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
Form 126 Income Tax 2025 pdf Download Click Here
Instructions for Form 126 Income Tax 2025
1. What is the Form No. 126?
Ans. Form No. 126 is a self-declaration and treaty-benefit request filed by a non-resident person specified in Rule 209, operating in India through a branch, to obtain a certificate from the Assessing Officer under section 395(1) of the Income-tax Act, authorising it to receive
certain sums without deduction of tax at source (TDS).
2. Who is eligible to file Form No. 126?
Ans. Form No. 126 should be filed by:
i. Banking company or an insurer (as defined in section (2)(9)(d) of Insurance Act, 1938), which is not a domestic company, and which carries on operations in India through a branch.
i. Any person other than the person referred to in (i) who carries on a business or profession in India through a branch
3. Which banking company or an insurer is eligible to file Form No. 126?
Ans. A banking company or an insurer who fulfils the following conditions laid down in Rule 209 is eligible to file Form No. 126:
a. It is not an Indian company,
b. It has not made the prescribed arrangements for declaration and payment of dividends within India.
c. It carries on operations in India through a branch.
d. Income is in the nature of interest or other sums (excluding dividends and “interest on securities”)
4. Which persons other than banking company or an insurer are eligible to file Form No. 126?
Ans. Any person other than banking company or an insurer who fulfils the following conditions laid down in Rule 209 sis eligible to file Form No. 126:
It is not a banking company.
It carries on business or profession in India through a branch(es).
It is entitled to receive income which is chargeable to tax in India during the tax year and
Income is not in the nature of interest or dividend.
5. What is the purpose of the Form No. 126?
Ans. The purpose of Form No.126 is to allow receipt of certain types of income, without tax deduction at source when the recipient is a specified non-resident entity carrying on its business or profession in India through a branch.
6. What are the prerequisite conditions for filling Part B of Form No. 126?
Ans. The applicant banking company or insurer must fulfill all the following conditions as laid down in Rule 209:
i. It has been regularly assessed to income tax in India and has furnished all due ITRs for all last five tax years.
ii. It is not in default or deemed to be in default regarding any tax, interest, penalty, fine, or other sums payable under the Act
iii. Interest or other sum is receivable by the branches on their own account and not on behalf of its head office or any branch situated outside India, or any other person
7. What are the prerequisite conditions for filling Part C of Form No. 126?
Ans. The applicant person other than banking company/insurer must fulfil all the following conditions as laid down in Rule 209:
i. It has been regularly assessed to income tax in India and has furnished all due ITRs for all last five tax years.
ii. It is not in default or deemed to be in default regarding any tax, interest, penalty, fine, or other sums payable under the Act.
iii. Interest or other sum is receivable by the branches on their own account and not on behalf of its head office or any branch situated outside India, or any other person
iv. It has been carrying on business or profession in India continuously for five years or more immediately preceding the date of the application, and
v. Value of fixed assets of such business or profession in India as shown in the books of account for the relevant tax year exceeds ₹50 lakhs
8. Is Form No. 126 mandatory?
Ans. No, it is not mandatory. It is an optional application that a person can file if they wish to receive certain sums without deduction of tax.
9. What is the time limit for filing Form No. 126?
Ans: There is no specific time limit prescribed; however, the form must be submitted before the income is received to avoid TDS.
10. How many times can Form No. 126 be filed in a year?
Ans: Form No. 126 should be filed once for tax year.
11. Which “Part” of the form No. 126 do I need to fill?
Ans: Part A of Form No. 126 which has applicant details, is to be filled by every applicant. Form No. 126 has two other parts:
i. Part B: To be filled up, if the applicant is a banking company/insurer. It states that the applicant company or insurer fulfils all the conditions laid down in Rule 209;
ii. Part C: To be filled up if the applicant is a person other than banking company/insurer;
12. What documents are required to file Form No. 126?
Ans: Documents required include ITRs and financial statements
13. How can I file Form No. 126?
Ans: Form No. 126 can be filed online on the TRACES website (www.tdscpc.gov.in) or the NRI services portal if filing from outside India (www.nriservices.tdscpc.gov.in)
14. Can Form No. 126 be filed offline?
Ans. No. Form No. 126 cannot be filed offline.
15. How do I e-Verify form No. 126?
Ans: Form No. 126 can be verified e-using Digital Signature Certificate (DSC), Electronic Verification Code (EVC), Aadhaar-based authentication or Mobile OTP. DSC is mandatory for companies, LLPs, and other entities having a TAN-based login.
16. How do I know that the form has been successfully submitted?
Ans: Once successfully submitted and verified, an acknowledgement number and transaction ID is generated and the remitter receives a confirmation message via email and SMS.
17. How can I track the status of my Form No. 126 application?
Ans. Applicants can track their request using the “Track Request for Form 128/126” tab under the Statements/Forms section of the TRACES portal.
18. Can the applicant withdraw Form No. 126 after filing?
Ans. Yes, applicant can withdraw the Form No. 126 after filing at any time before the Assessing Officer (AO) passes an order on the application.
19. What is the outcome of Form No. 126?
Ans. If the applicant meets the eligibility or compliance criteria, the Assessing Officer will electronically generate a certificate on the TRACES portal authorizing the applicant to receive the specified sums without TDS during the relevant tax year. But, if the applicant fails to meet eligibility or compliance criteria, the AO may reject the application, resulting in TDS under section 395(1) of the Income-tax Act.
20. What is the validity of the certificate issued by the AO?
Ans. The certificate issued by the Assessing Officer remains valid for the specified tax year, unless cancelled earlier. And a fresh application may be filed after expiry or within three months before expiry to ensure continuity.
21. Why is Form No. 126 important?
Ans. It is important because it prevents excessive tax deduction (TDS) on payments to nonresidents by allowing the AO to determine the actual taxable portion under the Income-tax Act, 2025, or applicable Double Taxation Avoidance Agreements (DTAA).
Guidance on Form 126 Income Tax 2025
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