Under the Indian domestic tax laws, the non-residents availing benefits of a tax treaty are required to furnish a Tax Residency Certificate (TRC), along with a self-certified Form 10F (where certain specific information like Status, Nationality, Tax Identification Number, Period of TRC, Address, etc. is not available on TRC issued by resident country tax authority).

The Central Board of Direct Taxes (CBDT), vide notification1 dated 16 July 2022, had mandated the electronic filing of Form 10F. Due to this requirement, the non-residents transacting with residents in India and relying on any provision of the tax treaty for exemption/beneficial tax rates had to face certain challenges as:

  • To file Form 10F electronically, the non-resident had to register themself on the income tax portal.
  • For registration, PAN was mandatorily required.
  • To sign Form 10F digitally, the non-resident had to obtain a Digital Signature Certificate (DSC) in India, etc.

To overcome the challenge of obtaining a PAN in India just for filing Form 10F, the CBDT came up with certain relaxations.2 To apprise wherein an exemption was provided to non-residents not having a PAN and not needing to obtain a PAN in India to continue furnishing Form 10F in self-certified manual format till 30 September 2023.

Recently, on the expiry of the exemption period, the Income-tax department has now enabled a new category while registering on the income tax portal, i.e., 'non-residents not having a PAN and not required to have a PAN'.

Procedure for registration

  • The non-resident can click on the 'Register' option on the e-filing portal, i.e., https://www.incometax.gov.in/iec/foportal
  • Under the 'others' category, there is an option to choose 'non-residents not having a PAN and not required to have a PAN'.
  • Certain basic details will need to be entered, like name, date of incorporation, tax identification number, status, and country of residence.
  • The non-resident will then have to provide the details of the key person, i.e., name, date of birth, etc.
  • The next step is to provide contact details, i.e., email address and mobile number, which will be verified through an OTP.
  • Lastly, the non-resident will need to upload certain documents like its TRC, address proof, identification proof, and any other document if required.

Once the non-resident is registered on the portal, it can file Form 10F electronically without having to obtain a PAN in India.

While the above can be construed as a welcome move to reduce the hassles of a non-resident transacting with Indian customers while claiming tax treaty benefits, the following are critical aspects to be mindful of:

  • It may be noted that currently, for updating the profile of a taxpayer, the income tax portal accepts the foreign mobile number, but the OTPs are not delivered from the portal on the foreign number. If the same continues, the Non-resident taxpayer must provide an Indian mobile number for registration.
  • As seen in the registration process above, the non-resident must furnish certain mandatory documents while registering on the portal.
  • It should be noted that the category for this registration specifically states that it is for 'non-resident not having a PAN and not required to have a PAN'. Thus, the non-residents opting for this registration need to carefully determine and be sure that they are not required to obtain a PAN in India as per the Income-tax Act, 1961 provisions.
  • Once registration is complete, for filing Form 10F, it's noticed that the non-residents must digitally sign the form using DSC. Thus, the authorized person for the non-resident must obtain a DSC in India and digitally sign the form to complete the submission.

Our Comments

Since the above change on the income tax portal was introduced recently, there is no standard user manual/guideline provided for this specific category of registration. However, it will be interesting to see how the tax department foresees the above challenges and how it responds to any other relaxation/solution that may be introduced later to ensure that non-residents have hassle-free tax compliance in India.

Footnotes

1. F. No. DGIT(S)-ADG(S)-3/e-Filing Notification/Forms/2022/3813

2. F. No. DGIT(S)-ADG(S)-3/e-Filing Notification/Forms/2022/9227 and F. No. DGIT(S)-ADG(S)-3/e-Filing Notification/Forms/2023/13420

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.