Tax Residence Certificate (TRC)
A tax residence certificate is required to claim the benefit of a Double Taxation Avoidance Agreement (DTAA”) entered into between India and a foreign country. Tax residency certificate can be required in respect of two situations (a) A non-resident deriving income from India (b) An Indian resident deriving overseas income . In case of a non-resident, the certificate needs to be obtained from his country of residence. Such certificate is used by Indian Income Tax Authorities to determine, if the non-resident is a bona fide tax resident of the particular State (i.e. Country), to claim Treaty benefit. Similarly, an Indian resident who earns overseas income may be required to provide a TRC certificate issued by Indian Government to the foreign payer, which can be obtained by making an application in Form 10FA
Index
- What is Tax Residency Certificate
- Importance of Tax Residency Certificate
- Types of Income covered
- TRC Certificate under Income Tax act 1961
- How to Obtain a TRC Certificate – Form10FA
- Tax Residency Certificate Format
- Form 10F
- Particular required in Form 10F
- Advantages of Tax Residency Certificate
What is Tax residency certificate (TRC)
A Tax residency certificate (TRC) , is a document issued by the tax authorities of a country, affirming that the applicant (whether an individual or a company) is a resident of that country , for a given tax year . It serves as a proof that the applicant is entitled to the benefit of Tax Treaty of that country.
Importance of Tax Residency Certificate
An Indian resident , is liable to pay tax on his global income in India. If he earns income from an overseas country, he may have tax deducted in those countries as well. To reduce the rate of tax in foreign country, he can claim the benefit of a Tax Treaty entered into by Government of India with the Governments of other countries .
To claim the benefits of DTAA in foreign country, a taxpayer has to obtain Tax Residency Certificate (TRC) from the Government of India.
In case of a non-resident deriving income from India, he has to obtain TRC from his local Government.
Types of Income covered
- Revenues earned from services provided in Foreign country / India
- Salary earned in Foreign country / India
- Revenue from assets in the Foreign country / India
- Capital Gain earned on transfer of property situated in Foreign country / India
- Interest on Fixed deposit / India
- Interest on Saving bank account / India
- Income on agriculture of agriculture produce earned in Foreign country / India
- Dividends received on Share and other Fund / India
TRC Certificate under Income Tax Act 1961 – Applicable for Indian deriving Global Income
A person who is a resident of India, and intends to claim the benefit of DTAA between India and a foreign country , shall not be entitled to claim any relief under such agreement unless he obtains a TRC in India .
How to Obtain a Tax Residence Certificate from Indian Government – Form 10FA
An assessee who is a resident of India , can apply to the Assessing Officer for a Tax Residency Certificate in Form No. 10FA under rule 21AB . The Assessing Officer shall give the assessee a certificate of residency in Form No – 10FB upon receipt of an application and after being satisfied on the particulars mentioned therein.
TRC for Non-Resident Taxpayer
A Taxpayer who is a Non-Resident as per the Indian Income Tax Law, may obtain a TRC from the Government of the country or the specified territory of which he is a resident. The following details must be included in the TRC :-
- Taxpayer’s name;
- Taxpayer’s status (i.e. individual, company, firm etc.);
- Nationality in case of individual or country/specified territory of incorporation or registration in case of a company, LLP, Firm or others;
- Tax identification number or Unique number of taxpayer as per the country or specified territory of residence based on which the person is recognised as a resident by such country’s government or the government of a specified territory;
- Taxpayer’s residential status;
- Period during which the certificate is valid; and
- Taxpayer’s address for the period for which the certificate is applicable.
The above information is required to be submitted in Form 10F by the Non-resident taxpayer .
Tax Residency Certificate Format for Application made by Indian Taxpayer in Form 10FA
Assessing Officer shall issue a Certificate of residence / TRC in Form No. 10FB which is as under :-
FORM NO. 10FB
[See rule 21AB (4)]
Certificate of residence for the purposes of section 90 and 90A
1. Name of the Person ________________
2. Status ______________
3. Permanent Account Number _______________________
4. Address of the person during the period of ________________
Tax Residency Certificate
Certificate
It is hereby certified that the above mentioned person is a resident of India for the purposes of Income-tax Act, 1961.
This certificate is valid for the period __________________
Issued on __________ the day of ________, ________.
Name of the Assessing Officer
Designation____________
Seal ______________
A Non-resident is required to submit declaration in Form 10F which is as under (Please check latest format with a tax consultant)
Form 10F
FORM NO. 10F
[See sub-rule (1) of rule 21AB]
Information to be provided under sub-section (5) of section 90 or
sub-section (5) of section 90A of the Income-tax Act, 1961
I, ________________ *son/daughter of Shri _____________, in the capacity of _________________ (Designation) do provide the following information, relevant to the previous year ________________ in my case/in case of ________________ for the purposes of sub-section (5) of section 90/section 90A :-
| Sl.No. | Nature of information | Details # |
| (i) | Status (individual, company, firm etc.) of the assesse | |
| (ii) | Permanent Account Number (PAN) of the assessee, if allotted | |
| (iii) | Nationality (in the case of an individual) or Country or specified territory of incorporation or registration (in the case of others) |
|
| (iv) | Assessee’s 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 the country or the specified territory of which the assessee claims to be a resident | |
| (v) | Period for which the residential status as mentioned in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A is applicable | |
| (vi) | Address of the assessee in the country or territory outside India during the period for which the certificate, mentioned in (v) above, is applicable |
2. I have obtained a certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A from the Government of __________________ (name of country or specified territory outside India).
Signature : __________________
Name : __________________
Address :__________________
Permanent Account Number or Aadhaar number : __________________
Verification
I, __________________ do hereby declare that to the best of my knowledge and belief what is stated above is correct, complete and is truly stated.
Verified today the __________ day of _____________.
Signature of the person providing the information
Place: ______________
Notes :
- Delete whichever is not applicable.
- Write N.A. if the relevant information forms part of the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A.
A non-resident, who intends to claim the benefit of Indian Treaties with their country of residence, is required to provide information in Form 10F – Information to be provided under sub-section (5) of section 90 or sub-section (5) of section 90A of the Income-tax Act, 1961
Particulars required in Form 10F
An assessee must give the following information in Form No. 10F : –
- Status (individual, company, firm, etc.) of the assessee
- Nationality (in case of an individual) or country or specified territory of incorporation or registration (in case of others)
- Assessee’s tax identification number in the country or specified territory of residence and in case there is no such number, then, a unique number based on which the person is identified by the Government of the country or the specified territory of which the assessee claims to be a resident
- Period for which the residential status, as mentioned in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A, is applicable
- Address of the assessee in the country or specified territory outside India, during the period for which the certificate, as mentioned in (iv) above, is applicable.
Rule 21AB also provides that the assessee may not have to give the information mentioned above, if such information or part of it is in the Tax Residency certificate in India .
Also, the assessee is required to keep and maintain any documents to back up the information given in the TRC Certificate application, which can be verified by the income-tax authority .
Advantages of Tax Residency Certificate
- An Indian resident has to apply for tax residency certificate to foreign tax authorities in order to prevent foreign tax deduction
- An Indian citizenship is not required to apply for TRC. A foreign citizen is required to apply TRC
- To speed up the payment process, a format has been decided to make it possible for foreign residents to know the process to receive tax credits
- With the help of TRC, tax authorities has the right to check the genuineness of the beneficiary
FAQs on Tax Residency Certificate
1. What is Tax Residency Certificate ?
TRC is a document issued by tax authorities to enable a taxpayer to claim the benefit of the Tax Treaty affirming his tax residency status as a Resident.
2. Who can apply for TRC in Form 10F and 10FA ?
An assessee who is a resident of India , can apply to the Assessing Officer for a Tax Residency Certificate in Form No. 10FA under rule 21AB to claim relief under a DTAA. However, a non-resident, who intends to claim the benefit of Indian Treaties with their country of residence, is required to provide information in Form 10F
3. Whether Form 10FA for TRC be filed online ?
Form 10 FA cannot be submitted online in India.
4. Where to submit Form 10 FA ?
The Form 10FA can be filed before the jurisdictional Assessing Officer (‘AO’) for getting a TRC in India.
5. In which Form the Assessing Officer provides TRC?
The Assessing Officer shall give the assessee a certificate of residency in Form No – 10FB upon receipt of an application and after being satisfied on the particulars mentioned therein.
