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The Income Tax Department has released detailed FAQs on Form No. 126, providing much-needed clarity on its purpose, eligibility, and compliance requirements under the new Income Tax Act, 2025 and Income Tax Rules, 2026. This move is part of the government's broader effort to streamline tax procedur
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Form 126 is a new compliance form introduced by the Income Tax Department that replaces the previous Forms 15C and 15D. It allows eligible non-resident entities operating in India via branch offices to apply for a certificate to receive certain income without Tax Deducted at Source (TDS).
Eligible entities include foreign banking companies, non-resident insurers, and other non-resident persons carrying on business or profession in India through branch operations, provided they meet specific conditions related to income and compliance.
The main purpose of Form 126 is to obtain a certificate that prevents excessive TDS deduction at source, aligns TDS with the actual tax liability, facilitates smoother cross-border transactions, and improves transparency in tax compliance for eligible non-residents.
Entities must not be Indian companies, must operate in India through a branch structure, earn specified income (excluding certain categories like dividends in some cases), and meet the conditions laid down under Rule 209 of the Income-tax Rules, 2026.
Form 126 replaces the older Forms 15C and 15D.
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