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.”
“As per the notification issued by the CBDT, non-resident taxpayers who want to avail the benefit of DTAA provisions can file Form 10F manually till March 31, 2023 if they do not have PAN and they are not required to apply for PAN as per the Income-tax Act provisions, ” says Abhishek Soni, CEO, Tax2Win.in – an ITR filing website.
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.
Dr Suresh Surana, Founder, RSM India – a tax consulting firm says, “Form 10F is generally required by non-residents willing to claim benefit of any tax treaty in respect of any income earned in India in accordance with Section 90(5). Based on the notification issued on 16th July 2022, non-Furnishing of Form 10F electronically may result in withdrawal of beneficial Treaty rates by the income tax authorities since Form 10F has to be furnished along with valid Tax Residency Certificate for claiming any treaty benefit. Thus, if the non-resident is unable to file the Form 10F electronically, they may face issues in claiming the treaty benefits and also it may have tax and penal consequences on the Indian resident remitter/deductor for shortfall/nil deduction of tax as the case may be by treating him as “assessee in default”. The one major problem post the notification issued in July 2022, is that to file the Form 10F online, the non-resident is also required to obtain the PAN registration. As such, this technical hurdle and lack of clarity on this aspect had led to practical challenge for non-residents to comply with the requirement of documentation w.r.t. remittances from India.”
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.”