Lower / NIL TDS Deduction Certificate Assistance

A Lower TDS Certificate may be applicable where tax is required to be deducted from certain payments or income, but the taxpayer’s estimated actual tax liability is lower than the TDS that would otherwise be deducted at the prescribed rate.

The certificate allows the payer to deduct TDS at a lower rate approved by the Income Tax Department, subject to the conditions and validity specified in the certificate. Under the Income Tax Act, 2025, the corresponding provision is Section 395(1) and the application for Tax Year 2026-27 is made in Form 128.

This can be particularly relevant for NRIs, property sellers, investors and other taxpayers receiving income from India that is subject to TDS.

How Long It Takes to Get NIL/Lower TDS Certificate and Who Issue Lower TDS Deduction Certificate?

In case of a non-resident who sells an immovable property in India, the buyer is required to deduct TDS under the applicable provisions. The applicable TDS depends on the nature of the capital gain and other relevant conditions. For long-term capital gains, the current domestic rate for transfers on or after 23 July 2024 is 12.5%, subject to applicable surcharge and cess.

The TDS deducted may be higher than the non-resident seller’s final tax liability. To recover the refund of extra TDS deducted, non-resident seller shall file his tax return in India after the end of the financial year.

To avoid this hassle, a person can apply for lower or nil TDS deduction certificate depending on his case. For Tax Year 2026-27, the application is made in Form 128, and the Assessing Officer issues the certificate after being satisfied that the taxpayer’s estimated total income justifies lower or nil deduction.

Does an NRI require to be present for lower deduction certificate?

Not exactly, He can authorize anyone on his behalf and get it finished from his country of current residence. You can authorize NRI CA Services to take care of end-to-end TDS proceedings.

How to Obtain TDS Exemption certificate for NRI Sale of Property?

To obtain NIL or Lower TDS Certificate, a calculation needs to be submitted along other documents to satisfy Assessing officer that the estimated tax liability justifies lower or nil TDS.

An NRI selling property in India may have a lower actual capital gains tax liability after considering the purchase cost, eligible expenses, exemptions, deductions, losses and other applicable tax provisions. In such cases, a Lower TDS Certificate may help align the TDS deduction more closely with the estimated tax liability.

When Should You Apply?

The application should be made before the relevant payment is made or TDS is deducted, wherever required under the applicable provisions. This is particularly important in property transactions, where the buyer may need to deduct TDS from the payment to the seller.

Applying in advance allows the applicable lower or nil TDS rate to be considered before the deduction takes place.

Important Point

A Lower / Nil TDS Certificate does not reduce the taxpayer’s final income tax liability. It only determines the amount or rate of TDS to be deducted during the period and for the payments covered by the certificate.

The final tax liability is determined while filing the Income Tax Return after considering the taxpayer’s total taxable income, deductions, exemptions, capital gains, applicable tax provisions and taxes already paid or deducted.

How to Get Nil/Lower TDS Deduction Certificate with Our Assistance?

NRI CA Services provides assistance with the Lower TDS Certificate application for resident and non-resident taxpayers, including NRI property sale cases, from reviewing the applicable TDS provisions and estimating tax liability to preparing the required application and supporting documentation.

For Tax Year 2026-27, the application under Section 395(1) is made in Form 128 through the applicable online process.