The Central Board of Direct Taxes (CBDT) has issued a notification on December 12, 2022 offering one-time relied to the non-resident taxpayers who do not have PAN and required details in Tax Residency Certificate. Such taxpayers are required to file Form 10F to claim benefit under the DTAA. However, this form must be filed before the last date i.e., March 31, 2023.
Form 10F is filed by those NRIs receiving payments from India who do not have PAN and required NRI’s Tax Residency Certificate details. This form helps them to avoid TDS on the payments accrued or received in India. Do note that every rupee earned by an NRI in India is subject to TDS provisions under the Income-tax Act, 1961.
Saurrav Sood, Practice Leader – International Tax & Transfer Pricing, SW India says, “The relaxation to file Form 10F manually has been offered by the CBDT as NRIs without PAN were unable to file this form online on the e-filing income tax portal. The e-filing income tax portal asks for PAN to allow an individual to register himself/herself. Without PAN these NRIs were not able to register themselves and file the form online.”
Form 10F is mandatorily filed by those NRI taxpayers who do not have the required details of the Tax Residency Certificate (mandated under the Double Taxation Avoidance Agreement) as well as PAN. Remember TDS is deducted at a higher rate if PAN is not available with an individual.
Under the DTAA, an NRI taxpayer having Tax Residency Certificate must have the following details – i) Name, ii) Address of the NRI taxpayer, iii) Tax Identification Number of a foreign country, iv) Status of the taxpayer (individual, firm etc.) and so on.
Sood says, “Under the current income tax rules, an NRI taxpayer can file this Form 10F to avoid TDS on payments received in India as well as take advantage of DTAA as well. Under the DTAA rules, an eligible NRI taxpayer would not have to pay tax on the income received from India.”
With this relaxation, the eligible NRI taxpayer can ask her chartered accountant to file this form on their behalf manually on or before March 31, 2023, and take benefit under the DTAA rules, he adds.
What the latest CBDT notification states
As per the notification issued by the CBDT, “On consideration of the practical challenge being faced by non-resident (NR) taxpayers not having PAN in making compliance as per the above notification and with a view to mitigate genuine hardship to such taxpayers, it has been decided by the Competent Authority that such category of Non-resident taxpayers who are not having PAN and are not required to have PAN as per relevant provisions of the Income-tax Act, 1961 read with Income-tax rules, 1962 are exempted from mandatory electronic filing of Form 10F till March 31, 2023. For sake of clarity, it is reiterated that such category of taxpayers may make statutory compliance of filing Form 10F till March 31, 2023, in manual form as was being done prior to issuance of the DGIT (Systems) Notifications no.3 of 2022.”