Income Tax Form 42: Application for Tax Residency Certificate (Section 159)

Form 42 is an application prescribed under section 159(1) and 159(2) of the Income-tax Act, 2025  for obtaining a Tax Residency Certificate (TRC) in India, which is essential for claiming benefits under Double Taxation Avoidance Agreements (DTAAs). It is filed electronically by residents who need to establish their tax residency status in India for use in foreign jurisdictions. While filing is not mandatory, it becomes crucial when taxpayers seek treaty benefits or need to furnish proof of residency abroad. The form requires details such as PAN, passport, incorporation documents (for entities), and supporting evidence of stay in India. Once submitted, it cannot be edited, though it may be withdrawn and refiled. There is no fixed due date, and multiple applications may be filed for different periods if required. Form 42 enhances compliance by providing official certification of residency, facilitating cross-border tax claims, and ensuring proper application of DTAA provisions.

Income Tax Department
Ministry of Finance, Government of India

FAQs on Income Tax Form 42: Application for Certificate of residence for the purposes of an agreement under section 159(1) and 159(2) Income Tax Act, 2025

Application for Certificate of residence for the purposes of an agreement under section 159(1) and 159(2) of the Act

Q1: What is FORM 42?

Ans Form 42 is an application filed by the non-residents to obtain tax residency certificate in India from the income tax department for the purposes of section 159 of the Income-tax, Act, 2025. This tax residency certificate (TRC) thus, enables the taxpayers to fulfill requirements for tax claims in other countries under the Double Taxation Avoidance Agreements (DTAAs). It is prescribed under Rule 75(3) of the Income-tax Rules, 2026.

Q2: Who should file FORM 42?

Ans: Any resident who claims tax residency in India and is required to file tax residency certificate to claim DTAA benefits or fulfill requirements in other countries.

Q3: Is FORM 42 mandatory?

 Ans: No. Form 42 is not mandatory. It is to be filed at requirement of the tax- payer.

Q4: What is the time limit for filing FORM 42?

Ans: There is no due date for filing of the form. It is to be filed as per the requirement of the taxpayer

Q5: How many times can FORM 42 be filed in a year?

Ans: Since tax residency certificate is issued for the tax year, a single form for a specific time-period is often sufficient to meet the requirements of the taxpayers in other countries. In case the time periods are different in different countries, multiple tax residency certificates can be applied for (without overlapping time-periods in a tax year), specifying the purpose/necessity for the certificate in each form.

Q6: What documents are required to file FORM 42?

 Ans: Following documents may be required for filing Form 42:

1) Personal documents such as PAN, Passport

2) For non-residents other than individuals, the document of registration/incorporation

3) Documents supporting any other details given in the Form that are to be uploaded

Q7: Can I edit FORM 42 after submission?

Ans: No. Once Form 42 is submitted and acknowledgment is generated, it cannot be edited. Ensure all details are correct before submission. However, option to withdraw the application is being enabled so as to file a new form after withdrawal.

Q8: Do I need to attach proof of tax payment?

 Ans: No. Form 42 does not require submission of any proof of tax payment.

Q9: While filling personal details, can I leave Aadhaar or mobile number blank?

Ans:

• Aadhaar is no longer required in the personal details.
• Mobile number ensures faster communication and verification; it is recommended to provide it.

Q10: What if I do not have a PAN?

 Ans: Form 42 cannot be submitted without a valid PAN.

Q11: Can FORM 42 be filed offline?

 Ans: No. Form 42 can only be submitted online through the Income Tax e-Filing portal.

Q12. What is the process flow of filing FORM 42?

Ans. The process flow for filing Form 42 includes the following steps

• Registration: Residents must register on the Income Tax e-filing portal.
• Fill FORM 42accurately for the period for which the TRC is applicable.
• Documents to be submitted:

-Passport copies

-Aadhaar copy (in the case of individuals)

-Documents of incorporation/ registration

-Proof of stay in India

– Any other relevant information

• Verification: The statement should be digitally signed by authorized signatory or verified by the OTP through various means, depending on the taxpayer’s profile.

Q13: Why is FORM 42 important?

 Ans: Form 42 is important because it is the official application to obtain a Tax Residency Certificate (TRC) in India, which is crucial for claiming benefits under Double Taxation Avoidance Agreements (DTAA). Taxpayer cannot obtain tax residency certificate in Form 43 in India, without filing Form 42.

Guidance Note on Income Tax Form 42: Application for Certificate of residence for the purposes of an agreement under section 159(1) and 159(2) Income Tax Act, 2025

Form 40 – Form to exercise the option under Section 159 of the Act Purpose:

Form 40 is prescribed under Rule 74 and is required to be filed by Indian residents to claim tax relief under Section 159 of ITA 2025 for income accrued in a foreign retirement account maintained in a notified country (e.g., USA, UK, Canada, Australia). This form allows for the deferral of taxation until the income is withdrawn or redeemed in the foreign country.

The purpose of the provision is to prevent double taxation on income from a foreign retirement fund that might be taxed both on an accrual basis in India and on a withdrawal basis in the foreign country. By allowing the relief claimed through this form, tax is deferred in India until the year of withdrawal from the foreign account, aligning the tax treatment in both jurisdictions.

Who Should File:

The form is to be filed by a “specified person” (resident Indian) who has a retirement account in a “notified country”, to claim tax relief under Section 159 of the Income Tax Act.

The applicant should not have previously exercised this option, because the option, once exercised, is irrevocable, and it applies for all future years and all specified accounts.

When and How to File:

1. The form shall be filed on e-filing portal.

2. The form shall be furnished electronically either under digital signature or through electronic verification code verified by the resident Indian.

3. The form must be filed on or before the due date for furnishing the income tax return (ITR) for the relevant tax year.

4. The form must be verified by the resident Indian.

Filing Count:

The number of Form 40 filed over the past five years is 977.

Structure of Form 40:

• Basic Details: Name, PAN, address, Tax year, residential status,
• Details of Specified Retirement Benefit Account(s): Country’s name, account number,
• Income details: Nature of income, amount accrued, withdrawn etc.
• Declaration of option
• Formal verification by the applicant.

What are the documents required to file the Form 40?

Following documents are required for filing Form 40:

• Specified Account or Foreign Retirement Account details – Account number(s), Date of account opening, Account balance at the end of the previous tax year.
• Name of the retirement fund and the notified country.
• Details of income already taxed in India in earlier years, if any. A copy of instrument of trust evidencing the formation of the fund.
• Copy of statement of the specified account having above details.
• Document showing how the income from specified account has been taxed or is taxable in the notified country including relevant statutory provision of the notified country or any other relevant document.
• Computation of income for all the tax years in which the income from specified account has already been included in the total income. A reconciliation statement of the computation of income with the return of income for the said tax years.

What is the process flow of filing Form 40?

The process flow includes following steps

• Prepare the application: Fill Form 40, ensuring all columns are complete with accurate details.
• Attach mandatory documents.
• Sign/verify: Application, annexures, and all attached statements must be signed or digitally signed or electronically verified by the Resident Indian.
• Submit online on the e-filing portal.

Outcome of processed Form 40:

• Where the declaration is accepted, the applicant is taxed in India only when withdrawals happen from the specified retirement accounts, not on annual accruals.
• This gets applicable for all successive tax years.

Key updates include the following

• Dropdown has been provided to in data fields relating to nature of income, and manner of taxation of income in the notfied country.
• Data field relating to address of specified person has been omitted.
• Declaration has been substituted by Verification, and language has been simplified.

Improved Applicant Experience, Expedited Process:

The language of the Form has been simplified. The data fields sought to be captured have been rationalized and standardised, viz. dropdown etc.