Who has to sign Form 10F?

Form 10F must be signed by the non-resident individual or, in the case of a company, an authorized representative.

Form 10F of Income Tax: Applicability, Requirements, and Filing Form 10F Online

Q: What is Form 10F used for?

Form 10F is used by Non-Resident Indians (NRIs) to claim a reduced rate of Tax Deducted at Source (TDS) on income generated in India and to avail benefits under India's Double Taxation Avoidance Agreements (DTAAs) with other countries.

Q: Where can one fill out Form 10F?

Form 10F can be completed online on the Income Tax Department's official e-filing website or submitted physically to the local tax office with the necessary documentation.

Q: Is it mandatory to file Form 10F online?

Non-resident taxpayers without a PAN card and with a Tax Residency Certificate (TRC) must file Form 10F online via the Income Tax e-filing platform. Filing is possible without a PAN card in certain cases.

Q: Is Form 10F mandatory for a foreign company?

Filing Form 10F is not mandatory for foreign companies, but it is highly beneficial as it allows them to claim lower tax rates under Double Taxation Avoidance Agreements (DTAAs).

Q: Who needs a tax residency certificate?

A Tax Residency Certificate (TRC) is required by individuals or entities seeking benefits under a Double Taxation Avoidance Agreement (DTAA). It enables access to tax exemptions, deductions, and reduced tax rates in the host country.

Q: Do I need a TRC to get tax treaty benefits?

Yes, a Tax Residency Certificate (TRC) is generally required to claim tax treaty benefits under sections 90(4) and 90A(4). Without a TRC, benefits may be denied, though in cases like Skaps Industries India (P.) Ltd., verified residency may suffice.

Q: What if the TRC is valid before the payment?

If the TRC is not valid at the time of payment, tax treaty benefits may be denied. Tax authorities may object, but practitioners can assess whether an expired TRC with a commitment to provide a new one soon is acceptable.

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

No, a Tax Residency Certificate (TRC) issued in a foreign language must be accompanied by an English translation to be considered valid.

Q: What is the validity of a TRC?

The validity of a Tax Residency Certificate (TRC) depends on the issuing country and the specific conditions under which it is granted.

Asharam Swain
4 days ago
7 min read

Living overseas and earning money from India? A Double Taxation Avoidance Agreement (DTAA) may qualify you for lower tax rates. The benefits of DTAA, which allows for a single tax on income, are available to non-residents. Due to the several tax treaties that India has signed, dual nationals are exempt from paying taxes twice. However, in order to claim these benefits, a vital document is needed, namely Form 10F. As a taxpayer, one must understand the applicability, requirements, and the process of downloading and filing Form 10F online.

What is Form 10F?

Purpose of Form 10F

Benefits of Filing Form 10F

Eligibility Criteria for Form 10F

Steps to File Form 10F Online

Documents Required for Filing Form 10F

Filing Form 10F Online and Having a PAN Card for Filing: Are Both Mandatory?

Who Needs a Tax Residency Certificate?

Implications of Not Filing Form 10F

Conclusion

Frequently Asked Questions

What is Form 10F?

Individuals and businesses that receive income from non-resident nations must file Form 10F in order to be eligible for the advantages of a Double Taxation Avoidance Agreement (DTAA). Form 10F must be submitted in order to be eligible for DTAA benefits. As an illustration, suppose that X, a US citizen, owns a company in India. X is eligible for lower tax rates under the double taxation avoidance agreement, but in order to do so, Indian tax officials want documentation of her tax residency in India. Form 10F, which serves as documentation showing X is qualified for lower tax rates under DTAA, must be completed by X and the Tax Residency Certificate. In this manner, X can avoid having to pay taxes on the same income twice.

Purpose of Form 10F

The NR taxpayer must submit extra information on Form 10F if the TRC does not include all the information required by the DTAA. According to Section 90(5) of the Income Tax Act, NR taxpayers must provide TRC and Form 10F (if specific information is absent in TRC) in order to claim the advantages of a tax treaty. The taxpayer's name, overseas address, TIN (Tax Identification Number), and taxpayer status are among the details that must be included in a TRC. NRIs are also able to seek tax exclusions and deductions on their income earned in India with the filing of Form 10F online.

Benefits of Filing Form 10F

Lower Taxes: Avoid increased tax rates on income from royalties, interest, and dividends.
Compliance: Enables you to meet legal standards in order to be eligible for DTAA benefits.
Quicker Tax Return Processing: Prevents delays and guarantees correct tax assessment.

Eligibility Criteria for Form 10F

To be eligible for DTAA benefits, an individual must submit a self-declaration on Form 10F and a TRC from their home country. Additionally, NRIs can avoid TDS (tax deducted at source) on income earned in India by submitting Form 10F. Since all of their income is subject to TDS, this is quite helpful for NRIs who earn in India. In the past, NRIs without a PAN card also needed to submit Form 10F online. Since there were no ways to access the income tax reporting portal without a PAN, all taxpayers were compelled to register for a PAN.

However, for FY2023, taxpayers without a PAN were granted a one-time reprieve by the Central Board of Direct Taxation (CBDT). By March 31, 2023, they could manually submit the form. The due date was now September 2023. As this partial exemption draws to a close, the Income Tax Department has added the ability for "non-residents not holding and not required to have PAN" to register on the Income Tax Portal. Non-residents can now electronically submit Form 10F without a PAN.

Steps to File Form 10F Online

Step 1: Enter your PAN or user ID to access the official e-filing portal. If you don't already have an account, create one.

Step 2: Choose "Income Tax Forms" from the "e-File" menu on the dashboard.

Step 3: Select "File Income Tax Forms."

Step 4: Choose the "Person not dependent on any source of income" third tab on the following page.

Step 5: In the final column of this page, you will see the option to file Form 10F. Select "File Now."

Step 6: Choose the assessment year from a dropdown box after entering your PAN. Press "Continue."

Step 7: Click "Let's get started" after reading the instructions.

Step 8: Enter the necessary information, such as your name, your father's name, Section 90/90A, your country of residency or registration, your TIN, etc.

Step 9: Next, choose your address outside of India and the time frame for which you received the TRC.

Step 10: A copy of your tax residency certificate must be included once the other information has been filed.

Step 11: The form can be signed using an electronic verification code or a digital signature.

Step 12: To check the information and submit the form, click "Preview."

Documents Required for Filing Form 10F

Proof of residential address in the resident country
Duration of residential status as shown in the TRC
Proof of nationality in case of individuals or the territory of incorporation/registration in case of businesses
PAN card
Digital signature certificate to authenticate the details filled in Form 10F
Taxpayer status (individual, firm, company, trust, etc.)
TIN or unique tax identification number in the country of residence

Filing Form 10F Online and Having a PAN Card for Filing: Are Both Mandatory?

In the past, Form 10F had to be filed electronically to claim the benefit of DTAA. Since they required a PAN to register on the Income Tax Portal and submit the form, this presented a problem for foreign businesses without one. However, non-residents can now register without a PAN. As a result, filing Form 10F online no longer requires a PAN card. The following details must be entered in order for non-residents without a PAN to register on the Income Tax Portal and electronically file Form 10F:

Basic details: Name, incorporation date, TIN, and country of residence.
Key person details: Name, date of birth, designation, and TIN.
Contact details: Postal address, and primary and secondary email IDs and mobile numbers.
Attachments: ID proof, address proof, and a copy of TRC, with ID and address proofs being valid documents in the country of residence.

Who Needs a Tax Residency Certificate?

A tax residency certificate, or TRC, is required for any Indian who receives income from a nation with which the Indian government has a DTAA. Getting a TRC is essential for non-resident Indians (NRIs) who must pay taxes in India and wish to avoid having their income taxed twice. Furthermore, the government has mandated that Indians obtain a TRC in order to be eligible for DTAA subsidies. The income tax department uses the Tax Residency Certificate to verify a person's country of tax residence. The place where an individual provides their services or earns their income determines their resident status. NRIs might also be required to submit a TRC to the host nation's government. In India, you must be eligible as a resident the following to receive a TRC certificate.:

Form 10FA: Under Section 90(5) and Section 90A, Indian citizens utilise this form to get a certificate of residency.
Form 10FB: A residency certificate will be issued via Form 10FB after the relevant assessing officer has confirmed the information.

Implications of Not Filing Form 10F

According to the government's letter of July 16, 2022, a taxpayer's DTAA benefits will be revoked if they fail to comply with the Form 10F requirement. As previously stated, those who have not submitted this form are subject to a higher TDS rate. There are additional tax and legal consequences to take into account if you fail to provide Form 10F. An NRI taxpayer will be considered an "assessee in default" if they apply for a reduced tax rate or nil tax liability without first filing the form. Since non-residents must adhere to documentation rules in order to keep accounts, this would also make remittances challenging.

Conclusion

In conclusion, NRIs can avoid paying taxes on the same income in two countries by submitting Form 10F. Additionally, they can claim a number of tax exemptions and deductions under the Income Tax Act by submitting this form. Lastly, it offers receipts for taxes paid in India, which lowers the international tax obligation.

FAQs

Q1. What is Form 10F used for?

NRIs utilise Form 10F to obtain a reduced rate of TDS on income produced in India and to claim the advantages of India's tax treaties with other nations.

Q2. Where can one fill out Form 10F?

Form 10F can be completed online at the Income Tax Department's official website or by sending the completed form to the local tax office with the necessary paperwork.

Q3. Who has to sign Form 10?

A non-resident person or, in the case of a company, an authorised member signs Form 10F.

Q4. Is it mandatory to file Form 10F online?

NR taxpayers must submit Form 10F online via the income tax e-filing platform if they do not possess a PAN card and a tax residency certificate from their home country. Filing Form 10F is possible without a PAN card.

Q5. Is Form 10F mandatory for a foreign company?

Although filing Form 10F is not required, it is quite advantageous for international businesses since it enables them to take advantage of the lower tax rates under DTAA.

Q6. Who needs a tax residency certificate?

A tax residence certificate is required for any person or organisation to be eligible for the advantages of a double taxation avoidance agreement between nations. Additionally, it enables them to take advantage of different tax exemptions and deductions in the host nation, as well as reduced tax rates.

Q7. Do I need a TRC to get tax treaty benefits?

Yes, the absence of a TRC may result in the denial of tax treaty benefits u/s 90(4) and 90A(4). However, in certain situations, such as Skaps Industries India (P.) Ltd., you may contend that benefits shouldn't be withheld if your residency is verified.

Q8. What if the TRC is valid before the payment?

You won't receive the tax treaty benefit in these circumstances. The tax department may disagree, but it is up to practitioners to decide whether to consider an outdated TRC based on a pledge to obtain a new one shortly.

Q9. Some countries issue TRCs in their language. Will that be valid?

No, you also require a translation of the TRC into English.

Q10. What is the validity of a TRC?

The country that issues the TRC and the conditions under which the certificate is granted determine its validity.