3 weeks ago
Child Certificate for Lower TDS Under Income Tax Act 2025
Sometimes, when people or companies pay someone money, they must take out some tax from the payment.
The tax office can allow a person to pay less tax, or no tax at all, on that money.
But the money might come from many different companies.
The person would need to tell every company about the special permission.
A 'child certificate' is an online document that does exactly that.
Companies use it to know how much tax to take out.
The new system started on 1 April 2026 under the Income Tax Act, 2025.
Even though it is called a 'child certificate', it has nothing to do with kids.
It just makes it easier to share tax permission with many payers.
A new process for lower or nil tax deduction certificates came into effect from 1 April 2026 under the Income Tax Act, 2025.
Taxpayers can generate separate child certificates on the TRACES portal for each person or organisation making payments to them.
Child certificates are needed when more than 100 tax deductors are expected but their details are not available when Form No. 128 is filed.
Payers must deduct tax at the rate specified in the child certificate and quote its certificate number in the relevant TDS statement.
Despite the name, a child certificate has nothing to do with minors; it simply lets a payer apply the Assessing Officer-approved TDS rate.
- Who
- Taxpayers who hold a lower or nil tax deduction certificate under Form No. 128, along with the payers (persons or organisations) who deduct TDS.
- What
- Introduction of child certificates that communicate an Assessing Officer's lower or nil TDS approval to individual payers under the revamped TRACES system.
- Where
- On the TRACES portal, under the Income Tax Act, 2025.
- When
- From 1 April 2026.
- Why
- To let taxpayers share approved lower or nil TDS rates with payers whose details were not known at the time of filing the application.
Key facts
- Effective from
- 1 April 2026
- Governing law
- Income Tax Act, 2025
- Application form
- Form No. 128 (Annexure-II)
- Relevant sections
- 395(1) and 395(3) of the Income Tax Act, 2025
- Portal
- TRACES
- Facility applies when
- More than 100 tax deductors are expected
- Eligibility
- Resident and non-resident taxpayers
- Meaning of name
- Not related to minors
Quotes
Tax authority
Statement released by the Income Tax Department
“The child certificate number must also be quoted in the relevant TDS statement while reporting the transaction.”
livemint.com
“A new compliance process for lower or nil tax deduction certificates has come into effect from 1 April 2026.”
livemint.com
Sources
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