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Many people live in countries other than their own to earn money by way of jobs, business, and investments. Here comes the requirement for a Tax Residency Certificates India as it’s commonly called.

People may have a secondary source of income in the country where they are citizens, but do not reside permanently. They may also have income as a result of some operations in both jurisdictions. Taxation of income for such people can be a nightmare as no country would like to forego its share of revenues, and the person concerned may end up paying double taxation.

Each country has its own tax laws, with some countries like the USA also having state income taxes applicable, and the criteria for “residency of the assessee” for taxation purposes may vary considerably. One must remember that the main criteria for “taxes residency” is the physical presence within a jurisdiction for the most part of the taxes assessment year.

In this Article –

  • What is Tax Residency Certificates?
  • What is the Double Taxation Avoidance Agreement (DTAA)?
  • How DTAA helps avoid double taxation?
  • How to get a Tax Residency Certificate in India?
  • Validity of the Tax Residency Certificates.

 

Tax Residency Certificate
tax residency certificates India

Check – How NRIs can save tax on their income in India

What is Tax Residency Certificates?

A Tax Residency Certificate India is a certificate issued by a competent tax authority to give you the status of “Tax-Resident” of the concerned country. Such a TRC certificate is needed to segregate your incomes and taxes on them on the basis of their point of origin even if they are moved from one jurisdiction to another.

Tax Residency Certificate India – rules for NRIs

For individual non-Resident Indians, their tax residency is dependent on the number of days they have stayed in India within a financial year (April 1 to March 31). Typically, u/s6 of the IT Act, 1960, one is said to be a Resident Indian (RI) for taxes purposes, if s/he was in India for more than 182 days in the given fiscal year.

A HUF is to be Resident Indian in a given financial year in all manners, except only when during that year its effective control and management was situated outside India.

Read – NRI TDS & Simple Process of Tax Refund

What is Double Taxation Avoidance Agreement?

The income earned in one country, say the USA, will obviously attract applicable income tax there. But it will be a double whammy if you would have to pay tax in India again on the post-tax income if you brought it to India for building a house, spending on family, or simply making an investment!

When you earn your income from two countries, your income may be taxable in both of them in accordance with their domestic taxes laws. To promote cross-border investments, migration of talented labor, and help their citizens avoid paying double tax on the same income, countries sign the Double Tax Avoidance Agreement or the DTAA with each other.

Double Taxation Avoidance Agreements between two countries have the objective to avoid taxing the same declared asset twice by both countries. The rules for DTAA applicable for NRIs are defined u/s 90 & u/s 90A of the Income Tax Act, 1961. The changes in these rules (and their explanations) are notified by the Central Board of Direct Taxes (CBDT) that comes under the Ministry of Finance, Government of India.

The provisions of DTAA allow you to benefit by subjecting your income only in one country and making it tax-exempt in the other automatically. A TRC comes in handy to help establish your residency tax certificate and apply the relevant DTAA rules for the application of tax jurisdiction.

As per the most common practices under the DTAAs income is taxed by the country where the individual was tax-resident normally for the said financial year – it can be the source country if the person was not resident in India for at least 182 days or will be India otherwise.

To understand better, suppose you are a resident of the USA (NRI) and also have income in India, then as an NRI, you would be liable to pay the tax on such income in the “source country” (India) and also in the “home country” (USA). If there is a DTAA in place between the USA and India, which fortunately is, you would pay the tax only in one country, and not both of them.

How DTAA helps avoid double taxation?

With the DTAA in place with most countries where a substantial NRI population lives and works, almost every NRI can take advantage of its provisions in more than one way:

  1. It grants an exclusive right to tax to only one of the countries in the agreement.
  2. In case both countries have the right to tax then there are provisions to limit the tax rate in both countries.
  3. It also grants the NRIs the right to obtain a tax credit in India for taxes paid in the source country.

Check – India Tax For NRIs – On India Income

Incomes covered by the DTAA

Depending on the specific DTAA between India and a country the incomes covered may be slightly different, but for the most part following incomes are covered:

  • Interest income on deposits.
  • Dividend income.
  • Salary – from part-time and full-time jobs.
  • Capital gains – short-term and long-term both.
  • Consultancy, patent & license fee, and royalty income.
  • Income from the business.
  • Miscellaneous income.
Tax Residency Certificate India
Need for Tax Residency Certificate for NRIs, and how to get?

How to obtain a Tax Residency Certificate India 

Now it must be clear that a Tax-Residency Certificate is your key to avoid double taxation in the source and the home countries, therefore you must get one as soon as possible. To obtain one, you may approach the competent Income Tax authority of the country where you reside, like the IRS in the USA or the HMRC in the UK, to obtain a TRC.

You must check with your financial advisor, the CA, or the CPA to avoid missing any deadlines and lapses in the procedure to obtain a TRC. Your financial advisor or the local bank, where you have your local bank account, may help you with the format to apply for TRC in the country of residence.

How to get a Tax Residency Certificate in India

As NRIs need to obtain the TRC in their respective countries, and the exact minutiae may be different everywhere, here we present a guide to obtain a TRC certificate in India for any “tax-resident of India” (TRI from hereon).

Residency Certificate Form 10F: A TRI needs to submit Form 10FA to the competent IT authority in India. If you have received your TRC from the country of your residence, then you will need to submit it to your bank and taxman in India to avail the benefits of the DTAA. For e.g., if you do not submit your USA TRC with Indian IT authorities or banks, there is a TDS of 30% applicable on interest, which might not be refundable. But if you submit the TRC in time, the effective rate would be only 15%, a 100% savings.

Check – Tax-free incomes for NRI

Tax residency certificate for NRI requirement in India

Mandatory details in a residency certificate.

U/s 90(4) of the IT Act, a TRC (for NRI individuals) must have the following details:

  1. Name of the assessee.
  2. Status of the assessee – individual, company, firm, etc.
  3. Nationality of the assessee.
  4. Unique Tax Identification Number (TIN) of the assessee in the country of residence or a unique personal ID number for identification used by the Government of the country in case the TIN is not available.
  5. Period for the applicability of the residential status.
  6. Residential Address of the applicant for the period during which TRC is applicable.

A TRC with all these above details and duly verified by the Competent Tax (or Government) authority of the country of residence must be submitted by the NRI to tax authorities in India and vice-versa.

In case if any of the details are missing in the TRC, anyone submitting their TRC in India needs to submit information sought in Form 10F India u/s to the taxman. Other countries also have similar provisions.

Validity of the TRC

A TRC is issued fresh for each financial year for which it is applicable and is the only document acceptable by governments all over for granting benefits under the DTAA provision. Therefore, it becomes necessary to obtain a fresh TRC each year and submit it to the tax authorities and/or banks.

Hope this article clarified to you what is TRC or Residency Certificate. Please share your views & experiences getting an India tax residency certificate or from any other country.

Published on May 20, 2021

Hemant Beniwal


Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning". 

  • Please help us with the below documents required to transfer the Royalty fee of uniforms as per Indian banking Rules & Law-:Tax Residence Certificate (TRC)is needed in order to benefit from the application of double tax treaties and comply with local tax regulations.2. NO PE IN INDIA Certificate- A Certificate to be provided by a Non Resident.3. FORM 10F Certificate- Form 10F must be verified by the government of the country in which the assessee is a resident for the period applicable. It is a declaration that the assessee resided in the foreign country which is covered under a DTAA with India and hence, the tax rate applicable to the income is at the rate mentioned in the DTAA (Double Taxation Avoidance Agreement).

  • A Indian origin person live in US since 1999. He is not resident of India. Now he is selling a property in Indian. So he has required TRC. The question is can he apply for TRC in India even he is non resident in India?

  • This is my first year in usa. My only income in India is interest and Rs 360/ dividend. It is below exemption limit. I have to file return to get TDS refund. How to show dividend income. I have not obtained TRC. When i tried to file return. It shows error related to double taxation treaty. How to avoid this error.

    • Hi NJ Shaikh,
      To obtain one, you may approach the competent Income Tax authority of the country where you reside, like the IRS in the USA or the HMRC in the UK, to obtain a TRC.

    • Hi Maria,

      No you will not be taxed on your USA social security income in India. There are some tax treatments which allows you to avoid double taxations.

  • I am an NRI staying in Singapore how I can get TRC? Whom I need to contact for TRC like Singapore government or Indian government

    • Hii Periyasamy Ji
      To obtain Tax Residency Certificate you may approach the competent Income Tax authority of the country where you reside.
      You must check with your financial advisor, the CA, or the CPA to avoid missing any deadlines and lapses in the procedure to obtain a TRC. Your financial advisor or the local bank, where you have your local bank account, may help you with the format to apply for TRC in the country of residence.

  • I’m doing as postdoctoral researcher in Spain. I need to avail TRC to avoid double taxation here in spain. Is it possible to apply for TRC from spain itself or do i need to be present physically in india to apply for the same?

  • Someone in India receives an inheritance from the Netherlands and now I need a ‘Tax Residence Certificate I was wondering if I can use the Form No. 10 FA?

  • I am a resident of India , I need to submit a TRC from India . Can I just fill form 10F and submit to AO online? or does it have to be a physical submission?

  • How can I get residency certificate from USA for the Financial year 2021-22 in India because it is given by IRS after end of financial year 2020 FY ending on 31st Dec every year

  • I will be returning back to india from Oman in july-2021 first week. if any money transfer to NRE account before that will be considered under taxable for the financial year 2021-22? I am only eligible for the pay tax on indian income only after july-2021 onwards. Am i right?

    • Hi Jatin,

      After staying more than 182 days in India you will be considered a resident of India & if you receive any income in India then it will be taxable.

  • i am nri since 2006 i have not filed it return in india what to do now i have nre account in india in some banks and have nre fd in those account

    • Hi Dipak,

      Interest in NRE FD is exempted from tax. If you have an income in India that is more than Rs 2.5 lakh in an FY then you should file the ITR.

  • Banks and companies request a TRC to apply concessional tax rates to the current year income. But the issue is that the TRC for the curreny year is only issued AFTER the year is completed or AFTER 182 days of the current year had elapsed. Meanwhile the tax has already been deducted at normal rates for those 182 days.

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