Comprehensive Guide on Form 10F – Treaty Benefits, PAN, ROI, TDS, and FAQs – Vinay Vohra & Co.

Table of Contents

Form 10F – The Genesis
Form 10F – Reason for Uneasiness
Form 10F – ROI Filing and Exemption
Form 10F – Deduction of Tax at Higher Rate
Interplay between Form 10F, PAN, ROI and TDS
Frequently Asked Questions

1. Form 10F – The Genesis

1.1 Primary Document for treaty benefit

A non-resident is entitled to treaty benefits only if a Certificate of Tax Residence (TRC) is obtained.¹

1.2 Additional Document for treaty benefit

The non-resident is also required to disclose certain information (status, nationality/place of incorporation, TIN/UIN, TRC period, address) in Form 10F and provide the same.²

If the TRC captures all the information required in Form 10F, then Form 10F is not required to be provided.³

Form 10F needs to be submitted electronically.⁴

Persons not having PAN and not required to obtain PAN under ITA rw ITR.⁵

The documents relied upon while filling the information in Form 10F should be kept and maintained by the taxpayer and the same may be required to be produced before the tax authority, whenever called for.⁶

2. Form 10F – Reason for Uneasiness

2.1 Permanent Account Number (PAN)

Every person having total income assessable under the Act exceeding the maximum amount chargeable to tax⁷
Every person carrying on any business or profession whose total sales, turnover, or gross receipts are or is likely to exceed 5 lakhs in any previous year⁸ and who has not been allotted a PAN shall, before the end of the financial year, apply to the Assessing Officer for the allotment of a PAN
1. Business Connection (including Significant Economic Presence) – Judicially interpreted as well as legally defined
2. Source rule – Dividend, interest, royalty, Fees for Technical Services (FTS), etc.

2.2 Exemption from obtaining PAN

Non-residents including the Foreign Company who made the investment during the previous year in specified funds subject to fulfillment of specified conditions.⁹
Non-residents being eligible foreign investors who have made capital asset transactions referred to in 47(viiab) listed in IFSC RSE subject to fulfillment of specified conditions.¹⁰

3. Form 10F – ROI Filing and Exemption

3.1 Filing of Return of Income (ROI)

Every person being a company or a firm shall, on or before the due date, furnish a return of his income (including loss)¹¹ or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.¹²

3.2 Exemption from filing ROI (examples)

Passive income of specified nature and tax deducted at the rates mentioned therein.¹³
Income from bonds, Global Depository Receipts, or capital gains arising from their transfer and tax is deducted at rates in force.¹⁴

4. Form 10F – Deduction of Tax at Higher Rate

4.1 Deduction of tax in the absence of PAN

Tax at be deducted at the higher¹⁵ of the following rate in the absence of furnishing of PAN by the recipient of the income:

Rates specified in the ITA; or
Rates in force; or
20%.

4.2 Exemption from tax deduction at higher rates

Exemption to Non-residents (including a foreign company) in respect of the following:

Interest on long-term bonds referred to in 194LC¹⁶;
Income in the nature of interest, royalty, FTS, dividend, and capital gains subject to furnishing of TRC, TIN/UIN, name, email-id, contact number, and address¹⁷; or
Persons exempted from obtaining PAN.¹⁸

5. Interplay between Form 10F, PAN, ROI and TDS

Particulars	PAN	ROI	TDS (Higher rate)	Form 10F
Exemption	✓	✓	✓	??
	✘	✓	✓	✓
	✘	✓	✘	✓
	✘	✘	✓	✘

6. Frequently Asked Questions

Issue	Our View
Whether TRC is mandatory to avail tax treaty benefits? If yes, can the tax treaty benefit be denied in the absence of TRC?	Yes, as per section 90(4) / 90A(4). The benefit can be denied in the absence of TRC. However, one can rely on Skaps Industries India (P.) Ltd. to argue that if residency is otherwise substantiated, the benefit cannot be denied.
Which period should be mentioned at point (v) in Form 10F viz., the taxable year of Source state or the Resident state or the one mentioned in TRC?	The one mentioned in the TRC. However, the default start period in the online format is 01.04.2023 and the end period is 31.03.2024 (can be preponed)
In certain occasions, the TRC is for a period prior to which the payment is done. Whether the tax treaty benefit should be given in such a scenario?	No. It is left to each practitioner’s judgment whether to consider the old TRC on the basis of undertaking from the recipient to obtain a fresh TRC asap. Though the department can dispute the same.
Few countries issue TRC in their local language. Whether the same amounts to sufficient compliance?	An English-translated version of the TRC which is duly apostilled should be additionally obtained
If Form 10F is provided manually before the issuance of the July 2022 notification mandating electronic filing of the same, whether digital Form 10F is required to be provided again for the said taxable year?	No.

1. Section 90/90A(4), Income-tax Act, 1961 (ITA)
2. Section 90/90A(5), ITA rw Rule 21AB(1), Income-tax Rules, 1962 (ITR)
3. Rule 21AB(2), ITR
4. Rule 131(1), (2), ITR rw Notification No. 03/2022 dated July 16, 2022
5. F. No. DGIT(S)-ADG(S)-3/e-Filing Notification/Forms/2023/ 13420 dated March 28, 2023
6. Rule 21AB(2A), ITR
7. Section 139A(1)(i), ITA rw Rule 114, ITR
8. Section 139A(1)(ii), ITA rw Rule 114(1), 114(3)(ii), ITR
9. Section 139A(8)(d), ITA rw Rule 114AAB(1) ITR
10. Section 139A(8)(d), ITA rw Rule 114AAB(2A) ITR
11. Section 139(1)(a), ITA
12. 3rd Proviso, Section 139(1), ITA
13. Section 115A(5)
14. Section 115AC(4)
15. Section 206AA(1), ITA
16. Section 206AA(7)(i), ITA
17. Section 206AA(7)(b), ITA rw Rule 37BC(1), ITR
18. Section 206AA(7)(ii), ITA rw Rule 37BC(3), ITR

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Comprehensive Guide on Form 10F – Treaty Benefits, PAN, ROI, TDS, and FAQs