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The Income-tax Department has rolled out a key procedural change with the introduction of Form No. 128, replacing the earlier Form 13 under the new Income-tax Act, 2025. The update is designed to make it easier for taxpayers to avoid excess tax deductions or collections during the financial year. Instead of waiting for refunds later, eligible individuals and businesses can now apply in advance for a lower or nil TDS or TCS rate. 

The process is fully online, more structured, and aims to reduce unnecessary cash flow pressure for taxpayers.

What Is Form No. 128 And Who Should Use It?

Form No. 128 allows taxpayers to apply for a certificate that permits tax deduction or collection at a reduced rate or even zero. This applies under Sections 395(1) and 395(3) of the new law. It is especially useful for those whose actual tax liability is expected to be lower than standard rates.

Both residents and non-residents can apply, and the form is optional. It is only required if the taxpayer wants to avoid an excess deduction. However, timing plays a critical role. The application must be filed before the income is credited or paid. 

Once tax is already deducted or collected, the request will not be considered. Filing early is strongly advised to avoid processing delays.

How To Apply For Form No. 128 And What Happens Next?

The application process is entirely digital through the TRACES portal. Taxpayers need to log in, select Form No. 128, enter estimated income and tax liability, upload supporting documents, and complete e-verification. Offline submissions are not allowed.

Applicants must provide estimated income details, tax calculations, prior income data if returns were not filed, and information on exempt income. A valid PAN is mandatory.

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After submission, an Acknowledgement Receipt Number is generated to track the request. If approved, the certificate can be downloaded online. 

Taxpayers dealing with more than 100 payers can use Annexure-II to generate multiple child certificates. The form can also be revised or withdrawn before processing if needed.