Form 128: Lower or Nil TDS Certificate (Old Form 13)
Form 128 is the TRACES application for a lower or nil TDS certificate under Section 395, replacing Form 13. Who files, documents, validity, rejections, FAQs.
Form 128 is the application, filed on the TRACES portal, for a certificate that lets your payer deduct TDS at a lower or nil rate (Section 395(1)) or collect TCS at a lower rate (Section 395(3)) under the Income-tax Act, 2025. It replaced Form 13 under Section 197 of the 1961 Act from 1 April 2026, and is decided by your Assessing Officer.
Filing it is optional. If you do nothing, tax is deducted at the normal rate and you claim the excess back as a refund in your return. Form 128 only changes when the money reaches you, not how much tax you finally pay. Here is who should file it, what it needs, and why applications get stuck, as at October 2026 (tax year 2026-27).
Form 13 to Form 128: what changed on 1 April 2026
| Point | Up to 31 March 2026 (1961 Act) | From 1 April 2026 (2025 Act) |
|---|---|---|
| Application form | Form 13 | Form No. 128 |
| Lower or nil TDS | Section 197 | Section 395(1) |
| Lower TCS | Section 206C(9) | Section 395(3) |
| Governing rule | Rules 28, 28AA, 28AB, 29, 37G, 37H (1962 Rules) | Rule 213, Income-tax Rules, 2026 |
| Self declaration alternative | Form 15G / 15H (Section 197A) | Form No. 121 (Section 393(6)) |
| Period | Financial year | Tax year |
A Section 197 certificate issued before April 2026 continues only where it was issued for projected receivables of tax year 2026-27. Anything older does not carry forward. The full mapping, including that one exception, is on our lower deduction certificate page.
Who files Form 128
Any person, resident or non-resident, can apply: individuals, HUFs, firms, LLPs, companies, trusts and registered non-profits. It is worth the effort when the TDS rate on your receipts is well above the tax you will actually owe for the year.
| Situation | Form 128 or Form 121? |
|---|---|
| Company, firm or LLP with TDS on fees, contracts or rent above its real tax | Form 128 (Form 121 is not available to companies or firms) |
| Professional or contractor with losses, low margins or brought-forward losses | Form 128 |
| Resident individual with only interest or dividend and income below the taxable limit | Form 121 to the payer is usually enough |
| Registered non-profit with exempt income | Form 128, with the non-profit declaration (Part D) |
| NRI selling property in India (TDS on the full sale price) | Form 128, against the computed capital gain |
| Seller wanting lower TCS | Form 128 with Annexure III |
Resident vs NRI: what is different
For a resident business, the gain is cash flow: TDS at 1%, 2% or 10% on gross receipts can run far ahead of tax on a thin margin. For a non-resident, especially on a property sale, the gap is larger, because TDS is computed on the sum paid, not on the capital gain inside it. A Form 128 certificate brings the deduction down to what the computed gain supports. The capital gain computation, the reinvestment exemptions and the buyer's side are covered on our lower deduction certificate for NRIs page, and the default rates are in NRI TDS rates in India.
How to file Form 128 on TRACES
- Prepare the computation of estimated total income and tax for the tax year, plus a computation for any of the last four years in which no return was filed.
- Log in to TRACES (www.tdscpc.gov.in) as a taxpayer with your PAN. Register first if you have never used TRACES.
- Go to Dashboard → e-file and view → File Forms → Form No. 128.
- Fill Parts A to F and the right annexure: Annexure I for known payers (with their TAN), Annexure II where more than 100 payers are expected and their details are not yet known, Annexure III for TCS.
- Upload the mandatory attachments, e-verify and submit. An Acknowledgment Receipt Number (ARN) is generated.
- Answer any query from the Assessing Officer.
- Download the certificate from Dashboard → Downloads → Lower/Nil Deduction/Collection Certificates, and send it to your payer.
Apply before the payment, not after. The departmental FAQ says an application cannot be processed once the transaction involving TDS or TCS is complete. A certificate in August does nothing for TDS already deducted in April to July.
Documents for Form 128
- PAN (mandatory; the form cannot be submitted without it)
- Computation of estimated total income and tax liability for the tax year
- Computation of income for any of the preceding four years in which no return was filed
- A note on income claimed as exempt, where relevant
- Payer names, addresses and TANs, and the expected amount from each
- Advance tax paid and TDS/TCS already credited for the year (from Form 26AS / AIS)
- Contracts, work orders or a receivables schedule backing the estimate; returns and financial statements of past years
- For an NRI property sale: purchase and sale deeds, cost of improvement and the capital gain computation
Processing time and validity
Neither Rule 213 nor the department's FAQ fixes a time limit for the Assessing Officer to decide a Form 128 application, so timing depends on how complete and well-reconciled your file is. Apply in April for recurring income, and well before the agreement date for a one-off sale.
The certificate is valid for the period of the tax year stated in it, unless the Assessing Officer cancels it earlier, and does not roll into the next tax year. It is also limited to the payer it names, the nature of payment and a monetary ceiling: once that amount is used up, TDS goes back to the normal rate. Apply again before the ceiling runs out if billing is ahead of plan. There is no government fee for Form 128.
Common rejection and delay reasons
- An outstanding tax demand, often an old one under the 1961 Act
- A return missing for one of the last four years, with no computation attached
- An income estimate that does not reconcile with receipts already in Form 26AS and the AIS
- A requested rate the estimate cannot support
- Wrong or missing payer TANs in Annexure I
- For a non-profit, approval not in force on both the application and grant dates
- Applying after the payment has already been made
What your payer does with the certificate
Under Section 395(1)(c) the payer must deduct at the certified rate while the certificate is valid. A careful payer validates it on TRACES, checks that their own TAN, the payment type and the ceiling match, and quotes the certificate number in the quarterly statement. Payers filing those statements can see our TDS return filing guide.
Frequently asked questions
Q: What is Form 128 in income tax?
A: Form No. 128 is the application for a certificate of lower or nil TDS under Section 395(1), or lower TCS under Section 395(3), of the Income-tax Act, 2025. It replaced Form 13 under Section 197 from 1 April 2026. It is filed on TRACES and decided by the Assessing Officer on your estimated income, past four years and any outstanding demand.
Q: Is Form 128 the same as Form 13?
A: It does the same job. Form 13 was the application under Section 197 of the Income-tax Act, 1961. From 1 April 2026 the application is Form No. 128 under Section 395 of the Income-tax Act, 2025 and Rule 213 of the Income-tax Rules, 2026. Applications for tax year 2026-27 onwards use Form 128.
Q: Where do I file Form 128?
A: Only online on the TRACES portal at www.tdscpc.gov.in, after logging in as a taxpayer: Dashboard, e-file and view, File Forms, Form No. 128. It cannot be filed offline and is not filed on the income tax e-filing portal.
Q: Can an NRI file Form 128?
A: Yes. Any person, resident or non-resident, can apply. NRIs most often use it when selling property in India, because TDS is otherwise computed on the full sale price rather than on the capital gain. The NRI needs a PAN, and the computation of gain and any reinvestment exemption goes with the application.
Q: How long is a Form 128 certificate valid?
A: For the period of the tax year stated in the certificate, unless the Assessing Officer cancels it earlier. It is limited to the named payer, the payment type and the amount specified, and does not carry into the next tax year, so you apply again each year.
Q: How long does Form 128 take to process?
A: There is no statutory time limit. The time depends on the Assessing Officer and on how complete your file is. Queries on the income estimate, missing past returns or an old demand slow it down, so apply well before the payments start.
Q: Is there a government fee for Form 128?
A: No. There is no government fee for filing Form No. 128 on TRACES. Professional fees for preparing the estimate and handling the Assessing Officer are separate.
Q: Can I use Form 121 instead of Form 128?
A: Only if you are eligible to give a self-declaration under Section 393(6), which replaced Form 15G and 15H for tax years from 1 April 2026. It is not available to companies or firms, and does not suit business or professional receipts. For those, Form 128 is the route.
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