A lower or nil TDS certificate lets a taxpayer ask the assessing officer to direct a payer to deduct tax below the standard rate when actual tax liability is lower than what standard TDS would withhold. From Tax Year 2026-27, this is filed as Form 128 under Section 395(1) of the Income-tax Act, 2025 the form formerly known as Form 13 under Section 197. TaxLegit prepares the projection, files on TRACES, and tracks the application through the assessing officer's review.
What Is a Lower TDS Certificate, and Who Needs One?
A lower TDS certificate is an Assessing Officer's written direction, under Section 395(1) of the Income Tax Act, 2025, authorizing a payer to deduct tax at a reduced or nil rate instead of the standard statutory rate. It matters most where TDS is calculated on the gross value of a transaction rather than the actual profit or gain, which routinely over-withholds cash the taxpayer will never owe as tax.
The most common users are: NRIs selling Indian property, where TDS applies to the full sale value rather than the capital gain; freelancers and consultants with standard-rate withholding well above their real tax bracket; companies receiving royalty, interest, or fee income taxed at a treaty rate lower than the domestic withholding rate; and landlords or lessors where rental TDS exceeds their actual liability after deductions.
