Form 10F is a self-declaration Form which is required to be submitted as per rule 21AB(1) of the Income tax rules if the TRC (tax residency certificate) submitted by non-resident does not contain all 5 details as required in Rule 21AB.
The 5 details as required in rule 21AB are: Status, Nationality, TIN or any other identification number, Residency & address of the non-resident. Hence, if these 5 details are mentioned in TRC, Form 10F is not required. However, it is recommended to take Form 10F even if these 5 details are mentioned in TRC if the TRC is in a language other than English.
Form 10F is not a substitute to TRC but a supporting document to TRC.
Earlier Form 10F was required to be submitted in manual form to the deductor. However, vide notification no. 03/2022 Dt. 16.07.2022 it was made mandatory to submit Form 10F online on e-filing portal.
Many non-resident were facing it difficult to submit Form 10F online on e-filing portal as for submitting Form 10F online, a person is required to have PAN and all non-resident don’t have PAN in India.
Hence, considering the above difficulty, CBDT has come up with a notification Dt. 12.12.2022 wherein partial relaxation has been offered to certain classes of non-resident from online filing of Form 10F.
The notification read as under:
“Reference is invited to Notification No. 03/2022 dated 16th July 2022 issued by Directorate of Income Tax (Systems) New Delhi in exercise of powers conferred under Rule 131(1)/(/2) of the Income-tax Rules mandating, inter alia, furnishing of Form 10F electronically.
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 witha 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 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 31st March 2023. For the sake of clarity, it is reiterated that such category of taxpayers may make statutory compliance of filing Form 10F till 31st March 2023 in manual form as was being done prior to issuance of the DGIT(Systems) Notification No. 3 of 2022.”
There are two key points here for claiming exemption:
- This exemption is available to non-residents who are not having PAN and who are not required to have PAN.
- This exemption is available only till 31.03.2023.
From the above points it is very clear that if a non-resident already has PAN irrespective of whether he was required to have PAN or not he needs to file Form 10F online.
Now let’s see person who are required to have PAN in India:
Section 139A of the Income Tax Act prescribed the list of persons who are required to have PAN in India:
“Every person,
(i) if his total income or the total income of any other person in respect of which he is assessable under this Act during any previous year exceeded the maximum amount which is not chargeable to income-tax; or
(ii) carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed five lakh rupees in any previous year; or
(iii) who is required to furnish a return of income under sub-section (4A) of section 139; or
(iv) being an employer, who is required to furnish a return of fringe benefits under section 115WD, or
(v) being a resident, other than an individual, which enters into a financial transaction of an amount aggregating to two lakh fifty thousand rupees or more in a financial year; or
(vi) who is the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person referred to in clause (v) or any person competent to act on behalf of the person referred to in clause (v); or
(vii) who intends to enter into such transaction as may be prescribed by the Board in the interest of revenue,
and who has not been allotted a permanent account number shall, within such time, as may be prescribed, apply to the Assessing Officer for the allotment of a permanent account number.”
Thus, considering the above if any person is earning income from India needs to take PAN in India and if they are not earning income from India then no PAN is required. Further, if a person is required to obtain PAN in India but he does not obtain it due to any reason then he will not get the relaxation from online filing of Form 10F.
However, there are certain relaxation provided to non-resident from obtaining PAN in rule 114AAB which is as under:
(1) The provisions of section 139A shall not apply to a non-resident, not being a company, or a foreign company, (hereinafter referred to as the non-resident) who has, during a previous year, made investment in a specified fund if the following conditions are fulfilled, namely:—
| (i) | the non-resident does not earn any income in India, other than the income from investment in the specified fund during the previous year; | |
| (ii) | any income-tax due on income of non-resident has been deducted at source and remitted to the Central Government by the specified fund at the rates specified in section 194LBB of the Act; and | |
| (iii) | the non-resident furnishes the following details and documents to the specified fund, namely:— |
| (a) | name, e-mail id, contact number; | |
| (b) | address in the country or specified territory outside India of which he is a resident; | |
| (c) | a declaration that he is a resident of a country or specified territory outside India; and | |
| (d) | Tax Identification Number in the country or specified territory of his residence and in case no such number is available, then a unique number on the basis of which the nonresident is identified by the Government of that country or the specified territory of which he claims to be a resident. |
The specified fund in the rule has been defined as under:
“‘specified fund” means any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which has been granted a certificate of registration as a Category I or Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992(15 of 1992) or International Financial Services Centres Authority Act, 2019 (50 of 2019) and which is located in any International Financial Services Centre or a specified fund referred to in sub-clause (i) of clause (c) of Explanation to clause (4D) of section 10;]”
Hence, other than above exception all other people are required to take PAN in India and if they are required to take PAN in India, they will have to file Form 10F online.
Thus, there will be a very small group of people who would not be required to get PAN in India and who would be exempted from filing Form 10F online.
Further as of now the exemption has been granted till 31.03.2023.
In addition to above we would like to suggest some alternative ways in which such declarations can be made which are as under:
- Non-resident should be allowed a TIN based login to submit Form 10F as many times Form 10F is a supporting document to TRC which helps in making income not taxable in India as per DTAA. or
- Deductor should be asked to upload Form 10F on e-filing portal rather than asking non-resident to take PAN and file Form 10F.
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