As you may already know, in order to claim treaty benefits, a non-resident would need to provide Form 10F along with the Tax Residency Certificate (TRC) if all the necessary details were not available in the TRC. However, on July 16, 2022, the Directorate of Income Tax (Systems) introduced a list of various forms that must be filed electronically, including Form 10F.
To file Form 10F electronically, non-residents are required to have an Indian PAN and register on the income-tax e-filing portal. Additionally, the authorized signatory filing such a form must have a digital signature. Notification No. 3 of 2022, published on December 12, 2022, provided partial relaxation to a select category of taxpayers for electronic submission of Form 10F until March 31, 2023.
Failing to submit e-Form 10F could lead to the tax authorities challenging the treaty benefits claimed, which could result in litigation and additional tax exposure for both the deductor and the deductee. This could lead to the deductor withholding tax at a higher rate without considering the treaty benefits. In cases where taxes are borne by the resident payer, this could become a cost for the resident payer. It is, therefore, important for resident payers to obtain e-Form 10F from non-resident payees if the TRC does not contain all the required information.
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