Rule 213 of Income 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.
Rule 213 of the Income-tax Rules, 2026 prescribes Form No. 128 for a certificate of deduction at a lower rate or no deduction under section 395(1), or collection at a lower rate under section 395(3). It replaces Form 13 of the 1962 Rules.
The application — rule 213(1) and (2)
An application is made in Form No. 128 for a certificate for:
- (a) deduction of income-tax at any lower rate, or no deduction, under section 395(1); or
- (b) collection of income-tax at any lower rate under section 395(3).
Rule 213(2) carves out an exception: sub-rule (1) may not apply to a person who is eligible for a certificate of no deduction in respect of income or a sum specified under rule 209. Where rule 209 already provides the relief, a Form No. 128 application is not the route.
What the Assessing Officer must consider — rule 213(3)
The Assessing Officer may issue the certificate after taking into consideration:
| Clause | Factor |
|---|---|
| (a) | Tax payable on the estimated income for the tax year under consideration |
| (b) | Tax paid or payable on the returned income, assessed income or estimated income for the last four tax years |
| (c) | Existing liability under the Act and under the Income-tax Act, 1961 as it existed prior to its repeal |
| (d) | Advance tax payments and TDS or TCS credit standing to the taxpayer as on the date of application for the tax year applied for |
Clause (c) expressly reaches liabilities under the repealed 1961 Act. An applicant carrying an old demand — even one from several years back — should expect it to be weighed against the application. Clearing or getting a stay on old demands before applying is often the difference between a nil certificate and a partial one.
Additional conditions for non-profits — rule 213(4)
Where the applicant is a specified entity referred to in section 263(9)(c) or a registered non-profit organisation, the Assessing Officer must also take into consideration:
- (a) that the specified entity is approved for exemption from income-tax as on the date of application and also as on the date of grant of the certificate for that tax year; and
- (b) that the person has furnished returns of income for the last four tax years for which returns became due on or before the date the application is made.
The two-date approval test in clause (a) is worth noting — approval must subsist not only when the application is filed but also when the certificate is granted.
Dividend income — rule 213(5) and (6)
Where a certificate is sought in respect of dividend income under section 393(1) , two further conditions apply on top of rule 213(3):
- (a) the shares must be shares in public companies; and
- (b) either
- the shares stand in the name of the applicant and are beneficially owned by him, and the dividends are not includible in the total income of any other person under sections 96 to 99; or
- the shares stand in the applicant's name and are held on behalf of a registered non-profit organisation, and the dividends are exempt under Chapter XIX-B of the Act.
Rule 213(6) provides that such a certificate ceases to operate from the date of notice to the company for transfer of the shares mentioned in it to another person, to the extent of the income corresponding to the shares transferred.
Validity and scope — rule 213(7) and (8)
The certificate is valid for such period of the tax year as is specified in it, unless cancelled by the Assessing Officer at any time before the expiry of the specified period.
Critically, the certificate is issued in the name of the person responsible for deducting or collecting the tax, under advice to the applicant, and is valid only in respect of:
- (a) a specified payment from the specified deductor, to the extent of the amount specified in the certificate; and
- (b) a specified receipt from the specified collector, to the extent of the amount specified.
Two limits are built in. The certificate names a particular deductor, so it cannot be handed to a different payer. And it specifies an amount, so once payments from that deductor exceed the amount specified, the ordinary rate applies to the excess. Both limits are routinely overlooked, and both produce short-deduction exposure for the payer, not the payee.
The hundred-deductor mechanism — rule 213(9)
Where the number of persons responsible for deducting tax is likely to exceed one hundred, and details of those persons are not available with the applicant at the time of making the application, the certificate for deduction at a lower rate may be issued in the name of the applicant, authorising him:
- (a) to receive specified payments at the appropriate rate of deduction;
- (b) to generate the appropriate certificate and provide it to the person responsible for deducting tax; and
- (c) such certificate shall be generated from the portal of the Income-tax Department.
This is the practical answer for businesses with a very large and shifting customer base — logistics operators, professional service firms, contractors — where naming every deductor in advance is impossible.
Old rules and rule 213 compared
| Point | 1962 Rules | Rule 213 (2026) |
|---|---|---|
| Rules | 28, 28AA, 28AB, 29, 37G, 37H | Consolidated into rule 213 |
| Form | Form 13 | Form No. 128 |
| Parent section | Sections 197 and 206C(9) | Section 395(1) and 395(3) |
| Look-back period | Four years | Four tax years |
| Old-Act liabilities | Not expressly stated | Expressly included — rule 213(3)(c) |
| Bulk-deductor mechanism | Administrative practice | Expressly in rule 213(9), threshold of one hundred |
Worked example
A logistics company expects gross receipts of Rs 40 crore in tax year 2026-27 from roughly 400 customers, and estimates its tax liability at well below the tax that would be deducted at the ordinary rate. It has no arrears.
- It applies in Form No. 128 under rule 213(1)(a).
- Because deductors will exceed one hundred and their identities are not fully known, it relies on rule 213(9).
- The certificate is issued in the company's own name, authorising it to receive payments at the specified rate and to generate a certificate from the Department portal for each deductor.
- The company generates and issues a portal certificate to each customer as it onboards them.
Contrast a professional firm with three large clients: it would name those three deductors, and each certificate would be capped at the amount specified for that deductor.
Compliance checklist
- Check whether rule 209 already provides relief before applying under rule 213.
- Clear or address old-Act arrears before applying — rule 213(3)(c) brings them in.
- Non-profits: confirm approval subsists on both the application and grant dates, and that four years of returns have been filed.
- Track the amount cap on each certificate and revert to the ordinary rate on the excess.
- Where deductors exceed one hundred, invoke rule 213(9) and generate per-deductor certificates from the portal.
- Watch for cancellation — the Assessing Officer may cancel before expiry.
Common mistakes
- Giving one deductor's certificate to another payer. It is deductor-specific.
- Ignoring the amount cap. Payments beyond it attract the ordinary rate.
- Applying without clearing old demands.
- Non-profits applying with lapsed approval or missing returns for the four-year look-back.
- Citing Form 13 for tax year 2026-27.