By Soni Kumari, ( Article Trainee, Tapuriah Jain & Associates)

Provisions of Tax Residency Certificate requires Business entities to obtain this certificate from their home country for claiming relief under the Double Taxation Avoidance Agreements that India has entered into with the different countries. These rules have been setup to ensure peoples do not abuse the provisions of DTAA. Essentially, a TRC classifies a person as a resident of one country and makes him eligible to claim relief under the DTAA of the other country. This requirement is applicable from financial year 2013. TRC is required by the foreign nationals who have come to India for a specified period and are claiming a relief under the DTAA on their Indian income. It is also applicable to Indians who are going abroad and the host country requires a TRC to allow tax exemptions there.

A foreign national claiming a relief under DTAA is required to file application in the home country to its tax authorities and obtain a TRC. Earlier, the application for a TRC was required to contain the name of the taxpayer, status, nationality, taxpayer’s tax-identification number, residential status, period for which the certificate is applicable. There were many countries which did not issue TRC providing all these details and, in such cases, relief under DTAA was not available. This caused a lot of hue and cry, prompting the government to recently delete this requirement when the proposals were passed in the Lok Sabha.Taxpayers who are residents of India can obtain a TRC by giving an application in Form 10FA to the tax authorities. The form requires information such as name, address of taxpayers, basis for claiming residency in India, purpose and the period for which TRC is required. Upon receipt of the application form, along with the supporting documents, the tax authorities will verify the information and then issue a TRC in Form 10FB.The Indian tax return filing deadline is July 31 and the TRC should be obtained if you are claiming a relief under DTAA. Obtaining a TRC can take a few weeks to a month


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