Union Budget 2026-27 - Finance Bill, 2026

Section 395 of the Act pertains to issuance of certificates for deduction of tax at source (TDS) and tax collection at source (TCS) at nil or lower rate.

2. Sub-section (1) of the said section of the Act provides for issuance of certificate for deduction of tax at source at Nil or lower rates. As per the present provisions, the payee has to make an application before the Assessing Officer. Subsequent to the application, if the Assessing Officer is satisfied after due verification that the total income of the recipient17 justifies deduction of income-tax at any lower rates or no deduction of income-tax, he shall issue a certificate for lower or nil deduction of tax at source.

3. It is proposed to ease the compliance burden of small taxpayers by providing an option to the payee, to file the application for issuance of certificate for lower or nil deduction of income-tax electronically before the prescribed income-tax authority, which may issue the certificate subject to fulfilment of conditions as may be prescribed, or reject the application if prescribed conditions are not fulfilled or the application is incomplete.

4. The amendment will take effect from the 1st day of April, 2026.

[Clause 74]

 

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Full Text:

Union Budget 2026-27 - Finance Bill, 2026

Electronic TDS/TCS certificates: payees may file for lower or nil deduction; authority may issue or reject applications. Permits payees to file applications electronically for certificates for deduction of income-tax at lower or nil rates before the prescribed income-tax authority, which may issue the certificate subject to prescribed conditions or reject incomplete or non compliant applications, thereby easing compliance burdens for small taxpayers under Section 395.