Quick answer
What is a lower TDS certificate and how do I get one?
A lower TDS certificate lets a named payer deduct TDS at a reduced or nil rate on your income. You apply on the TRACES portal with your PAN, an estimate of income and tax, and past returns. From 1 April 2026 the application is Form 128 under section 395, replacing Form 13 under section 197.
- Apply online on TRACES only, PAN required
- Form 13 for the 1961 Act, Form 128 from tax year 2026-27
- Certificate names the deductor and the period
- Common for NRIs selling property in India
What is a lower TDS certificate?
It is a certificate issued by your assessing officer, after you apply, directing a specific payer to deduct TDS at a lower rate or not at all for a stated period. It solves a cash flow problem: without it, tax is deducted at the full rate and you wait for a refund after filing your return.
The law sits in section 197 of the Income-tax Act 1961 for earlier years and section 395(1) of the Income-tax Act 2025 from tax year 2026-27. Section 395(3) covers the matching certificate for lower tax collection at source. The Income Tax Department's Form 128 FAQ confirms the new form replaces Form 13 and that filing it is optional: you apply only if you want the certificate.
Form 13 or Form 128: which form applies now?
For payments in tax year 2026-27, which started on 1 April 2026, you apply in Form 128 under section 395. Form 13 under section 197 belongs to the 1961 Act years. If a certificate was issued for FY 2025-26, it covers that period only, so apply afresh for the new year.
| Point | Up to FY 2025-26 | From tax year 2026-27 |
|---|---|---|
| Act | Income-tax Act 1961 | Income-tax Act 2025 |
| Section | Section 197 (TDS); 206C(9) (TCS) | Section 395(1) (TDS); 395(3) (TCS) |
| Application form | Form 13 | Form 128 |
| Rule | Rules 28, 28AA and related | Rule 213 of the Income-tax Rules 2026 |
| Where to apply | TRACES | TRACES |
Source: Income Tax Department FAQ on Form 128 (seen in search; the site blocks automated fetches) and ClearTax (secondary), checked October 2026.
Need help with lower TDS certificate application? Talk to a chartered accountant in Delhi today. First call is free.
Who can apply for a lower TDS certificate?
Anyone whose real tax liability for the year is lower than the tax that will be deducted can apply: individuals, HUFs, firms, companies, trusts and non-residents. It is most useful where TDS is a flat rate on gross receipts but the actual taxable income is small.
- NRIs selling property in India, where TDS is worked out on the full price but tax is due only on the gain.
- Contractors and professionals with thin margins or brought forward losses.
- Companies with losses receiving rent, interest or contract payments.
- Trusts and institutions whose income is exempt.
- Non-residents receiving interest, royalty or fees where a tax treaty gives a lower rate.
A nil TDS certificate is the same application with a request for zero deduction. One practitioner reports that the department rarely grants nil rates, so ask for the lowest rate your computation supports.
What documents are needed for Form 13 or Form 128?
You need your PAN, a computation of estimated income and tax for the year, returns and financial statements of recent years, details of TDS and advance tax already paid, and the name and TAN of each payer. Property sellers also need the sale agreement and purchase cost proof.
| Document | Purpose |
|---|---|
| PAN (mandatory) | Identifies the applicant on TRACES |
| Estimated income and tax computation for the year | Basis for the lower rate |
| Income tax returns of recent years (guides cite the last four) | Past compliance and income pattern |
| Audited or provisional financial statements | Supports the estimate for businesses |
| Details of TDS, TCS and advance tax already paid | Shows existing credits |
| Name, TAN and expected payment amount of each deductor | Certificate is issued for named payers |
| Property only: sale agreement, purchase deed, cost of improvement bills | Works out the capital gain |
| Non-residents: tax residency certificate and treaty position | Supports a treaty rate |
Compiled from ClearTax's Form 128 guide and practitioner guides (secondary). The TRACES form lists the exact fields.
How to apply for a lower TDS certificate on TRACES: step by step
Register as a taxpayer on TRACES (tdscpc.gov.in), fill the online application with income estimates and deductor details, upload the supporting files, and submit. The assessing officer reviews it, may ask questions, and issues or rejects the certificate online.
- 1
Register on TRACES
Create a taxpayer login on tdscpc.gov.in using your PAN and a recent TDS or tax payment detail.
- 2
Prepare the computation
Work out estimated income, tax, existing credits and the rate you are asking for, with working papers.
- 3
Fill the application
Open the lower deduction request, choose the section, enter income estimates and each payer's TAN and expected amount.
- 4
Upload documents and submit
Attach returns, financial statements and agreements, then submit with a digital signature or electronic verification as the form allows.
- 5
Answer queries
The assessing officer may ask for more details through the portal. Reply quickly to avoid delay.
- 6
Share the certificate
Once issued, send it to each named payer. The payer can verify it on TRACES and must apply the stated rate.
How long is a lower TDS certificate valid?
A lower TDS certificate is valid for the period stated in it, usually up to the end of the financial year, and only for the payers and amounts it names, unless the officer cancels it earlier. Once the stated amount is used up, normal TDS resumes.
Processing times are not fixed in any source we could verify. Practitioner guides report anything from about two weeks to six weeks, so apply at the start of the year or well before a property sale. The payer deducts at full rate until the certificate is in hand.
How does an NRI use a lower TDS certificate when selling property?
When an NRI sells property in India, the buyer must deduct TDS on the sale price, which often far exceeds the tax on the actual gain. The NRI seller can apply before the sale for a lower deduction certificate naming the buyer, so less tax is held back.
The application needs the buyer's TAN (a resident buyer paying an NRI must obtain one), the sale agreement, the original purchase cost and improvement bills, and a capital gains computation. Without a certificate, the excess TDS comes back only as a refund after the NRI files a return. Our TDS on purchase of property guide explains the buyer's side, and NRI tax services covers the seller's return and repatriation papers.
Remitting the sale money abroad may also need Form 15CA and 15CB; see our Form 15CA and 15CB page.
Why are lower TDS applications delayed or refused?
Most delays come from an estimate the officer cannot match with past returns, missing deductor TANs, unfiled returns of earlier years, or outstanding tax demands against the PAN. Clean compliance history is the strongest support for a lower rate.
- Pending returns. Missing returns for earlier years make the officer doubt the estimate.
- Open demands. An unpaid demand on the portal often has to be settled or explained first.
- Weak computation. A one-line estimate without working papers invites queries.
- Wrong payer details. A wrong TAN or amount means the certificate cannot be used.
- Late filing. Applying a week before a property registration leaves no time for questions.
Fix these before applying and keep your replies inside the portal so there is a record.
How can CA in Delhi help with a lower TDS certificate?
Applying for a lower TDS certificate is not work reserved for chartered accountants, so the listed firms can prepare and file it. Moneymji and Khubchandani & Co. both handle income tax and TDS work, and you get a fixed quote before work starts.
The work usually covers the income and tax computation, the TRACES application, replies to the officer and sending the certificate to payers. After the year, the same team can file your return and reconcile TDS credits; see ITR filing and TDS return filing. Compare the firms on the chartered accountant firms in Delhi page. Families in Punjabi Bagh selling inherited property for NRI relatives can also see CA in Punjabi Bagh.
Frequently asked questions
What is Form 13 in income tax?
Form 13 was the application under section 197 of the 1961 Act for a certificate of lower or nil TDS, and under section 206C(9) for lower TCS. From tax year 2026-27 it is replaced by Form 128 under section 395 of the 2025 Act.
Can I get a nil TDS certificate?
You can ask for nil deduction if your computation shows no tax liability, for example because of exempt income or losses. Practitioners report that nil certificates are granted less often than reduced rates, so support the request with clear numbers.
Is a lower TDS certificate valid for all payers?
No. It is issued for named deductors, with their TAN, and often for a maximum amount. If you have a new client or buyer, apply for a certificate covering that payer.
Can an NRI apply for Form 128?
Yes. Non-residents can apply on TRACES with their PAN. It is common for NRIs selling property, and for those receiving interest or other income where a treaty rate applies.
How does the payer check my certificate?
The deductor can verify the certificate on TRACES using your PAN and the certificate number, and must report the lower rate in its TDS return. Our TDS return filing page explains how deductors report it.
What if my application is rejected?
TDS continues at the normal rate, and you claim any excess as a refund when you file your return. You can apply again with better supporting papers if your position changes.
Does a lower TDS certificate cover TCS too?
A separate request covers lower collection of tax at source. Form 128 handles both TDS under section 395(1) and TCS under section 395(3).
When should I apply for a lower TDS certificate?
Apply at the start of the financial year, or as soon as a property deal or contract is agreed. The certificate works only for payments made after it is issued.
Is a lower TDS certificate a CA certificate?
No. It is issued by the Income Tax Department, not by a chartered accountant. A CA or tax professional can prepare the application, but the order comes from the assessing officer.