Form 10F Guide: Tax Treaty Benefits for Non-Resident Receiving Indian Income

Introduction

Form 10F is a self-declaration form that is required to be filed by a non-resident taxpayer receiving income from India and claiming the benefit of a tax treaty between India and their country of residence. The form is provided to the person responsible for deducting withholding tax (i.e., the Indian payer) along with the Tax Residency Certificate (TRC) issued by the government of the country of residence of the non-resident. The purpose of Form 10F is to provide the relevant information to the Indian tax authorities to verify the eligibility of the non-resident for the tax treaty relief.

The purpose of Form 10F and TRC is to avoid double taxation of the same income in both India and the foreign country. India has entered into double taxation avoidance agreements (DTAAs) with many countries to provide relief to non-resident taxpayers from paying tax twice on the same income. The DTAAs specify the rates of tax and the conditions for the taxation of different types of income, such as interest, dividends, royalties, fees for technical services, capital gains, etc. The non-resident taxpayers can claim the benefits of the DTAAs by furnishing Form 10F and TRC to the payer of the income in India, who is responsible for deducting tax at source (TDS).

When and how to file Form 10F and TRC?

The non-resident taxpayers need to file Form 10F and TRC for each financial year in which they receive income from India. The non-resident taxpayers also need to file their return of income in India if they have any taxable income in India, or if they want to claim a refund of the excess tax deducted at source.

The Central Board of Direct Taxes (CBDT) has recently made some changes in the mode and manner of filing Form 10F electronically. The CBDT has issued Notification No. 03/2022 dated 16th July 2022, which mandates that Form 10F shall be furnished electronically in the manner prescribed under Rule 131 (1) of the Income-tax Rules, 1962. The notification also specifies the format and the procedure for the electronic filing of Form 10F.

However, the CBDT has also given partial relief to some non-resident taxpayers who do not have a permanent account number (PAN) in India and are not required to have one as per the relevant provisions of the Income-tax Act, 1961 and the Income-tax Rules, 1962. These non-resident taxpayers are exempted from the mandatory electronic filing of Form 10F till 30th September 2023. They can continue to file Form 10F in manual form till then. This partial relaxation is only applicable to those non-resident taxpayers who do not have a PAN and are not required to have one. Other non-resident taxpayers are still required to file Form 10F electronically as per the earlier notification.

Recent Changes related to Form 10F

The income tax department has introduced a new category for registration on the income tax portal – ‘non-residents not having PAN and not required to obtain PAN’. This enables non-residents to file Form 10F without PAN.

Registration Procedure For Non-Residents Without PAN

• The non-resident can click on the ‘Register’ option on the e-filing portal, i.e., https://www.incometax.gov.in/iec/foportal.
• Under the ‘others’ category, there is an option to choose ‘non-residents not having a PAN and not required to have a PAN.
• Basic details will need to be entered, like name, date of incorporation, tax identification number, status, and country of residence.
• The non-resident will then have to provide the details of the key person, i.e., name, date of birth, designation, and Tax Identification Number.
• The next step is to provide contact details, i.e., email address and mobile number, which will be verified through an OTP.
• The non-resident will need to upload certain documents like its TRC, address proof, identification proof, and any other document if required,
• The non-resident will have to set password for the e filling account and thereafter a User ID will be generated.

What are the details to be provided in Form 10F?

The electronic filing of Form 10F requires the non-resident taxpayers to register themselves on the income tax portal, obtain a digital signature certificate (DSC), and verify the form with the DSC. The non-resident taxpayers also need to provide the following details in Form 10F:

• Status (individual, company, firm, etc.) of the taxpayer
• Nationality (in case of an individual) or country or specified territory of incorporation or registration (in case of others)
• Tax identification number in the country or specified territory of residence and if there is no such number, then a unique number on the basis of which the person is identified by the government of that country or specified territory
• Period for which the residential status as mentioned in the TRC is applicable
• Address of the taxpayer in the country or territory outside India during the period for which the TRC is applicable

The non-resident taxpayers also need to declare that they have obtained a TRC from the government of the country or specified territory outside India and that the information provided in Form 10F is correct, complete, and truly stated. The non-resident taxpayers also need to sign the form and mention their name, address, and PAN or Aadhaar number (if any).

What are the benefits and implications of filing Form 10F and TRC?

The electronic filing of Form 10F is expected to ensure that the benefits of the tax treaties are not availed without a valid TRC and Form 10F. It is also expected to enable the tax department to trace all the payments made to non-resident taxpayers through their PAN or Aadhaar number. In case of any non-compliance by the non-resident taxpayers with respect to the taxable income earned from India, the tax department may send notices to them and compel them to do the compliance in India.

The non-resident taxpayers who receive income from India should be aware of the requirements and the benefits of filing Form 10F and TRC. They should also comply with the latest amendments in the mode and manner of filing Form 10F electronically. By doing so, they can avoid double taxation of their income and reduce their tax liability in India.

NOTE – The non-resident taxpayers need to file their return of income in India if they want to take benefit of DTAA in India.

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Contact CA Satya N Sharma at SRCA & Co, 407-408 Anukampa Tower, Church Road, M I Road, Jaipur 302001, India. Email: fcasnsharma@gmail.com, fcasnsharma@srcaco.com.