All You Need To Know About the Notifications With Regard To Filing of Form 10F

In recent years, there are various new notifications with regard to the filing of Form 10F introduce. Central Board of Direct Taxes (hereinafter referred to as CBST) has notified these notifications. In India, it is the main authority for overseeing institutions of direct taxes. These notifications aim to give instructions to non-resident taxpayers, who want to claim tax benefits. These notifications specify the clear processes and needs of filing FORM 10F, which makes the process simpler. In this write-up, we will discover all the requisites for Filing Form 10F. 

Short Glimpse about the filing of Form 10F

It is a pronouncement that requires to be provided by non-resident taxpayers to claim the benefits of a tax treaty between India and their home country. The form needs data on the non-resident such as their incomes, and tax status i.e., significant for the Indian tax authorities to regulate the correct tax treatment. Non-resident taxpayers must claim treaty benefits and avoid double taxation. 

The form includes various details regarding the residence of the taxpayer such as the nature and duration of the services given or what kind of business activities that person has been involved in India and earning income. It must be signed and submitted to the Indian tax authorities with supporting documents. Form 10F is handling the data needed to be accomplished by the assessee as mentioned under Rule 21AB (1).

Meaning of Form 10F

Form 10F is a declaration that confirms the eligibility of an individual or an entity to claim tax benefits under the DTAA. This form needs to be filed before the payment of any income to the non-resident, and the validity of the form is for the financial year in which it is filed. The form is divided into two parts, the first part is a declaration by the non-resident or the foreign entity, and the second part is a certification by the tax authority in the country of residence.

Purpose of Filing of Form 10F

In India, if someone is earning and would like to claim the benefit of any tax treaty. Then a non-resident has to mention certain details in Form 10F. Likewise Tax Residency Certificate (TRC)by sections 90(5) and 90A of the Income Tax Act, 1961. Even India has signed Double Taxation Avoidance Agreements (DTAAs) with various countries, thus the income is taxed only once. Therefore, the non-residence has to file Form 10F if they required a TRC and self-declaration in the prescribed manner to the entity duty for reducing tax at source.

TRC- At the time non-resident is liable to pay tax in India and would like to claim the benefits of DTAA. The Income Tax Authority (ITA) wants to know, whether the non-resident is a bona fide tax resident of their country or not. The Indian Tax Authorities examine this and need TRC from the non-resident. That they brought from their respective country’s Government, TRC for a DTAA has been signed by India with another country.

Filing of Form 10F

Form 10F can be filed online on the official website of the Income Tax Department of India. The form can also be filed manually at the jurisdictional tax office. The form needs to be filed for each financial year in which the non-resident or the foreign entity wishes to claim tax benefits under the DTAA.

Eligibility Criteria for Filing Form 10F

• The following criteria need to be fulfilled to file Form 10F:
  The individual or the entity must be a non-resident Indian or a foreign entity.
• The individual or the entity must be eligible for tax benefits under the DTAA.
• The individual or the entity must have a valid Tax Identification Number (TIN) or a Permanent Account Number (PAN).

Benefits of Filing Form 10F

There are some benefits, these are as:-

• Avoidance of double taxation: The primary benefit of filing Form 10F is that it enables non-resident taxpayers to claim the benefits of the tax treaty between India and their home country. This can help to avoid double taxation, which is the situation where the same income is taxed twice, both in India and in the home country of the taxpayer.
• Simplified tax compliance: Filing Form 10F also simplifies the tax compliance process for non-resident taxpayers. By providing the necessary information about their tax status and income in India, non-resident taxpayers can ensure that their tax returns are accurate and complete, which can help to avoid penalties and other consequences of non-compliance.
• Faster processing of refunds: Non-resident taxpayers who file Form 10F are also likely to receive faster processing of refunds if they are entitled to one. This is because the tax authorities will have all the necessary information to determine the appropriate amount of refund.
• Reduced tax liability: Filing Form 10F can also help to reduce the tax liability of non-resident taxpayers. This is because tax treaties often provide for lower tax rates on certain types of income, such as dividends, interest, and royalties. By claiming treaty benefits, non-resident taxpayers can reduce the amount of tax they owe in India.

Documents required for Filing of Form 10F

There are certain documents required to file the FORM 10F and these are: –

• Status of an individual, company, firm, etc.;
• PAN Card;
• Country, or nationality (in case of an individual) or particular territory of incorporation or registration (in a matter of others);
• Address of the assessee in a residential country;
• Period for that residential status as provided in the certificate as per sections 90(4)/ 90A (4);
• A digital signature certificate is needed to evaluate the form 10F to the authentication of the FORM 10F data.
• Tax identification number of the assessee, in which the assessee’s residential country or Unique Tax Identification Number.

Process of filing of FORM  10F

Form 10F has significant to file by the e-filing account of Non-resent on the Income Tax e-filing portal. The non-resident assessee has to follow certain steps to furnish FORM 10F. To login to the income-tax portal then PAN card is necessary:-

• Login to the income-tax portal account at https://www.incometax.gov.in/iec/foportal;
• From the e-file tab, choose “Income Tax Form” and then click on “File income Tax Forms” ;
• Choose “Persons not dependent on any Source of Income (Source of Income not relevant)”;
• There is a list of forms available, the choose Form 10F;
• Choose an appropriate Assessment year (AY) in the tab and click on “Continue”;
• The assessee will be needed to fill up the necessary information and compulsory to attach a copy of TRC;
• The signing of Form 10F can be completed either by a digital signature, mainly in case the return of income is needed to be filled under a digital signature; or by electronic verification code as per Rule 131 of the IT Rules.

Consequences of Non-Filing Form 10F

The consequences of non-filing of Form 10F can be severe. The non-resident or the foreign entity may not be able to claim tax benefits under the DTAA, and the income may be subject to tax in both countries. Additionally, penalties may be imposed by the income tax department of India for non-compliance.

Notifications With Regard To the Filing of Form 10F

• Notification No. 53/2016: This notification, issued on 24 June 2016, provides for the electronic filing of Form 10F by non-resident taxpayers. Under this notification, non-resident taxpayers can file their Form 10F electronically through the Income Tax Department’s e-filing portal. This has made the filing process more efficient and convenient for non-resident taxpayers, as they no longer need to physically submit the form.
• Notification No. 86/2018: This notification, issued on 4 December 2018, amended the rules for filing Form 10F. Under the amended rules, non-resident taxpayers are required to provide additional information in the form, such as the name of the foreign tax authority that has issued the Tax Residency Certificate (TRC), the TRC number, and the issue date. The amended rules have made the form more comprehensive and have facilitated the Indian tax authorities in verifying the authenticity of the TRC.
• Notification No. 11/2020: This notification, issued on 12 February 2020, relaxed the time limit for filing Form 10F. Under this notification, non-resident taxpayers are allowed to file Form 10F at any time before the processing of their income tax return. Previously, the form had to be filed before the end of the relevant financial year. This has provided greater flexibility to non-resident taxpayers and has reduced the risk of them losing their treaty benefits due to delays in filing.
• Notification No. 87/2020: This notification, issued on 29 October 2020, provided for the submission of self-attested TRCs along with Form 10F. Under this notification, non-resident taxpayers are required to submit a self-attested TRC along with Form 10F, instead of submitting the original TRC. This has reduced the compliance burden for non-resident taxpayers, as they no longer need to obtain and submit multiple original TRCs.
• Notification No. 01/2021: This notification, issued on 6 January 2021, extended the time limit for filing Form 10F for the financial year 2019-20. Under this notification, non-resident taxpayers were allowed to file Form 10F for the financial year 2019-20 by 31 March 2021, instead of the earlier deadline of 31 March 2020. This was a relief measure introduced in light of the COVID-19 pandemic, which had caused disruptions in the operations of businesses and tax authorities.
• Notification No. 03/2022: This notification, issued on 16 July 2021, herein the Director General of Income Tax (system) is in the exercise of the power, which is mentioned under Rule 131 of the Income Tax Rules, 1962 has mentioned the Forms, statements, reports, returns, reports, orders as in the case that shall be filed electronically and examined in any way described under rule 131(1).

Notification vide Folio No D.No. DGIT (S}-AD G(S)-3/e-Filing Notification/Forms/2022/9227:

This notification, issued on 12 December 2022, has come up with the intent to give partial relief to electronic submission of Form 10F through Non-resident taxpayers not having PAN in the creation of compliance as mentioned under said Notification, with regards to reducing genuine hardship to such non-resident taxpayers. If non–resident taxpayers are not having PAN then it is not necessary as per the current statutes of the Income Tax Act, 1961 i.e. read with Section 139A of the Income Tax Act, 1962 are exempted from compulsory electronic filing of Form 10F till 31/03/2023 in manual form as it was being accomplished before the issuance of DGIT, Notification No. 3 of 2022.

Takeaway

The Indian Government has issued many notifications with the filing of form that can make the filing procedure more flexible, efficient, and comprehensive for non-resident taxpayers. It is significant for them to know about these notifications and obey all rules and regulations for filing Form 10F. As to claim the advantages of the tax treaty between India and their home country. The filing of Form 10F is important for non-resident taxpayers to claim treaty benefits. These benefits are avoiding double taxation, reducing tax liability, simplifying tax compliance, and receiving faster processing of refunds.

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