Form 10F: Purpose, Applicability, Requirements, How to Download and Fill Form 10F Online?

Earning income from India while residing abroad? You may be eligible for reduced tax rates under a Double Taxation Avoidance Agreement (DTAA). Non-residents can claim the benefits of DTAA, an agreement under which their income is taxed only once. India has signed such tax treaties with many countries, which allow dual citizens to avoid the burden of double taxation. But claiming these benefits requires a crucial document: Form 10F.

What is Form 10F?

Form 10F is a self-declaration tax form used by non-resident (NR) taxpayers for claiming the benefits under DTAA (Double Taxation Avoidance Agreement) if their Tax Residency Certificate (TRC) lacks certain crucial details.  

Terms used above:

1. NR taxpayers: These are individuals or entities whose primary source of income is not from India.
2. Double Taxation Avoidance Agreement (DTAA): These are agreements between India and other countries that prevent double taxation on income earned in both countries.
3. Tax Residency Certificate (TRC): This document is issued by the NR taxpayer's home country confirming their tax residency status. NR taxpayer is mandatorily required to furnish a valid TRC for claiming the DTAA benefit.

Purpose of Form 10F: Why is Form 10F needed? 

If the TRC doesn't contain all the necessary information as per the DTAA, the NR taxpayer must provide additional details in Form 10F.

To claim the benefits of a tax treaty, NR taxpayers need to furnish TRC and Form 10F (if certain details are missing in TRC)  as per Section 90 (5) of the Income Tax Act. A TRC must contain certain information, including the taxpayer’s name, foreign address, TIN (Tax Identification Number) and taxpayer status. If the tax certificate does not contain these details, he/she must file the Form 10F electronically. 

The Form 10F requirement also allows NRIs to claim tax exemptions and deductions on their income made in India. 

Eligibility Criteria for Form 10F

Any person who wants to avail the benefits of DTAA must file a self-declaration in Form 10F along with a TRC of their country of residence. The Form 10F applicability is mandatory for NRIs who do not have all the required details of TRC. 

Furthermore, filing Form 10F allows NRIs to avoid TDS (tax deducted at source) on income accrued in India. This is quite useful for NRIs earning in India, as all of their income is subject to TDS. Moreover, TDS is deducted at a higher rate if an individual does not furnish his/her PAN. 

Previously, NRIs who did not have a PAN card also had to file Form 10F online. This required all taxpayers to obtain PAN registration as there were no options to log in to the income tax filing portal without a PAN. However, for FY2023, the CBDT (Central Board of Direct Taxes) allowed a one-time relief to taxpayers without PAN. They could file the form manually by 31^st March 2023. The deadline got extended till September 2023. With such partial exemption coming to an end, for “Non-residents not holding and not required to have PAN”, the Income Tax Department has introduced a functionality to register on the Income Tax Portal. Such functionality enables non-residents to furnish Form 10F electronically without a PAN.

Documents Required for Filing Form 10F

Here is a complete list of documents you may need to file the Form 10F:

• PAN card
• Proof of residential address in your resident country
• Duration of residential status as stated in the TRC
• Taxpayer status (individual, company, firm, trust, etc.)
• Proof of nationality (for individuals) or territory of incorporation or registration (for companies and firms)
• TIN or any other unique tax identification number in country of residence
• Digital signature certificate to authenticate the information furnished in Form 10F

Is it Mandatory to File Form 10F Online and is a PAN Card Required?

Previously:

• Yes, filing Form 10F electronically was mandatory to claim treaty benefits.
• This posed a challenge for foreign companies without a PAN, as they needed one to register on the Income Tax Portal and file the form.

Current situation:

• Non-residents can register on the Income Tax Portal without a PAN. Therefore, a PAN card is no longer required to file Form 10F online.

Non-residents without a PAN can now register on the Income Tax Portal and file Form 10F electronically by providing the following information:

• Basic details: Name, date of incorporation, tax identification number, and country of residence.
• Key person details: Name, date of birth, tax identification number, and designation.
• Contact details: Primary and secondary mobile numbers and email IDs, and postal address.
• Attachments: ID proof, address proof, and a copy of your Tax Residency Certificate (TRC). The ID and address proofs must be valid documents in your country of residence.

On successful verification of these details, you will receive a user ID on your registered email ID, through which you can login on the Income Tax Portal.

You can then upload Form 10F electronically after submitting your TRC and verifying it via OTPs.

Form 10F Download

Download Form 10F from here. 

How to File Form 10F Online?

As mentioned above, taxpayers need to file Form 10F on the income tax e-filing portal. Here is a step-by-step guide to file Form 10F:

Step 1: Log in to the official e-filing portal with with your PAN or the user ID. Register if you do not have an account. 
Step 2: On the dashboard, navigate to the ‘e-File’ menu and select ‘Income Tax Forms’. 
Step 3: Click on ‘File Income Tax Forms’.
Step 4: On the next page, select the 3^rd tab ‘Person not dependent on any source of income’. 
Step 5: You will find the option to file Form 10F in the last column on this page. Click on ‘File Now’.
Step 6: Enter your PAN and select the assessment year from a dropdown menu. Click on ‘Continue’.
Step 7: Go through the given instructions and click on ‘Lets get started’.
Step 8: Enter the required details, including your name, father’s name, Section 90/90A, country of registration/residence, TIN, etc.
Step 9: Next, select the period for which you obtained the TRC and your address outside India.
Step 10: After filing the other details, you need to attach a copy of your tax residency certificate. 
Step 11: Signing of the form can be done via digital signature or electronic verification code.
Step 12: Click on ‘Preview’ to review the details and submit the form. 

Consequences of Not Filing Form 10F

The Form 10F is necessary to claim the benefits of India’s tax treaties with foreign countries. Based on the government’s notification on 16^th July 2022, non-compliance with the Form 10F requirement will result in the withdrawal of DTAA benefits given to a taxpayer. As mentioned before, a higher rate of TDS is applicable to those who have not filed this form.

If you don’t furnish Form 10F, there are also tax and legal repercussions to consider. If an NRI taxpayer applies a reduced tax rate or nil tax liability without having filed the form, he/she will be treated as an ‘assessee in default’. This would also make remittances difficult as non-residents need to comply with documentation requirements to maintain accounts. 

It is advisable for NRIs to have a valid PAN as it would let them file Form 10F online and avail the lower rate of TDS deduction. Although NRIs without PAN were allowed to file the form manually by 31^st March 2023, the same benefit may not be applicable again. 

Who Needs a Tax Residency Certificate?

Any Indian who has received income from a country which has a DTAA with the Indian Government needs to get a TRC (tax residency certificate). For NRIs who are liable to pay tax in India and want to avoid additional taxation on their income by two countries, obtaining a TRC is a must. Additionally, the government has made it mandatory for Indians to obtain a TRC for claiming DTAA benefits. 

The Tax Residency Certificate helps the income tax department confirm which country a person is a tax resident of. A person’s residency status depends on the location where they perform their services or obtain their income. NRIs may need to submit a TRC to the government of their host country as well. Foreign nationals earning income in India also need to file a TRC if they want to benefit from DTAA.

To obtain a TRC certificate in India, you need to qualify as a resident and get two types of Form 10F. These are:

• Form 10FA: This form is used by Indian residents to obtain a certificate of residency as per the terms of Section 90 (5) and Section 90A of the Income Tax Act.
• Form 10FB: Once the concerned assessing officer verifies the details, they will issue a residency certificate through a Form 10FB.

Non-residents need to follow the procedure given by the government of their host country to receive a TRC. Note that the document remains valid for one financial year. 

Benefits of Filing Form 10F:

• Lower Tax Deduction at Source (TDS): Avoid higher tax rates on income like dividends, interest, and royalties.
• Compliance with Indian Tax Regulations: Fulfils legal requirements to claim DTAA benefits.
• Faster Processing of Tax Returns: Ensures accurate tax assessment and avoids delays.

Final Words

To sum up, filing Form 10F allows NRIs to avoid having to pay taxes on the same income to two countries. Furthermore, filing this form lets them claim various provisions of tax exemptions and deductions available under the Income Tax Act. Finally, it provides receipts for taxes paid in India, which helps to reduce tax liability in the foreign country.