Income Tax Form 126 replaces Form 15C/15D: Application for Nil TDS Certificate

Form No. 126, introduced under section 395(1) read with Rule 209 of the Income-tax Act, 2025, replaces earlier Forms 15C and 15D and provides a unified framework for specified non-resident entities operating in India through branches to apply for a certificate for receipt of certain sums without deduction of tax at source (TDS). It applies to foreign banking companies, insurers, and other non-resident entities carrying on business or profession in India through branches, subject to strict eligibility conditions such as regular tax compliance, filing of returns for the last five years, and absence of defaults. The application must be filed online before receipt of income and is valid for the relevant tax year unless cancelled earlier. The Assessing Officer evaluates eligibility and may grant or reject the certificate. The form ensures that TDS aligns with actual tax liability and treaty benefits, thereby preventing excessive deduction and improving compliance transparency.

Income Tax Department
Ministry of Finance, Government of India

FAQs on Income Tax Form 126 (Earlier Form No. 15C/15D): Application for Nil TDS Certificate under Section 395(1)

Application by a person specified in rule 209 for a certificate under section 395(1), for receipt of certain sums without deduction of tax

Q1. 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).

Q2. 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.

ii. Any person other than the person referred to in (i) who carries on a business or profession in India through a branch

Q3. 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”)

Q4. 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.

Q5. 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.

Q6. 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

Q7. 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 Z50 lakhs

Q8. 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.

Q9. 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.

Q10. How many times can Form No. 126 be filed in a year?

Ans: Form No. 126 should be filed once for tax year.

Q11. 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;

Q12. What documents are required to file Form No. 126?

Ans: Documents required include ITRs and financial statements

Q13. 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)

Q14. Can Form No. 126 be filed offline?

Ans. No. Form No. 126 cannot be filed offline.

Q15. 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.

Q16. 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.

Q17. 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.

Q18. 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.

Q19. 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.

Q20. 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.

Q21. 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 Note on Income Tax Form 126 (Earlier Form No. 15C/15D): Application for Nil TDS Certificate under Section 395(1)

Form No. 126 – Application by a non-resident for receipt of certain sums  without deduction of tax

1. Purpose of Form No. 126:

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). 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.

2. Who should file Form No. 126?

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 and fulfils the following conditions laid down in Rule 209:

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”)

ii. Any person other than the person referred to in (i) who carries on a business or profession in India through a branch and which fulfils the following conditions laid down in Rule 209:

• 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.

3. Frequency & Due Dates of Form No. 126:

The certificate issued remains valid for the tax year specified, unless cancelled earlier by the Assessing Officer. A fresh application may be filed after the expiry of the certificate, or within 3 months before its expiry to ensure continuity without interruption.

4. Structure of Form126:

The Form No. 126 has three parts:

Part A: It has applicant details: Name, PAN, status, nature of entity, Principal Officer details, address of Indian Branch(es), address of Head Office (outside India), country of incorporation, email id and contact details.

Part B (to be filled up, if the applicant is a banking company/insurer) Declaration and request: It states that the applicant banking company or insurer fulfils all the conditions laid down in Rule 209 which are as under:

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

Part C (to be filled up, if the applicant is a person other than banking company/insurer) Declaration and request: It states that the applicant company or insurer fulfils all the conditions laid down in Rule 209 which are as under:

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 Z50 lakhs

5. Documents required to file Form No. 126:

> Valid PAN

> ITRs and financial statements

6. Step-by-step process to file Form No. 126:

Step 1: Go to the TRACES website (www.tdscpc.gov.in) or the NRl services portal if filing from outside India (www.nriservices.tdscpc.gov.in) and login using your credentials

Step 2: After logging in, Select the option to file an application for Form No. 126 under the ‘Statements/Forms’ tab”.

Step 3: Provide details-such as head office location, confirmation of status as a banking company/insurer, and a declaration that you fulfil all conditions under Rule 209.

Step 4: Verify and submit the form using Digital Signature, Electronic Verification Code (EVC), Aadhaar-based authentication or Mobile OTP. For applicants outside India, application can be submitted using Digital Signature only. Upon successful submission, an acknowledgment receipt or reference number will be generated.

Step 5: Track status of the application via ‘Track Request for Form 128/126’ under the ‘Statements/Forms’ tab on TRACES portal.

Step 6: The application will be assigned to TDS AO in the International Taxation charges. The AO processes the application on the TRACES AO Portal. If the Assessing Officer (AO) requires any clarifications or documents, the applicant is informed. Submit necessary details/clarification to the AO online through the TRACES portal.

Step 7: After processing, the AO generates certificate electronically on the TRACES AO Portal. The generated certificates are available for download to the applicant. Onus of sharing the certificate with respective deductor(s) is on the applicant.

7. Withdrawal of Application in Form No. 126:

An applicant can withdraw the Form No. 126 after filing at any time before the Assessing Officer (AO) passes an order on the application.

8. Outcome of Form No. 126:

If the Assessing Officer is satisfied with the application, a certificate is issued 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.

9. Brief note on broad / qualitative changes in Form No. 126:

Merger of 2 forms into a Single Combined Form:

Forms 15C (for banking company/insurer) and 15D (for persons other than banking company/insurer) have been merged into a single Form No. 126. This will provide a unified application framework under Rule 209, with category-specific declarations built into the same form. The form introduces:

• Part B – to be filled where the applicant is a banking company/insurer, and
• Part C – to be filled where the applicant is a person other than banking company/ insurer.

This preserves the substantive conditions and declarations of both forms, while housing them within a single, structured framework.

10. Common Changes made across Forms:

i. To make forms system-friendly and enable e-filing and uploading, certain anomalies found due to grouping of name, address, PAN and aadhaar number have been separated into different boxes.

ii. Assessment/financial/previous year(s) have been replaced with tax year(s).

iii. Sections and clauses have been changed as per the Income-tax Act, 2025.

iv. Currency symbol “Rs.” has been replaced with “Z”.