The Indian government is developing a new online process for taxpayers to apply for reductions or exemptions in tax deducted at source, aiming to simplify procedures and enhance transparency as digitalisation accelerates across the tax department.
The Indian government is preparing rules that will let taxpayers apply online for lower or nil tax deducted at source certificates, a move aimed at cutting compliance costs and reducing paperwork for smaller filers. According to a written reply in the Lok Sabha, the Income Tax Department is drafting the framework to put the 2026-27 Budget measure into effect.
Minister of state for finance Pankaj Chaudhary said Section 395(1) of the Income-tax Act, 2025 already provides for certificates at nil or reduced deduction rates. He said the Finance Act, 2026 has enabled payees to submit applications electronically, with the certificate to be issued or refused once the prescribed conditions are met. The rule that will govern the process is still being prepared and will be notified later.
The government said the new system is intended to make the process faster, paperless and more transparent, while sparing taxpayers from repeated visits to tax offices and the need to submit physical documents. Under the proposed model, applications will be examined using information already on the tax portal, including past returns, the Annual Information Statement, the Taxpayer Information Summary and Form 26AS. Where the records match the required conditions, the certificate will be issued electronically; where they do not, the application may be rejected.
Chaudhary also told lawmakers that the department has disposed of 2.24 lakh appeals in 2025-26, up from 1.11 lakh in 2023-24. He said 2.13 lakh faceless assessments were completed in FY26, compared with 2.73 lakh in FY24, underscoring the tax department’s wider shift towards digital administration and remote processing.
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