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CMA Intermediate · Direct and Indirect Taxation · Tax Deducted at Source and Tax Collected at Source

As amended w.e.f. 1-4-2026, section 395(6) of the Income-tax Act, 2025 permits a payee's application for lower or nil deduction to be filed before the prescribed income-tax authority. What may that authority do on electronic verification of the application contents?

On electronic verification, the prescribed authority may either issue a certificate for deduction at a lower rate or no deduction, or reject the application because prescribed conditions are not met or it is incomplete. It is not limited to forwarding or to nil certificates.

  1. AOnly forward it to the Assessing Officer for decision
  2. BIssue a certificate for lower or nil deduction, or reject the application for unmet conditions or incompletenessCorrect
  3. CIssue a certificate only for nil deduction and never for a lower rate
  4. DApprove it automatically with no verification or conditions

Explanation

Section 395(6) says the authority, on electronic verification, may either issue a certificate for lower or nil deduction, or reject the application for non-fulfilment of prescribed conditions or incompleteness. It does not merely forward, restrict to nil, or approve automatically.

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