Electronic furnishing of Form 10F – Flowchart for Payer/Deductor

  

While Form 10F has been notified for electronic filing, the income-tax portal allowed filing for only AY 2022-23. However, now the income-tax portal has been updated to file Form 10F online for AY 2023-24 (i.e. FY 2022-23).

 

A Flowchart has been prepared below to assist Payers making foreign remittances to examine whether it is necessary to obtain Electronical Form 10F or a Physically generated form would suffice and also, whether to grant treaty benefit in the absence thereof.

 

Gist of Form 10F: In order to avail treaty benefit, sub-section (4) of section 90/90A of the Income-tax Act, 1961 (“the Act”) requires furnishing of Tax Residency Certificate (TRC). Sub- section (5) of section 90/90A r.w. Rule 21AB of the Income-tax Rules, 1962 requires furnishing of Form 10F in addition to the TRC.

 

Rule 21AB provides that following information shall be provided in Form 10F –

(i)           Status (individual, company, firm etc.) of the assessee;

(ii)         Nationality (in case of an individual) or country or specified territory of incorporation or registration (in case of others);

(iii)       Tax/Unique Identification Number in country of residence;

(iv)       Period for which the residential status, as mentioned in TRC, is applicable; and

(v)         Address of the assessee in the country or specified territory outside India, during the period for which TRC, is applicable.¹

 

In addition, a declaration has to be given in Form 10F that TRC has been obtained.

 

Genesis of Form 10F: Originally, when the provision to furnish TRC to avail treaty benefit was introduced in the Income-tax law, the certificate had to contain “such particulars as may be prescribed”. However, concerns were expressed by Tax Authorities of other countries, as well as stakeholders that different countries issue TRC as per their practice and law. Therefore, the TRCs issued by different countries may not contain all the particulars which were mandatorily required to be included. In order to address this concern, the requirement of having prescribed particulars in TRC was omitted, but a self-declaration in Form 10F of the prescribed particulars was introduced.

 

Electronic furnishing of Form 10F: Recently, Directorate of Income Tax (Systems) has added Form 10F to the prescribed list of forms to be furnished electronically vide Notification No. 03/2022 w.e.f July 16, 2022. A non-resident Payee is now required to file Form 10F online on the income-tax e-portal from its registered account created using its PAN. It is to be noted that TRC has to be attached to generate Form 10F electronically.

 

 

 

¹ In addition, Form 10F also requires details of Permanent Account Number or Aadhaar Number of the assessee, if allotted

Flowchart for Payers making foreign remittance:

 

 

Treaty benefit (if any) may not be granted#

Non-Resident Payee (NR) has furnished valid TRC

NO

 

 

YES

 

 

 

 

YES

 

 

 

 

 

YES

NO

 

 

NR has furnished electronically generated Form 10F

NR has PAN

NO        Check whether TRC has all the details listed

in (i) to (v) above

 

YES

 

Form 10F not required. Still advisable to obtain electronic/ physical Form 10F

Treaty benefit (if any) can be granted, if otherwise entitled

NO

 

 

 

 

 

 

 

 

 

# If the NR furnishes TRC of immediately preceding year and an application made for current year, then Payee may consider granting treaty benefit. Nonetheless, valid TRC for current year should be obtained as soon as possible.

Pertinent to note that since, online filing of Form 10F has been made effective only from July 16, 2022, it is not necessary to obtain electronically generated Form 10F for the period falling in FY 2021-22.

In some judicial precedents it has been held that non-furnishing of TRC cannot be construed as a limitation to treaty benefits – Refer Skaps Industries India (P.) Ltd [2018] 171 ITD 723 (Ahmd. Trib); Sreenivasa Reddy Cheemalamarri (ITA No. 1463/Hyd/2018). This position is, however, prone to litigation.

## This view would be prone to litigation but may be defended based on genuine difficulty in furnishing Form 10F electronically, liberal construction of procedural law and reliance on above referred decisions on TRC not being mandatory.

 

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