- What Form No. 128 is
- Why Form 128 matters in practice
- Who can apply
- What transactions it covers
- Old Form 13 vs new Form 128 transition
- Annexures, payer details and child certificates
- Documents and information required
- How to file Form 128
- Practical examples
- Common mistakes and rejection triggers
- Professional tips for smoother approval
- Related DN & CO. reads
- FAQs
- Official references
What Form No. 128 Is
Form No. 128 is the prescribed electronic application used to seek:
- lower deduction of TDS,
- nil deduction of TDS, and
- lower collection of TCS.
Under the new law, the form is linked to:
- Section 395(1) for lower or nil TDS certificate, and
- Section 395(3) for lower TCS certificate.
Official departmental guidance also confirms that this is the new-law equivalent of the earlier Form 13 under Section 197 and Section 206C(9) of the Income-tax Act, 1961.
Why Form 128 Matters in Practice
On paper, excess TDS or TCS eventually comes back through refund. In real life, that answer is rarely satisfying. Businesses with thin margins, project-based receipts, seasonal income, exempt income claims or heavy expense structures often face avoidable liquidity pressure when full-rate withholding continues for the entire year.
In practical terms, Form 128 can matter a lot for:
- consultants whose net taxable income is far below gross professional receipts,
- contractors operating on low-margin tenders,
- exporters with fluctuating profitability,
- registered non-profit organisations with exempt income position,
- entities already carrying forward losses, and
- non-residents whose actual taxable base in India is narrower than the gross payment base.
If you are evaluating the larger withholding framework under the new law, DN & CO.’s TDS rate chart for FY 2026-27 is a useful companion read.
Who Can Apply for Form No. 128
One of the strongest clarifications in the official Form 128 FAQ is that the form is not restricted only to resident applicants. The department states that any person, resident or non-resident, seeking lower or nil TDS or lower TCS may apply, subject to the law and the facts of the case.
| Applicant category visible in form | Typical practical examples |
|---|---|
| Registered non-profit organisation | Charitable trusts, institutions, approved exempt bodies |
| Specified entity referred to in Section 263(9)(c) | Special category entities mapped by the form structure |
| Person carrying on business or profession | Companies, LLPs, firms, consultants, contractors, professionals |
| Person other than the above | Other eligible resident or non-resident applicants |
This broader scope is important because many taxpayers still assume that lower-deduction certificates are mainly for domestic businesses. That is too narrow a view.
What Transactions Form 128 Can Cover
The official guidance note describes Form 128 as relevant for income subject to TDS such as interest, commission, professional fees, contract payments, rent and other specified income. For TCS cases, the applicant can seek a lower collection certificate where the law allows it.
In practical terms, the form is most relevant where:
- gross receipt and actual taxable income differ materially,
- deduction rate is high compared to real final tax liability,
- exempt income position exists, or
- the taxpayer otherwise expects refund year after year.
Old Form 13 vs New Form 128: Transition Point You Should Not Miss
Form No. 128 is the new form number replacing old Form 13 from 1 April 2026 under the Income-tax Act, 2025 and Income-tax Rules, 2026. But the transition is not as abrupt as many assume.
The official transition FAQ issued by the Income Tax Department clarifies that a certificate issued under Section 197 of the old Act can continue to remain valid for payments or credits made on or after 1 April 2026, provided it relates to projected receivables for Tax Year 2026-27.
For the broader transition from old form numbers to new form numbers, you can also link to DN & CO.’s article on new income-tax forms from 1 April 2026.
Annexures, Payer Details and Child Certificates
One of the more useful design changes in Form 128 is the structured annexure system. This is where the form becomes more practical than many taxpayers expect.
| Annexure | Use case | Practical impact |
|---|---|---|
| Annexure I | TDS application with payer details | Useful where deductor details are known |
| Annexure II | TDS application where likely deductors exceed 100 and details are not available at filing stage | Allows filing without complete deductor list |
| Annexure III | Lower TCS application | For collection-side cases under Section 395(3) |
What Annexure II really solves
This is one of the most practical features in the new framework. Where the number of persons responsible for deducting tax is likely to exceed 100 and their details are not available at the time of application, the applicant can still proceed using Annexure II.
In such a case, the main certificate may be issued in the name of the applicant, who can later generate child certificates for specific deductors when their details become available.
Documents and Information You Should Keep Ready
The official Form 128 note and FAQ make it clear that the application is not meant to be a blind request. The department expects a computation-backed filing.
Core items normally required
- PAN of the applicant
- payer or collector details, including TAN, where relevant
- estimated income and tax computation for the period
- last four years’ return details and supporting financial history
- details of advance tax, available TDS or TCS credit and tax payments
- note on exempt income, wherever exemption is claimed
What the authority will look at in substance
- whether your income estimate is realistic,
- whether past return filing history is clean,
- whether tax demands or compliance defaults exist, and
- whether the request genuinely matches expected tax liability.
How to File Form 128
The official Form 128 FAQ currently states that the application has to be furnished electronically through the TRACES portal. The guidance note gives the standard path within TRACES.
- Log in to the TRACES portal.
- Go to `Dashboard → e-File and View → File Forms → Form No. 128`.
- Fill the online application.
- Upload supporting documents.
- E-verify and submit the form.
After filing, the taxpayer receives an Acknowledgment Receipt Number (ARN). If the application is approved, the certificate becomes available electronically for download and can then be shared with the payer or collector.
Practical Examples That Show When Form 128 Helps
Example 1: Consultant with high gross receipts but moderate taxable profit
A professional consultant bills ₹48 lakh during the year. Clients continue deducting tax at standard rates on gross receipts. But after legitimate business expenses and deductions, actual final tax liability is far lower than the annual TDS outflow. In such a case, a lower-deduction certificate can reduce the mismatch between gross billing and real taxable income.
Example 2: Export-oriented business with thin margins
A small exporter has sizeable receipts but weak net margins because of competition, freight cost and price pressure. Standard withholding on the gross payment side creates a refund-heavy tax position. Form 128 can help reduce that year-long cash blockage.
Example 3: Registered non-profit organisation
A registered non-profit with a defendable exemption position may not want tax repeatedly deducted and then reclaimed through refund. If the facts justify it, a nil or lower deduction certificate route can make compliance cleaner and cash flow more efficient.
Example 4: Taxpayer with many deductors and incomplete payer data
A platform-based service provider expects receipts from a very large number of payers during the year. At the start of the year, a final deductor list is not fully available. Annexure II and the child-certificate mechanism can be especially useful in this situation.
Example 5: Non-resident with narrower India tax exposure
A non-resident may face withholding on a gross payment base even though the actual taxable position in India, after treaty or domestic-law analysis, is different. In the right case, Form 128 becomes a planning tool worth evaluating carefully alongside DTAA considerations. For the wider non-resident withholding picture, see DN & CO.’s guide on non-resident TDS under the new framework.
Common Mistakes and Rejection Triggers
1. Treating Form 128 like a routine annual form
The application is optional, but once filed it must be backed by facts. A weak or inflated claim can lead to delay, rejection or future compliance discomfort.
2. Confusing Form 128 with Form 121
Taxpayers often mix lower-deduction certificate applications with self-declaration-based no-TDS forms. These are not the same compliance route.
3. Applying after the transaction has already happened
The official FAQ is very clear that the application should be made well before the transaction. Delay can make the relief practically useless.
4. Ignoring old demands, defaults or filing gaps
If the portal shows unresolved return-filing issues, demands or tax defaults, the application may face resistance or processing delay.
5. Underestimating income too aggressively
Many taxpayers try to optimise rate reduction by pushing unrealistic income estimates. That may appear clever in the short term, but it weakens the overall credibility of the application.
6. Forgetting that PAN is mandatory
The official Form 128 FAQ specifically states that the form cannot be submitted without PAN.
7. Missing the Annexure II opportunity
Some applicants delay filing only because full payer details are not ready. Where conditions are met, Annexure II may solve that problem.
Professional Tips for a Stronger Form 128 Application
- Prepare the projected income computation first and the form second.
- Reconcile prior-year return pattern with the current-year request so the position looks commercially consistent.
- Keep a clean note explaining why standard withholding is excessive in your facts.
- Clear obvious compliance defects before filing wherever possible.
- File early in the tax year, not after major payment cycles have already started.
- For multiple deductor cases, evaluate Annexure II instead of waiting indefinitely for complete payer data.
- Track ARN, processing status and certificate validity carefully after filing.
If you are also reviewing advance tax impact under the new law, DN & CO.’s advance tax guide for Tax Year 2026-27 is a relevant follow-up read.
Related DN & CO. Reads
- Form No. 121 Explained: No-TDS Declaration Guide Under Section 393(6)
- New Income Tax Forms 2026: Old vs New Forms Mapping Guide
- TDS Rate Chart FY 2026-27: Latest Section-wise TDS Rates and Due Dates
- Non-Resident TDS FY 2026-27: DTAA, Rates and Compliance Guide
- Advance Tax for Tax Year 2026-27: Due Dates and Practical Guide
- Post Office Tax Compliance 2026: PAN, Form 97, Form 121, AIS and TDS Guide
Frequently Asked Questions
1. What is Form No. 128 used for?
Form No. 128 is the electronic application used to seek a lower or nil TDS certificate under Section 395(1) and a lower TCS certificate under Section 395(3) of the Income-tax Act, 2025.
2. Is Form 128 the same as old Form 13?
Yes. Official guidance treats Form No. 128 as the new equivalent of earlier Form 13 under the 2025 form framework.
3. Can non-residents apply for Form 128?
Yes. The official FAQ states that any person, resident or non-resident, may apply if the case fits the lower or nil deduction or lower collection framework.
4. Can Form 128 be filed offline?
No. The official FAQ states that Form 128 has to be furnished electronically. Current guidance specifically points taxpayers to the TRACES portal workflow.
5. Is PAN mandatory for filing Form 128?
Yes. The department’s FAQ clearly states that Form 128 cannot be submitted without PAN.
6. Can the application be withdrawn after filing?
Yes. The official FAQ says an application can be withdrawn until it has not yet been processed.
7. Can Form 128 be filed more than once in a tax year?
Yes. The FAQ says there is no statutory limit on the number of times it can be filed, especially if there are changes in estimated transaction values or expected income.
8. What if payer details are not available at the time of filing?
If the number of likely deductors exceeds 100 and their details are not available, Annexure II can be used. In such cases, child certificates may later be generated for specific deductors.
9. Does Form 128 also give nil TCS certificate?
The statutory framing and form title are best read as lower or nil TDS under Section 395(1) and lower TCS under Section 395(3). Professionals should use the exact wording of the certificate and applicable law for the particular case.
10. Can an old Section 197 certificate survive after 1 April 2026?
Yes, if it was issued for projected receivables for Tax Year 2026-27. The official transition FAQ confirms continuity in such cases.
Official References
- Income Tax Department: Form No. 128 guidance note
- Income Tax Department: Form No. 128 FAQs
- Income Tax Department: Updated FAQs on Interplay and Transition
- Income-tax Act, 2025: Section 395(1)
- Income-tax Act, 2025: Section 395(3)
- Income-tax Act, 2025 as amended by Finance Act, 2026
Final Professional Takeaway
Form No. 128 is not just another renamed compliance form. Under the Income-tax Act, 2025, it becomes a serious cash-flow management instrument for taxpayers who routinely suffer excess withholding that does not match their actual tax profile.
The taxpayers who benefit most are usually not the ones who file casually. They are the ones who prepare a credible tax estimate, file early, use the correct annexure, and support the application with clean compliance history and good documentation.
If your business or client profile regularly ends in large refunds because TDS or TCS was too high during the year, Form 128 deserves proactive review at the start of each tax year.