Form 126 Income Tax 2025 pdf Download and Key Points
Application by a person specified in rule 209 for a certificate under section 395(1), for receipt of certain sums
without deduction of tax
Key Points about Form 126 Income Tax 2025
Form No. 126 under the new Income-tax Rules, 2026, replaces the old Forms 15C and 15D. It is governed by Sections 393 and 395(1) of the Income-tax Act, 2025, read with Rule 209.
Here are all the key points regarding Form No. 126:
1. Purpose and Importance Form 126 is an optional self-declaration and treaty-benefit request filed by specified non-resident entities operating in India through a branch. Its primary purpose is to obtain a certificate from the Assessing Officer (AO) authorizing the applicant to receive certain types of income without Tax Deducted at Source (TDS). This is important because it prevents excessive tax deduction by allowing the AO to determine the actual taxable portion under the new Act or applicable Double Taxation Avoidance Agreements (DTAA).
2. Eligibility and Structure of the Form The form is divided into three parts based on the type of applicant:
- Part A (Applicant Details): To be filled by all applicants.
- Part B (For Banking Companies & Insurers): To be filled by a banking company or an insurer (which is not an Indian/domestic company) that operates in India through a branch. The income must be in the nature of interest or other sums (excluding dividends and “interest on securities”), and the entity must not have made arrangements for declaring dividends within India.
- Part C (For Persons other than Banks/Insurers): To be filled by any other non-resident entity carrying on a business or profession in India through a branch, provided the income to be received is not in the nature of interest or dividend.
3. Pre-requisite Conditions for Filing To successfully apply using Form 126, the applicant must meet strict compliance conditions under Rule 209:
- For all applicants (Part B & C): They must have been regularly assessed to income tax in India, must have furnished all due ITRs for the last five tax years, and must not be in default regarding any tax, interest, penalty, or fine. Furthermore, the income must be receivable by the branches on their own account, not on behalf of their head office or branches outside India.
- Additional conditions for non-banks/insurers (Part C): They must have been carrying on business or profession in India continuously for five years or more immediately preceding the application, and the value of their fixed assets in India must exceed ₹50 lakhs.
4. Filing Rules and Timelines
- Frequency and Timing: The form should be filed once for a tax year. While there is no specific time limit, it must be submitted before the income is received to successfully avoid the TDS deduction.
- Online Only: Form 126 cannot be filed offline. It must be submitted electronically on the TRACES portal or the NRI services portal (if filing from outside India).
- Verification: The form can be e-verified using a Digital Signature Certificate (DSC), Electronic Verification Code (EVC), Aadhaar authentication, or Mobile OTP. However, DSC is mandatory for companies and LLPs.
- Required Documents: The applicant must attach their ITRs and financial statements when filing.
5. Processing and Outcome
- Withdrawal: An applicant can withdraw their Form 126 at any time before the AO passes an order.
- Approval/Rejection: If the compliance criteria are met, the AO will electronically generate a certificate on the TRACES portal authorizing the nil TDS rate for the specified sums during the relevant tax year. If rejected, standard TDS under section 395(1) will apply.
- Validity: The issued certificate remains valid only for the specified tax year unless it is cancelled earlier. A fresh application must be filed for subsequent years.
Download Form 126 Income Tax 2025
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Instructions for Form 126 Income Tax 2025
Guidance on Form 126 Income Tax 2025
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