A significant change under Section 395(1) of the Income-tax Act, 2025 is reshaping how Lower Deduction Certificates (LDCs) operate via TRACES.
⚠️ Critical Update: Starting April 1, 2026, a Master LDC Certificate will no longer be valid for quoting in TDS returns.
✅ New Process: Payees must log into TRACES, generate “Child Certificates” (payer-specific), and share each unique number with the respective deductor. Only these child certificate numbers can be quoted in TDS statements.
📌 Impact: This move eliminates blanket certificate usage, enabling granular tracking. However, it adds operational complexity—especially for entities with many deductors.
🛠️ Action Required: Identify clients using Master LDCs, build internal SOPs for child certificate generation, and educate all stakeholders well before FY 2026-27.
Bottom Line: The era of “one certificate fits all” is over. Adapt your compliance workflow now.
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