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MoF: Representation highlighting challenges faced by non-resident taxpayers in mandatory e-filing of Form 10F
MoF: Representation highlighting challenges faced by non-resident taxpayers in mandatory e-filing of Form 10F

March 17, 2023

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The Central Board of Direct Taxes (CBDT), in July 2022, issued Notification No. 03/2022 (Notification) mandating Non-Resident (NR) taxpayers to file Form 10F electronically along with Tax Residency Certificate (TRC) to claim benefit of Double Taxation Avoidance Agreement (DTAA) in respect of income earned in India. Form 10F is relevant for the purposes of Tax Deduction at Source (TDS) under S. 195 of Income Tax Act, 1961 (IT Act) by the payer while making payment to NR taxpayers who is availing the benefit under DTAA.

In this context, CBDT exempted NR taxpayers who do not have a PAN in India and are not required to obtain Permanent Account Number (PAN) under IT Act from mandatory electronic filing of Form 10F till March 31, 2023.1 However, with effect from April 1, 2023, NR taxpayers not having PAN in India will be mandatorily required to file form 10F.

NR taxpayers who do not have PAN in India cannot access the e-filing portal of tax department to e-file Form 10F since e-filing facility is available only for those taxpayers who have PAN in India. As a result, NR taxpayers who wish to claim the benefits of DTAA need to login to the e-filing portal of tax department and hence, are mandatorily required to obtain a PAN in India. Further, the authorised signatory of NR taxpayer is also required to obtain a Digital Signature Certificate (DSC) for signing form 10F electronically. Mandating a non-resident taxpayer to obtain PAN and DSC in India creates an additional compliance burden.

Tax authorities in India already have access to information contained in Form 10F as part of reporting done in quarterly TDS statements in Form 27Q. Hence, mandatory e-filing of Form 10F by NR will result in duplication and will increase compliance burden for them.

In this regard, we have requested Ministry of Finance to do away with mandatory electronic filing of Form 10F for NR taxpayers who do not have PAN in India or are not required to obtain PAN under IT Act. Alternatively, Government should allow filing of form 10F electronically without creating a PAN-based login ID on the e-filing portal of tax department. This will help in promoting ease of doing business for such non-resident taxpayers.


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Tejasvi

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