Taxpayers will soon be able to apply for nil or lower Tax Deducted at Source (TDS) on property and other transactions through a new application format introduced under the Income Tax Act, 2025. The change is part of broader efforts to simplify tax compliance and make the process more digital-friendly.
The updated system introduces Form 128, which taxpayers can use to request a certificate allowing TDS to be deducted at a reduced rate or not deducted at all for a specified period. This can be particularly useful in situations where the taxpayer’s actual tax liability is lower than the TDS amount that would normally be deducted, such as during the sale of property.
For example, a property seller expecting to complete a transaction within a certain timeframe — say between April and October — can apply in advance using the new form to obtain a lower-TDS certificate from the Income Tax Department. Once issued, the certificate allows the buyer or payer to deduct tax at the approved rate instead of the standard rate.
Earlier, taxpayers typically applied for such relief using Form 13 under Section 197, which allowed the tax department to issue a certificate authorising deduction of TDS at a lower or nil rate.
The new form is part of the Income Tax Act, 2025 framework, which aims to streamline procedures, reduce paperwork, and improve digital processing of tax applications. The broader reform effort focuses on simplifying compliance and reducing administrative burden for taxpayers.
Overall, the introduction of the new application form is expected to make it faster and easier for taxpayers to seek relief from excess TDS deductions, especially in large financial transactions such as property sales.
