For the taxpayers, along with Indian residents and NRI’s the option to get a Nil TDS certificate has been removed by the proposed income tax bill 2025.
For both Indian taxpayers and non-residents, including non-resident Indians (NRIs), the proposed new Income Tax Bill 2025 seems to remove the concept of a “nil TDS” certificate by removing the two terms “no deduction”.
Taxpayers shall be required to apply for a nil TDS certificate online if they expect to get income for which no income tax is due for any reason. Nil TDS certificate has been proposed by the Income Tax Department to provide support to the taxpayers, both resident and non-resident individuals.
Taxpayers get the payments with zero tax deduction through the same. Taxpayers can use this certificate to prevent TDS if they do not have taxable income or are exempt from taxes.
Read Also: All About New Rules of TDS Certificate for Non-Residents
Now, taxpayers apply for a lower TDS certificate specifying no nil deduction, and therefore, the tax shall be cut at a lesser rate compared to the standard TDS rate. The government, by eliminating Nil TDS certificates, can monitor income and prevent taxpayers from filing a lower income.
Impact of New Tax Bill 2025 on Indian Residents
Considering the effect on residents, TDS deduction is important when the income of the taxpayer is not under the taxable limit. Filing out is needed if the tax cut is much higher. Opposite to the earlier system that avoided deductions with a Nil TDS certificate, now the taxpayer must file an ITR to get a refund.
Impact on NRIs
The tax collected from money paid to another individual or organisation is the government’s major income source u/s 195 of the Income Tax Act. It is related to whether a person makes money via interest or other sources.
If the NRI’s income was not taxable or exempted, then they get a lower TDS certificate, instead of a Nil TDS certificate. ITR filing is required for refunds for any excess TDS deducted.
What is the Method to Apply?
- By filling out Form 13 on the TRACES website, you can apply, which requests information about your income, tax liability, and why you want a lower rate.
- The essential documents are Details of income, PAN, and evidence of losses or exemptions. NRIs require a tax residency certificate to access DTAA benefits.
Due to the stringent move for tax monitoring, the income tax bill 2025’s elimination of the Nil TDS certificate, NRIs and Indian citizens alike, witness additional compliance loads. Taxpayers to get a refund must be required to file an ITR despite not having any outstanding taxes.
