IMPORTANCE OF TAX RESIDENCY CERTIFICATE (TRC) IN NON-RESIDENT PAYMENTS?

Q. 1: What are the Legal provisions on TRC?

Answer:              

S. 90(4) – NR cannot avail benefit under Treaty without Tax Residency Certificate (TRC).

S. 90(5) – The assessee has to provide such other details as may be prescribed.

Rule 21AB – specifies the information to be provided in Form 10F – if the same are not covered in the TRC. So, TRC and Form 10F go together. Form 10F alone not enough.

Q. 2: Is TRC enough for claiming the DTA benefit?

Answer:

If special conditions are specifying contrary in DTA – like Beneficial ownership, Limitation of Benefits clause – TRC is not enough.

Q. 3: If TRC is not available at the time of deduction?

Answer:

Practical decision can be taken based on past facts after due diligence. Once the TRC is obtained, the treaty benefit would be available for the whole year.

Q. 4: If the TRC is available, but it is for a different period?

Answer:

The remitter can only rely on the TRC for the period during which the income is earned.

Q. 5: Is TRC required in case tax is not payable under the Act itself?

Answer:

As DTAA provisions are not exercised, provisions of Sections 90(4), 90(5) and the relevant rules will also not be applicable.