New Delhi, Aug. 12 -- A new compliance process for lower or nil tax deduction certificates has come into effect from 1 April 2026. Taxpayers who obtain such a certificate through Form No. 128 may need to generate separate child certificates for the people or organisations making payments to them.

The process is part of the revamped TRACES system under the Income Tax Act, 2025. In simple terms, when the Income Tax Department allows tax to be deducted at a lower rate or at nil rate, the taxpayer can communicate that approval to individual payers through child certificates.

A child certificate is generated by the taxpayer on the TRACES portal based on a lower or nil tax deduction certificate issued by the Assessing Officer.

For example, s...