Filing of Form 10F

Non-residents without a Permanent Account Number (PAN) can now electronically file Form 10F that is required along with a tax residency certificate to avail of benefits of the tax treaty. The Central Board of Direct Taxes has enabled non-residents who do not have a PAN to e-file Form 10F on the income tax portal by creating an account without the requirement of first obtaining a PAN. Form 10F, is a declaration from the non resident, wherein they provide certain data , which helps the Indian payor to ascertain, whether they are liable to the benefit of the Indian Tax Treaty with their country of residence.

The Central Board of Direct Taxes (CBDT) made a significant change in July 2022 by making it mandatory to electronically file Form 10F. Initially, non-residents without Permanent Account Number cards were given a relaxation, but this grace period has now ended. Starting from October 1, 2023, anyone seeking treaty benefits must electronically file Form 10F, regardless of whether they have a PAN card or not.

What is Form 10F?

Form 10F is a self-declaration tax form used by non-resident (NR) taxpayers for claimingthe benefits under DTAA (Double Taxation Avoidance Agreement) if their Tax Residency Certificate (TRC) lacks certain crucial details.

Terms used above:

NR taxpayers: These are individuals or entities whose primary source of income is not from India.
Double Taxation Avoidance Agreement (DTAA): These are agreements between India and other countries that prevent double taxation on income earned in both countries.
Tax Residency Certificate (TRC): This document is issued by the NR taxpayer’s home country confirming their tax residency status. NR taxpayer is mandatorily required to furnish a valid TRC for claiming the DTAA benefit.

Purpose and Key benefits

The purpose of the article is to outline, the requirement for online Form 10F, the alternative ways in which a non-resident can submit Form 10F, and how we, at Sorting Tax can help the non resident to achieve this objective.

Form 10F, which is required to be filed online, helps a non resident to : –

Claim non taxability of an income ;
Claim lower tax rate on an income ;
Avoid Double Taxation of same income

Form 10F also assist the Indian tax office in obtaining a streamlined data on International Transactions, and the amount of holding tax turn on such payments.

Eligibility Criteria for Form 10F

Any person who wants to avail the benefits of DTAA must file a self-declaration in Form 10F along with a TRC of their country of residence . The Form 10F applicability is mandatory for NRIs who do not have all the required details of TRC.

Furthermore, filing Form 10F allows NRIs to avoid TDS (tax deducted at source) on income accrued in India. This is quite useful for NRIs earning in India, as all of their income is subject to TDS. Moreover, TDS is deducted at a higher rate if an individual does not furnish his/her PAN.

Previously, NRIs who did not have a PAN card had to file the Form 10F online. This required all taxpayers to obtain PAN registration as there were no options to log in to the income tax filing portal without a PAN. However, for FY2023, the CBDT (Central Board of Direct Taxes) allowed a one-time relief to taxpayers without PAN. They could file the form manually by 31^st March 2023.

Key Components and Information Required

In Form 10F, and non-resident is required to declaration, in which it provides the following information : –

Name of the non -resident ;
Whether there are tax president of the country with whom the Treaty benefit is cleaned
Tax identification number in their home country
Whether they have obtain the tax Residency certificate from their home country of residence .

Recently the Indian government changed the filing of Form 10F online, instead of providing a physical declaration. Such a Form can be filed by NR, who fall under either of the following categories : –

Non -resident, who have a PAN number or who are required to obtain the PAN number
Non resident, who do not have a PAN number and who are not required to obtain the PAN number.

The process in case the non resident is required to obtain a PAN number, takes 15-20 working days, as it requires certain document to be apostilled in the home country of the non resident.

Documents Required for Filing Form 10F

PAN card
Proof of residential address in your resident country
Duration of residential status as stated in the TRC
Taxpayer status (individual, company, firm, trust, etc.)
Proof of nationality (for individuals) or territory of incorporation or registration (for companies and firms)
TIN or any other unique tax identification number in country of residence
Digital signature certificate to authenticate the information furnished in Form 10F

How Form 10F Impacts Non-resident

A delay in filing online Form 10F, can result in the delayed payment by the Indian Company. Therefore it is very important for, a non resident to file online Form 10F.

Challenges faced in Filing Form 10F

The most common challenges faced by a non-resident is to ascertain whether they are required to obtain a PAN number or not, which itself is the governed by alternative Income Tax regulations. Therefore it is important that, professional advise is timely sought, so as to avoid Inaccurate or Incomplete Information.

Is it mandatory to file Form 10F online and is a PAN card required?

Previously:

Yes, filing Form 10F electronically was mandatory to claim treaty benefits.
This posed a challenge for foreign companies without a PAN, as they needed one to register on the Income Tax Portal and file the form.

Current situation:

Non-residents can register on the Income Tax Portal without a PAN. Therefore, a PAN card is no longer required to file Form 10F online.

Non-residents without a PAN can now register on the Income Tax Portal and file Form 10F electronically by providing the following information:

Basic details: Name, date of incorporation, tax identification number, and country of residence.
Key person details: Name, date of birth, tax identification number, and designation.
Contact details: Primary and secondary mobile numbers and email IDs, and postal address.
Attachments: ID proof, address proof, and a copy of your Tax Residency Certificate (TRC). The ID and address proofs must be valid documents in your country of residence.

How to File Form 10F Online?

Step 1: Log in to the official e-filing portal with with your PAN or the user ID. Register if you do not have an account.
Step 2: On the dashboard, navigate to the ‘e-File’ menu and select ‘Income Tax Forms’.
Step 3: Click on ‘File Income Tax Forms’.
Step 4: On the next page, select the 3^rd tab ‘Person not dependent on any source of income’.
Step 5: You will find the option to file Form 10F in the last column on this page. Click on ‘File Now’.
Step 6: Enter your PAN and select the assessment year from a dropdown menu. Click on ‘Continue’.
Step 7: Go through the given instructions and click on ‘Lets get started’.
Step 8: Enter the required details, including your name, father’s name, Section 90/90A, country of registration/residence, TIN, etc.
Step 9: Next, select the period for which you obtained the TRC and your address outside India.
Step 10: After filing the other details, you need to attach a copy of your tax residency certificate.
Step 11: Signing of the form can be done via digital signature or electronic verification code.
Step 12: Click on ‘Preview’ to review the details and submit the form.

FAQs

Do I need a Tax Residency Certificate (TRC) to get tax treaty benefits, and can I be denied these benefits if I don't have a TRC?

Yes, according to section 90(4) / 90A(4), not having a TRC can lead to denial of tax treaty benefits. However, in some cases, like Skaps Industries India (P.) Ltd., you can argue that if your residency is substantiated, benefits shouldn’t be denied.

What if the TRC is for a period before the payment?

In such cases, you won’t get the tax treaty benefit. It’s up to practitioners to decide if they consider an old TRC based on a promise to get a new one soon, but the tax department might disagree.

What is Form 10F and why it is required?

Form 10F is a self-declaration filed by NRI taxpayers who want to avail the benefits of DTAA provisions. This allows them to avoid paying taxes twice on the same income.

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