Tax treaties and tax residence certificates (TRC)

Is the Indian Finance Ministry's 2013 press release something the tax authorities have to follow? Sometimes, the Indian tax authorities have not accepted a TRC as definite proof of where a taxpayer lives for tax treaty reasons.

But before January 2024, Indian high courts and the Income Tax Appellate Tribunal (ITAT) disagreed with the tax authorities. For example, the Delhi High Court in Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd. v. Asst. CIT (dated 18 January 2023).

However, in January 2024, the Indian Supreme Court paused the Delhi High Court’s decision.

Taxpayers have been using two circulars (Nos. 682 and 789) from the Central Board of Direct Taxes (CBDT) to support their argument that a TRC should be accepted by tax authorities for treaty rights.

Also, sometimes taxpayers mention a 2013 press release from the Indian Government’s Finance Ministry.

This press release explained that a TRC from a resident of a Contracting State should be accepted as proof that the taxpayer lives there. It also said that Indian tax authorities should not question this. This press release talked about the tax treaty between India and Mauritius.

Now, with the Supreme Court pausing the Delhi High Court’s decision, can taxpayers say that the press release is something the tax authorities must follow? Can taxpayers argue that tax authorities must accept a TRC as proof of where someone lives for tax treaty reasons?

One might think, since CBDT circulars (No. 682 and No. 789) are clearly rules tax authorities must follow, why focus on the press release? I believe it's important because the CBDT could change those circulars. So it's important to see if the press release also must be followed by tax authorities.