Direct Tax Alert - E-filing of Form 10F relaxed for certain Non-resident taxpayer
14 December 2022
As per Section 90(4) of the Income-tax Act, 1961 (IT Act), a non-resident taxpayer is entitled to the benefit of Double Taxation Avoidance Agreement (DTAA) only if such non-resident taxpayer obtains a Tax Residency Certificate (TRC) from the country of his/its residence. Section 90(5) of the IT Act read with Rule 21AB of the Income-tax Rules,1962 (IT Rules) provides that where TRC does not contain prescribed information, the missing information needs to be provided separately. For this purpose, Rule 21AB of the IT Rules has notified Form 10F. In a recent Notification1 the CBDT, in the exercise of the power conferred under Rule 131 of the IT Rules, mandated certain forms, including Form 10F, to be filed electronically in the manner prescribed in Rule 131(1) of the IT Rules. The said notification is effective immediately (i.e. from 16 July 2022). As e-filing of Form 10F is possible only if the taxpayer has Permanent Account Number (PAN), several non-resident taxpayers not having PAN faced genuine hardship in complying with this requirement. Hence, various representations were made before the CBDT. In this regard, recently, the CBDT has issued another Notification2 giving relaxation to certain non-resident taxpayers.
We, at BDO in India, have analysed and summarised the said Notification and provided our comments on its impact hereunder:
What is the relaxation
Competent Authority has decided that certain categories of non-resident taxpayers shall be exempted from the requirement of e-filing of Form 10F till 31 March 2023.
Which type of taxpayers are granted this relaxation?
A non-resident taxpayer fulfilling the following conditions is exempted from e-filing of Form 10F:
- Taxpayers who are not having PAN; and
- not required to have PAN as per relevant provisions of the IT Act read with IT Rules
Whether such exempted non-resident taxpayers are required to make any other compliance?
The Notification clarifies that such non-resident taxpayers may make statutory compliance of filing Form 10F till 31 March 2023 in manual form as was being done prior to issuance of the earlier Notification.
This is a welcome Notification. It may be noted that the exemption is restricted to only those non-resident taxpayers who are not required to have PAN. Further, the relaxation is granted only till 31 March 2023 and hence such non-resident taxpayers may decide to apply for PAN at the earliest.
1 Notification no. 3/2022 dated 16 July 2022
2 F. No. DGIT(S)-ADG(S)-3/e-Filing Notification/Forms/2022/9227 dated 12 December 2022