The mandatory electronic filing of Form 10F will not be required of non-resident taxpayers who do not have PANs or who are not obliged to have PANs under the applicable sections of the I-T Act until March 31, 2023, according to a notification from the CBDT.
The income tax department has made Form 10F manual filing available to non-resident taxpayers without PANs until March 31, 2023. This will reduce their compliance burden and allow them to claim a reduced TDS rate. To take advantage of reduced Tax Deducted at Source, the Central Board of Direct Taxes (CBDT) mandated in July that non-resident taxpayers submit Form 10F electronically (TDS).
However, taxpayers had issues with electronic filing of the form because the income tax system would not permit a taxpayer to file Form 10F if they did not have a Permanent Account Number (PAN).
The mandatory electronic filing of Form 10F will not be required of non-resident taxpayers who do not have PANs or who are not obliged to have PANs under the applicable sections of the I-T Act until March 31, 2023, according to a notification from the CBDT.
In a notification dated December 12, the CBDT stated: “It is emphasised that such category of taxpayers may make statutory compliance of filing Form 10F until March 31, 2023 in manual form, as was being done prior to the issuing of the (July) notification.”
Non-residents may transact with Indian parties in notified transactions that call for the quoting of PANs without being subject to the higher withholding tax rate of 20% if the resident Indian payer receives the required information, which includes name, email address, address, contact information, TIN, and a valid tax residency certificate (TRC).
The CBDT’s partial easing of the restriction that non-residents obtain a PAN just for the purpose of acquiring an electronic 10F would undoubtedly remove compliance hiccups. However, the relaxation is only in effect until March 31, 2023, so non-residents may wish to keep their fingers crossed for additional improvements regarding India’s shift to digital compliance requirements.
What is Form 10F under Income Tax?
Form 10F is a self-declaration by the assessee that he resided in a foreign nation covered by the Double Taxation Avoidance Agreement (DTAA) with India, and as a result, the income tax rate applicable is at the rate specified in the DTAA. The assessee must also present a tax residency certificate (TRC) issued by the government of the nation in which he resides as proof that he is a resident of that location in order to qualify for relief from double taxation.
What is a Tax Residence Certificate (TRC)?
A Tax Residence Certificate (TRC) is evidence that a person resides in a certain country. It is issued by the government, for instance, the Income Tax Department in India. A need for requesting relief is to prevent double taxes. According to section 90(4) of the Income Tax Act, a non-resident is eligible to receive the benefits of double taxation avoidance agreements (DTAA) unless he obtains a TRC from the government of the nation in which he resides. According to Indian tax legislation, TRC must include the following information for any benefits claimed:
1) The assessee’s status (as an individual, business, etc.)
2) Their nationality
3) Plan for a tax identification number (TIN) in the country of residency (or a unique number in the absence of a TIN);
4) Address of the Assessee in the Nation If the TRC omitted any of the aforementioned information, then Form 10 becomes applicable.
The assessee’s self declaration, Form 10F, contains the information mentioned above.
