Form 128 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Form 128 is the application a taxpayer makes to the Assessing Officer so that tax is deducted from payments to it at a lower rate or not at all, or so that a seller collects tax at a lower rate. This article describes the form as printed, as per the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026. Later notifications should be checked.
Rule 213(1) says the application for a certificate under section 395(1) (lower or no deduction) or section 395(3) (lower collection) is made in Form 128. It has six Parts (A to F) and three Annexures: I (deduction, payer known), II (deduction, payer not known) and III (collection). The Assessing Officer considers the estimated tax, the last four tax years, existing liability and tax already paid or deducted.
The rule and the section
Section 395 of the Income-tax Act, 2025 deals with certificates for deduction or collection of tax at lower rates or no deduction; see section 395. Rule 213 is the rule and our post on rule 213 covers it fully. In outline:
- Application (sub-rule 1). Form 128 is used for a certificate for deduction at a lower rate or no deduction under section 395(1), or for collection at a lower rate under section 395(3). Sub-rule (2) says sub-rule (1) may not apply to a person eligible for a certificate of no deduction under rule 209.
- What the Assessing Officer considers (sub-rule 3). Tax payable on the estimated income of the tax year; tax paid or payable on the returned, assessed or estimated income of the last four tax years; existing liability under the Act and under the earlier Act; and advance tax, tax deducted or collected at source as on the date of the application.
- Registered non-profit organisation or specified entity (sub-rule 4). In addition, the specified entity under section 263(9)(c) or the registered non-profit organisation must be approved for exemption on the date of the application and the date of the grant, and must have furnished the returns for the last four tax years that were due on or before the application.
- Dividend (sub-rule 5). For dividend income in section 393(1) (Table: serial number 7), the shares must be of public companies and stand in the applicant's name as described.
- Validity (sub-rules 7 and 8). The certificate is valid for the period it specifies unless cancelled; it is issued in the name of the deductor or collector under advice to the applicant, for the specified payment or receipt to the extent of the amount stated.
- Many payers (sub-rule 9). Where the number of persons deducting tax is likely to exceed one hundred and their details are not available, the certificate may be issued in the applicant's own name, authorising the applicant to receive payments at the appropriate rate and to generate certificates to give to the payers.
If you receive payments that suffer deduction at a rate higher than your actual tax, this is the application that can fix the cash-flow; our TDS compliance team can help check the numbers before filing.
How the form begins
The form number is printed at the left of its title line. The printed title reads "Application for issuance of certificate for lower or nil deduction of income-tax under section 395(1) and lower collection of income-tax under section 395(3)". The form is to be filed electronically by the person seeking the certificate. The tax year is entered at the top.
Parts A to F
| Part | What it asks |
|---|---|
| Part A | Row 1, details of the applicant: name, address, status (Note 3), PAN, residential status (Note 4), e-mail identity, contact number |
| Part B | Row 2, who files (registered non-profit organisation; specified entity referred to in section 263(9)(c); person carrying on business or profession; other persons); row 3, details of the request, by tick, among five options: a certificate to the payer for lower rate or no deduction (Annexure I); a certificate to the applicant, who does not have the payer's details, for deduction at a lower rate (Annexure II); the same two for a registered non-profit organisation or specified entity; and a certificate to the seller, lessor or licensor to collect tax at a lower rate (Annexure III) |
| Part C | Row 4, existing tax liabilities as on the date of application, for the Income-tax Act, 2025 and the earlier Income-tax Act, 1961 (as the print names it): tax year, advance tax or self-assessment tax amount, amount payable but not paid for which a notice of demand has been served, amount payable but not paid in the capacity of deductor or collector, total and remarks. Row 5, particulars of income: estimated total income (computation attached); tax including interest on it; income claimed to be exempt (note giving reasons attached); prepaid taxes as per AIS (advance tax, tax deducted, tax collected); and details of the return for the four preceding tax years (acknowledgement number, date of filing, taxable income, tax liability) |
| Part D | Applicable to a registered non-profit organisation or specified entity. A declaration of the registration number, that returns for the last four tax years due before the application have been furnished, that the specified entity is approved for exemption, and that the incomes are not includible in the total income of any other person under sections 96 to 99 |
| Part E | Applicable to a person other than those in Part D. A declaration on the last four tax years' returns and on sections 96 to 99 |
| Part F | Verification: the declarant states, as far as the declarant knows and believes, that the information is true and that no relevant information has been concealed, with signature, date and address |
The footnote to row 5(e) says that where a return has not been filed for any of the four preceding tax years, the computation of income for that year is to be attached.
The Annexures
| Annexure | Relevant for | Columns |
|---|---|---|
| I | Tax deduction at source, payer known | (1) serial number; (2) section under which tax at source is liable for deduction; (3) Table serial number under which tax is liable for deduction; (4) TAN or PAN of the payer; (5) estimated amount of income or sum to be received during the tax year; (6) requested rate of deduction (Note 5) |
| II | Tax deduction at source, payer not known | The same without the payer column; with a note justifying the issue of a certificate under sub-rule 9 of rule 213 |
| III | Tax collection at source | (1) serial number; (2) section under which tax is liable for collection; (3) Table serial number; (4) TAN of the seller, lessor or licensor; (5) estimated amount to be debited or paid during the tax year; (6) requested rate of collection |
The annexures end with date, place and signature.
The Notes
- Note 1 and Note 2. Name in full without abbreviations; address elements (country or region, flat or door or building, road or street or block or sector, PIN or ZIP code, post office, area or locality, district, State).
- Note 3. Status: individual, Hindu undivided family, company, firm, association of persons, body of individuals, local authority, artificial juridical person, Government, trust.
- Note 4. Residential status: resident, non-resident, or resident but not ordinarily resident.
- Note 5. Enter "0" where the requested rate of deduction is nil.
- Notes 6 and 7. Some information is pre-filled; amounts are in rupees unless otherwise provided.
A short example
Kaveri Contractors, a partnership firm, expects to receive Rs. 40 lakh from Hillside Infra Ltd during the year, and its estimated tax is far below the tax that would be deducted at the standard rate. It applies in Form 128: Part A with its details, Part B choosing the request for a certificate to the payer, Part C with its liabilities, estimated total income and returns of four earlier years, Part E with its declaration, Part F with the verification, and Annexure I listing the payer's TAN, the section and Table row, the estimated receipts and the rate it requests. The figures are invented; the rate it may obtain is for the Assessing Officer under rule 213(3).
Need help with a lower deduction certificate?
The strength of the application is in the estimate of income and the record of the last four years, and the certificate lapses on the date it specifies. If you would like a review of the working before you apply, speak to our TDS compliance specialists.
Key takeaways
- Form 128 serves section 395(1) (lower or nil deduction) and section 395(3) (lower collection).
- Three Annexures: I for known payers, II for unknown payers, III for collection.
- The last four tax years' returns and liabilities are asked for in Part C.
- Parts D and E are different declarations for non-profit or specified entities and for others.
- Enter 0 where the requested rate is nil.
Read next
- Rule 213: lower deduction certificate
- Form 130: certificate of tax deducted on salary
- Form 121: declaration for receipt of income without deduction of tax
- Forms 134 and 135: application for tax deduction and collection account number
Disclaimer: Based on the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026, as consulted on 2 October 2026. It explains the words of the rules and forms only; later notifications, the forms and utilities on the e-filing portal, circulars and the way the tax authorities apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.