Form 128: the application for a lower or nil TDS certificate
Form 13 became Form 128 on 1 April 2026, and section 197 became section 395. The application itself did not change.
Form 128 is the application for a certificate authorising tax to be deducted at a lower rate or at nil. From 1 April 2026 it replaces Form 13, and the provision behind it is section 395 rather than section 197. It is filed online, verified with a digital signature, and it needs the payer's tax deduction account number before it can be filed at all.
If you miss it: A certificate has no retrospective effect. Once the payer has deducted and deposited, the application is pointless and the excess comes back only as a refund, the following assessment year at the earliest.
Form 13 under s. 197 up to 2025-26 · Form 128 under s. 395 from 2026-27 · checked 10 September 2026
Key takeaways
- Form 128 is the application. The certificate is what comes back — they are not the same document.
- You cannot file it without the payer's tax deduction account number, which individual buyers usually do not have.
- It is verified with a digital signature certificate, which works from abroad without an Indian mobile number.
- The application stands or falls on the computation of expected income and the evidence behind it.
- A refusal is not the end — it can be applied for again on better material, but the time has gone and the sale rarely waits.
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 on 1 April 2026 and renumbered almost everything. It did not renumber your notice. Under the repeal-and-savings provision, an assessment, reassessment, appeal or penalty for a tax year before 1 April 2026 stays under the 1961 Act — even where the notice itself arrives after that date. So the number that governs the letter in your hand is decided by the year the letter is about, not by the date it was posted. Both numbers are given on every page here, with the governing one first.
“The provisions of the repealed Income-tax Act shall continue to apply to any proceeding pending on the date of commencement of this Act and to any proceedings initiated on or after the 1st April, 2026 (including notices, assessment, reassessment, recomputation, rectification, penalty, reference, revision and appeals) in respect of any tax year beginning before the 1st April, 2026.”
- Notice about 2025-26 or earlier
- The Income-tax Act, 1961 numbering is the one that governs it — s. 143(2), s. 156, s. 220, Form 26AS, Form 16. That is most letters arriving in 2026.
- Notice about 2026-27 or later
- The Income-tax Act, 2025 numbering governs — s. 270(8), s. 289, s. 411, Form 168, Form 130. In practice, letters from 2027 onward.
Form 13 became Form 128, and section 197 became section 395
From 1 April 2026 the application for a lower or nil deduction certificate is Form 128, made under section 395 of the Income-tax Act, 2025. Until then it was Form 13 under section 197 of the Income-tax Act, 1961. Nothing about the mechanism changed — the same application, judged the same way, producing the same certificate. Only the numbering moved.
Two practical consequences follow. A certificate already issued under section 197 for a period falling in tax year 2026-27 remains valid for payments made on or after 1 April 2026 and does not have to be reissued; if a payer queries it, that is the answer. And almost every guide you will find still says Form 13, because most of the web has not caught up — which is not a problem in itself, since the instructions are the same, but it does mean the form name on the screen will not match the page you are reading.
| Up to tax year 2025-26 | From tax year 2026-27 | |
|---|---|---|
| The application | Form 13 | Form 128 |
| The provision | s. 197, Income-tax Act, 1961 | s. 395, Income-tax Act, 2025 |
| Withholding it modifies | s. 195, for payments to non-residents | s. 393(2) |
| The residents-only declaration it is not | Form 15G / 15H under s. 197A | s. 393(6) |
Certificates issued under the old provision for periods falling in 2026-27 stay valid without reissue.
Three things to have before you open the form
Each of these stops the application dead, and each takes time to fix.
- 1Your PAN. There is no route without one, and a missing PAN separately triggers withholding at a higher rate, so obtaining one is the first step in any event.
- 2The payer's tax deduction account number. Withholding on a payment to a non-resident requires the payer to hold one, and it has to be quoted in the application. An individual buying a flat has almost certainly never needed one and does not know they need one now. Telling them on day one is the single most useful thing you can do for your own timetable.
- 3A digital signature certificate. The application is verified with one, which is the mechanism that makes this workable from abroad — it does not depend on an Indian mobile number for a one-time password.
Not the officer, not the documents, not the portal — the buyer. Sellers routinely discover two weeks before completion that the buyer cannot deduct at all because they have no tax deduction account number, and that obtaining one has its own processing time. Raise it at the point the price is agreed, in writing, and treat it as a condition of the timetable rather than a detail.
What the application asks for
The form is a statement of who you are, what payment is coming, and why the tax on it will be less than the default withholding. The last of those is the whole application; the rest is identification.
- Your details and PAN, and your residential status — which is what puts the application in the non-resident stream.
- The payer, and their tax deduction account number.
- The nature of the payment, the provision under which tax would be withheld, and the amount expected.
- The rate sought, or a request for nil deduction.
- A computation of the estimated income from the payment — for a sale, the consideration less the cost of acquisition and anything else properly deductible.
- Your income and tax position for the preceding years, and any tax already paid or withheld for the current year.
- The supporting documents, uploaded.
The officer is being asked to accept that your income from a payment will be materially less than the payment. What makes that easy to accept is arithmetic they can check against documents you have supplied: a purchase deed showing cost, a draft agreement showing consideration, and a computation that reconciles the two. What makes it hard is a figure asserted without a document behind it. Most delay in this process is a query about something that could have been supplied at the outset.
What to upload with it
Improvement costs deserve a separate warning. They are the commonest thing claimed in a computation and the commonest thing an officer declines to allow, because the receipts are old, informal, or in somebody else's name. If the improvement is material to the computation, expect to prove it properly; if it is marginal, consider leaving it out rather than having the application queried over it.
- The original purchase deed, and proof of what was actually paid — bank records rather than merely the deed's recital.
- The draft agreement to sell, or the agreement under which the payment arises.
- Documents for any cost of improvement being claimed, which is the item most often disallowed for want of evidence.
- Returns of income for the preceding years, where they exist.
- Proof of tax already paid or withheld in the current year.
- Where relief under a treaty is part of the case, the tax residency certificate and the treaty-relief declaration.
How it is decided, and how long it takes
The officer examines the estimated income and satisfies themselves that the case for a lower rate is made out. They may raise queries, and where they do, the clock effectively restarts on your answer. The outcome is a certificate specifying a rate or a nil direction, an amount up to which it applies, the payer it is issued in respect of, and a period.
Processing commonly takes somewhere between a month and three. Nothing about this is fast, and a sale timetable usually is — which is why the application belongs at the start of the transaction rather than at the point the buyer asks about withholding.
Answer queries the day they arrive. It is the one part of the timetable you control, and it is where most avoidable delay comes from.
| It specifies | So it does not cover |
|---|---|
| The payer it is issued in respect of | A different buyer, if the sale falls through |
| An amount up to which it applies | A payment larger than that amount |
| A period, usually within one financial year | The following year, without a fresh application |
| A rate, or a nil direction | Anything about your final liability — you still file and pay |
If it is refused, or issued at a rate you did not want
A refusal is not a finding that you owe the tax. It is a decision that the case for departing from the default withholding has not been made out, which is a different thing and is usually about evidence rather than principle.
The practical responses, in order of usefulness: find out what was not accepted and supply it, and apply again. Where the computation was refused because an improvement cost could not be evidenced, drop it and reapply on the figures that can be proved — a certificate at a rate slightly higher than you hoped is worth vastly more than no certificate. Where the issue is a treaty position, that is a separate document trail and is worth getting right before reapplying.
What a refusal does not do is end the matter financially. The default withholding applies, and you recover the excess by filing a return and claiming the refund. That is slower and carries its own risks — the credit has to appear against your PAN, and the refund has to reach a validated bank account — but it is a route rather than a loss.
The worst outcome is a completion that goes ahead on the expectation of a certificate that has not been issued, with the buyer unsure what to deduct. Either the buyer withholds the full amount, in which case the certificate is now pointless, or they withhold less without authority and the exposure moves to them. Tell the buyer what to do in both cases, in writing, before completion.
Worked examples
Example 1: An application held up entirely by the buyer
- Sale agreed
- 15 May
- Seller's PAN
- In order
- Buyer's tax deduction account number
- None — first purchase
- Completion scheduled
- 30 June
- 1.The application cannot be filed at all without the buyer's number, so nothing can start until the buyer applies for one.
- 2.That application has its own processing time, and it begins only once the buyer understands it is needed.
- 3.By the time the number exists, three of the six weeks are gone, and the certificate application then needs a month to three of its own.
- 4.Completion arrives with no certificate, and the buyer withholds against the full consideration.
The seller's paperwork was perfect and it made no difference. This is why the buyer's tax deduction account number belongs in the first conversation about price, not the last conversation about completion.
Example 2: An improvement cost that cost more than it was worth
- Cost of acquisition
- ₹62,00,000, fully documented
- Improvement claimed
- ₹9,00,000, informal receipts
- Sale price
- ₹1,30,00,000
- 1.The computation claims a gain of ₹59,00,000 after the improvement, rather than ₹68,00,000 without it.
- 2.The officer queries the improvement, because the receipts are informal and partly in another name.
- 3.Answering the query takes three weeks. The improvement is ultimately not accepted.
- 4.The certificate issues on a gain of ₹68,00,000 — three weeks later than it would have, for no benefit.
The difference the improvement would have made was a fraction of the withholding it was trying to reduce, and pursuing it cost three weeks of a timetable that did not have three weeks. Where an item is marginal and hard to prove, leaving it out of the application and claiming it in the return instead is often the better trade.
Example 3: A certificate that covered the wrong buyer
- Certificate obtained
- Naming the original buyer
- That sale
- Fell through at completion
- New buyer
- Found six weeks later, similar price
- 1.A certificate is issued in respect of a named payer. It does not follow the property, and it does not follow the seller.
- 2.The new buyer cannot rely on it, and deducting less on the strength of somebody else's certificate would leave the exposure with them.
- 3.A fresh application is needed, naming the new buyer and quoting their tax deduction account number — which the new buyer may not have either.
- 4.The evidence of cost is already assembled, so the second application is faster than the first. That is the only consolation.
Worth knowing before a sale wobbles rather than after. The certificate's specificity is easy to miss and expensive to discover late.
More questions about this page
What is Form 128?▼
Is Form 128 the same as Form 13?▼
Do I need the buyer's TAN to file Form 128?▼
Can I file Form 128 from outside India?▼
How long does Form 128 take to be processed?▼
What documents go with Form 128?▼
What happens if my application is rejected?▼
Does one Form 128 certificate cover more than one buyer?▼
Is a certificate issued under section 197 still valid?▼
Should I claim improvement costs in the application?▼
Official sources checked
The statutes, rules and regulator pages the statements on this page were checked against.
- Income-tax Act, 2025 — s. 395 (certificates), s. 393(2) (withholding on payments to non-residents), s. 393(6) (the residents-only declaration route)Applying from tax year 2026-27. The application form under s. 395(1) is Form 128.
- Income-tax Act, 1961 — s. 197 with Form 13, s. 195, s. 197A with Forms 15G and 15HGoverns applications for tax year 2025-26 and earlier. Certificates issued under s. 197 for periods falling in 2026-27 remain valid without reissue.
- Income-tax Rules, 2026Notified by CBDT Notification No. 22/2026, G.S.R. 198(E), 20 March 2026 — the source of the renumbered forms.
You are here
Preparing or chasing an application for a lower or nil deduction certificate
What to do next
- 1
If you have not decided whether it is worth applying
What the certificate saves, who else can use it, and the comparison that settles the question.
Lower TDS certificate → - 2
Work the numbers before you draft the computation
The application turns on the gap between what will be withheld and what you will owe — this shows it on your figures.
NRI property sale TDS calculator → - 3
If a treaty rate is part of your case
Treaty relief runs on its own document trail, with its own annual cycle, and it has to be right before you rely on it here.
Form 10F, now Form 41 → - 4
If the application failed and the money has gone
The refund route — and the credit has to appear against your PAN before you can claim it.
Form 26AS mismatch →
This page is general information about procedure and deadlines, checked against the provisions in force on the date shown. It is not advice on your own assessment, and a notice that looks routine can turn on facts a page cannot see. Where money or a limitation period is at stake, put the notice in front of a practising Chartered Accountant.