Form 10F – Electronic Filling/Manual Filling – Analysis

Background

Form 10F is required to be file by a non-resident taxpayer with income tax department India as per section 90(5) and section 90A (5) of income tax act 1961, to claim the relief under applicable double taxation avoidance agreement.

• As per notification No. 3/2022 dated 16 July 2022 it is mandatory for all the non-residents to file the form 10F electronically who want to avail the benefit double taxation avoidance agreement.
• However, in December 22, CBDT issued another notification dated 12 December 2022 has relaxed certain non-resident taxpayers to file manual form 10F for non-resident not having PAN in India till March 31, 2023.
• However, another notification has issued by the CBDT as on 28 March 2023 to extend the time limit for manual fille of Form 10F for non-resident not having PAN in India till September 30, 2023.

Documents required for preparing e-filing Form 10F

For preparing and e-filing Form 10F, following documents need to be considered:

• Status (Individual, Company, Firm,)
• Nationality or Country or specified territory of incorporation or registration
• Tax Residency Certificate
• Period for which residential status is
• Address of the taxpayer, in a country of residence
• Details of Authorized
• Permanent Account Number (PAN)
• Digital signature certificate (DSC), which is required to verify the Form 10F

Form 10F Filing – Impact on Non-residents

• The non-residents having PAN in India, but no taxable income in India do not file the return of income in India. In such cases, it becomes difficult for the non-residents to register themselves on the income-tax portal, obtain a DSC and file the from 10F electronically.
• The non-residents would require to appoint a professional in India to manage this compliance for them.
• Obtaining a Digital Signature Certificate in India only for the purpose of filing Form 10F may be fear to misuse of the Digital Signature Certificate.
• To avoid such hassles, the non-residents may consider to issue of Letter of Authority (“LOA”) to a professional in India to use his DSC for uploading the Form 10F electronically in terms of the provisions of Section 140 of the ITA read with Rule 131 of the Income-tax Rules, 1962.
• For non-residents not having a PAN in India, would be required to obtain PAN and followed the above procedure.
• The non-residents would be required to additional tax compliance burden even for a small payment to be received from India.

Form 10F  – Impact on Tax Department

The department will ensure that the benefits of Tax Treaties cannot be availed without a Valid TRC and Form 10F.

• The Tax department can trace all the payments to non-residents through their PAN number.
• In case of non-compliance by non-residents with respect to the taxable income earned from India, the Tax department may send notices to such non-residents and compel them to do compliance in India.
• This move will increase transparency with respect to the payments to non- residents.

Conclusion

The non-residents will be required to be more compliance in India i.e., obtaining PAN if not obtained already and filing Form 10F electronically on their e-filing portal.

• The Income tax department can track transactions with non- resident. their compliance in India and can be trace.
• The mischief of not obtaining valid TRC and Form 10F before making payments to non-residents will stop.
• The non-residents would require assistance from professionals in India to comply with the above requirements.
• Relaxation given for Manual Filling of Form 10F till September 30, 2023, by those non-resident taxpayers who are not required to obtain PAN in India.
• Except for the above Non-resident taxpayer others are required to mandatory Electronic Filling of Form 10F as per section 90(5) and 90A (5) of Income tax Act 1961.

Refer notification issued by Income Tax Department using given link:

1. DGIT notifies Income Tax Forms, returns for electronic submission

2. Partial relaxation with respect to electronic submission of Form 10F

3. Manual submission of Form 10F allowed till 30th September 2023

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