Taxpayers frequently face cash flow issues as a result of tax deducted at source, or TDS. Before releasing your income, the payer deducts tax, which occasionally exceeds your real tax obligation. When that occurs, the government keeps your money until you request a refund, which can take many months to process.

This can be handled in a more straightforward manner. Eligible taxpayers may request a certificate from the Income Tax Department that provides a reduced or zero TDS deduction. Form 13 was the previous name for this filing, which was submitted in accordance with Section 197 of the Income Tax Act of 1961. This same application has been renamed as Form 128, filed under Section 395, effective of April 1, 2026, in accordance with the Income Tax Act, 2025. The terms have changed, but the objective and procedure are essentially the same.

Who Can Apply for This Certificate

Any person whose actual tax liability is lower than the TDS being deducted can apply. This includes individuals, freelancers, contractors, businesses, and non-resident Indians. The income should fall under specific categories such as salary, interest, rent, professional fees, commission, or capital gains. Common applicants include:

• Property sellers, especially NRIs, who face TDS on the full sale value instead of the actual profit
• Freelancers and consultants receiving professional fees
• Individuals earning interest, dividend, or rental income
• Businesses expecting lower taxable profit than the TDS rate suggests

If your estimated tax for the year justifies a lower rate, you can apply anytime during the financial year. There’s no fixed deadline, but applying early helps cover the full year’s income, since TDS gets deducted as income accrues.

Documents and Filing Process

Filing Form 128 requires proper documentation to support your claim. Keep these ready before you start:

• PAN card and tax deduction account details of the payer
• Financial statements and audit reports for the previous three years
• Income tax returns and assessment orders for the same period
• An estimated profit and loss statement for the current year
• Details of any past TDS defaults, if applicable

The application is filed electronically through the TRACES portal. Once submitted, the jurisdictional assessing officer reviews the details and may ask for clarification before approving or rejecting it. Form 128 also groups applicants into categories, and the annexures you attach depend on which category fits your case, for instance, whether the payer’s details are known or whether the number of payers exceeds a hundred.

Steps to Apply Online

Applying online keeps the process quick and traceable. Here’s how it works:

1. Log into the TRACES portal and select the option to submit a new request.
2. Choose Form 128 (shown alongside its earlier name, Form 13, on most portals for now).
3. Fill in your applicant details, income particulars, and existing tax credits.
4. Attach the required financial documents and supporting evidence.
5. Submit the form and note the acknowledgment number generated.

Once approved, the certificate specifies the rate at which tax should be deducted, or confirms that no deduction is needed. This certificate is valid for the financial year mentioned in it, unless the Assessing Officer cancels it earlier. You then share a copy with your payer so they can adjust the deduction accordingly.

Conclusion

With a lower or zero TDS certificate, you can avoid excessive deductions and keep your working capital free rather than locked up in a refund claim. This application is now known as Form 128 due to the implementation of the Income Tax Act, 2025; however, the fundamental advantage for taxpayers remains the same. Applying early in the financial year gives you the best opportunity of faster processing and prompt relief from excess TDS if your income qualifies.