Form 128 | Lower or Nil TDS Certificate Application (TRACES)
If your actual tax liability is lower than the standard TDS deducted on your income, Form 128 helps you fix that upfront. Instead of paying excess tax and waiting for a refund, you apply for a certificate that allows your payer to deduct tax at a reduced or zero rate.
This is useful when your income is below taxable limits, your profits are lower than usual, or tax is already being deducted elsewhere. It replaces the earlier Form 13 and is filed online through the TRACES system.
When filing Form 128 makes sense
You should consider this form when standard TDS rates will result in excess tax deduction compared to your final tax liability. This happens often with interest income, professional payments, rent, or commission where flat deduction rates apply.
It is also relevant if you receive income from multiple sources or if your taxable income drops due to deductions or losses.
What the certificate actually does
Once approved, the certificate is linked directly to your payer through the system. Your payer then deducts tax at the approved lower rate for the specified period. This reduces cash flow blockage and avoids refund dependency.
If your case involves salary adjustments or multiple income reporting, forms like Form 122 work alongside this to keep tax calculations aligned.
Key details to get right before filing
Your PAN must match your TRACES profile exactly. You need correct TAN details for each payer and accurate income estimates for the full financial year. Any mismatch in these values can lead to rejection or incorrect certificate issuance.
You may also need past ITR records, financial statements, and proof of advance tax or TDS already paid. These help justify your request for lower deduction.
How the form is structured
The form includes separate annexures for TDS and TCS applications. You fill only what applies to your case. If both apply, both sections must be completed within the same filing.
For large payer lists, additional annexures are used to manage entries without errors.
Official system and legal basis
This form is governed under the Income Tax Act 2025 and is processed through the TRACES portal. The issued certificate is automatically visible to your payer for compliance.
For cases where you want to prevent TDS on specific income like bank interest, you can also use Form 121 where eligible.