FAQs related to Tax Residency Certificate:

FAQs related to Tax Residency Certificate:

Do I need a Tax Residency Certificate to get tax treaty benefits, and can I be denied these benefits if I don’t have a TRC?

Yes, a TRC is mandatory to claim tax treaty benefits under Section 90(4) / 90A(4) of the Income Tax Act. Without it, you may be denied these benefits. However, in some cases, such as Skaps Industries India (P.) Ltd., it has been argued that if residency is sufficiently substantiated, benefits shouldn’t be denied solely due to the absence of a TRC.

What is Form 10F?

• Form 10F is a self-declaration tax form used by non-resident taxpayers to claim benefits under the Double Taxation Avoidance Agreement. It allows NR taxpayers to claim DTAA benefits by providing necessary details when such information is missing in the Tax Residency Certificate . Section 90(5) of the Income Tax Act mandates furnishing Form 10F along with the TRC if certain essential details (e.g., name, address, TIN, and taxpayer status) are not present in the TRC.
• A TRC should contain Taxpayer’s name, Foreign address, Tax Identification Number, Taxpayer status, If these details are absent in the TRC, Form 10F must be filed electronically. For NRIs without a PAN card, the CBDT allowed manual filing of Form 10F until 31st March 2023, later extended to September 2023. With the partial exemption ending, the Income Tax Department introduced a new functionality that allows non-residents without PAN to register on the Income Tax Portal and submit Form 10F electronically without requiring a PAN card.
• Form 10F ensures compliance with Indian tax laws and helps NR taxpayers avoid double taxation by claiming lower tax rates or exemptions under DTAA.

Which period should I mention in Form 10F, point (v): taxable year of the Resident state or Source state or the one mentioned in TRC?

You should mention the period stated in your TRC. The default period in the online form is from 01.04.2023 to 31.03.2024, but you can modify it according to the dates mentioned in your TRC.

What if the TRC is for a period before the payment?

If the TRC period predates the payment, you may not get the tax treaty benefits. Some practitioners might accept an old TRC with the intention to submit a new one, but the tax authorities may disagree.

Some countries issue TRCs in their language. Will that be valid?

No, a TRC issued in a foreign language must be accompanied by an English-translated version for it to be valid in India.

What is Form 10F, and why is it required?

Form 10F is a self-declaration required by Non-Resident Indians (NRIs) who want to avail benefits under the Double Taxation Avoidance Agreement (DTAA). It helps avoid paying tax on the same income in two countries.

What is Form 10F used for?

Form 10F is used by NRIs to claim DTAA benefits, including a lower rate of TDS on income earned in India. It provides details not covered by the TRC.

Is it mandatory to file Form 10F online?

Yes, NRIs who lack a tax residency certificate or PAN card must file Form 10F online on the Income Tax e-filing portal. However, a PAN card is not mandatory for filing Form 10F.

Is Form 10F mandatory for foreign companies?

While it is not mandatory for foreign companies to file Form 10F, it is highly beneficial as it helps them avail lower tax rates under DTAA.

Who should submit Form 10F?

You need to file Form 10F if:

• You are an NR taxpayer earning income in India.
• You wish to claim DTAA benefits on that income.
• Your TRC lacks certain required details for DTAA.

What is the difference between Form 10F and TRC?

Parameters	TRC	Form 10F
Purpose	Certifies your residency for tax purposes in a country.	Provides additional information to claim DTAA benefits.
Content	Issued by the tax authorities of your home country.	Self-declaration of details like income nature and DTAA articles.
Who issues it?	Your home country’s tax authorities.	Self-filed by the individual or company.

Who needs a tax residency certificate?

Any individual or entity seeking to avail DTAA benefits to avoid double taxation and avail lower tax rates or tax exemptions/deductions needs a Tax Residency Certificate.

When is Form 10F needed?

If the TRC lacks necessary details as required by the DTAA, you will need to provide the additional details in Form 10F.

What is the validity of a Tax Residency Certificate?

The validity of the TRC depends on the country issuing it and the specific terms under which the certificate was issued. Generally, a TRC is valid for one financial year.