The lower TDS certificate: stop over-deduction before it happens

What it is

Under the Income-tax Act, 2025 a taxpayer can apply for a certificate authorising lower or nil deduction of tax at source — section 395(1), in Form 128 (formerly section 197 and Form 13). It’s filed online on the TRACES portal, and the payer then deducts at the rate on the certificate.

When it helps

• NRI property sales — buyers often deduct on the full sale price; the certificate limits TDS to your real capital gain. Try the calculator to see how much is at stake.
• Planned reinvestment — if you’ll claim an exemption by buying a new house or capital-gain bonds.
• Losses or low income — when your total tax will be lower than the TDS.
• Payments to non-residents generally, where a treaty or the facts justify a lower rate.

How to apply

1. Register on TRACES with your PAN.
2. Fill Form 128 with estimated income for the year, the payer’s details and the transaction.
3. Attach the computation and supporting documents.
4. Respond to any queries from the tax officer.
5. Download the certificate and give it to the payer before the payment.

A newer feature lets certificates be generated for payers who aren’t known when you apply — useful when a buyer hasn’t been finalised. Apply early; processing can take several weeks.

Documents usually needed

• PAN, passport and proof of non-resident status.
• Sale agreement or draft, purchase deed and cost of improvements.
• Capital gains computation, and evidence of planned reinvestment if claiming an exemption.
• Past income-tax returns and details of other Indian income.

After you get it

• The payer deducts at the certificate rate and reports it; check it appears in your tax credit statement (Form 168).
• File your Indian return for the year — see NRI income tax return.

We prepare and follow up Form 128 applications for NRIs — see NRI tax services.

Frequently asked questions

Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.