When you have global income & investments, there is always a chance to pay double tax. This means you are taxed in India as well in the country you make investments or receive any income. Double Tax Avoidance Agreements play an important role in minimizing such incidences. But to get benefits from DTAA, you require an important document called Tax Residency Certificate or TRC. Let’s check this in detail.

Today we will discuss,

1. What is Tax Residency Certificate or TRC?
2. Why is TRC required?
3. What is the information required in TRC?
4. Where can you get a TRC in India?
5. The process to obtain TRC.

Tax Residency Certificate

Tax Residency Certificate (TRC) is a declaration from the Government of the country of which Assessee claims to be a resident.

A non-resident is required to produce a tax residency certificate (TRC) which states his country of residence from the home country if he wishes to claim relief as per DTAA.

A tax residency certificate is a document that enables Indian residents to enjoy tax relief under the Double Taxable Avoidance Agreement (also known as DTAA).

So TRC can be obtained by Indian Tax Authorities or TRC of a foreign country may be obtained from that country’s relevant authority.

DTAA

DTAA is an agreement between two or more nations to avoid taxing an income twice (i.e. by the resident nation and the source nation). You can avail the benefits of this tax treaty if you’re a resident of one country and earn income from another.

Details Here

Why is TRC required?

A Tax Residency Certificate helps you save on double taxation.

Sometimes income tax is levied by two or more nations. To claim income tax relief you need to take benefit of DTAA. For this, a Tax Residency Certificate is mandatory from the tax authority of your resident country.

In India, TRC is mandatory for a person who wants to avail any DTAA benefits of a treaty that India has entered into with another country.

TRC is required by non-resident Indians (NRIs) to submit to their country of residence. Foreign nationals who have earned an income from India and want to take treaty benefits also need to obtain TRC from the Indian Tax Department.

So TRC will save tax by not paying double. Following incomes can be mentioned to avail benefit:

• Services provided in the non-resident country
• Salary received in the non-resident country
• Assets in the non-resident country
• Capital gains on the transfer of assets to a non-resident country
• Fixed deposit in the non-resident country
• Saving bank account in the non-resident country

Information contained in TRC

The certificate must contain the following information:

• Status i.e. individual
• Nationality of the individual
• Taxpayer’s tax identification number in the country in which he is a resident. In case, there is no such number, then, a unique number based on which the person is identified in the country where he is a resident
• Period for which the residential status, as mentioned in the certificate is applicable; and
• Address of the taxpayer in the country of which he is a resident

If these details are not contained in the TRC, Form 10F needs to be filed containing the above particulars. It requires the taxpayer to keep and maintain the documents that are necessary to substantiate the above information provided in Form 10F. It authorizes the tax officer to ask the taxpayer for these documents for verification.

Tax Residency Certificate (TRC) format

FORM No. 10FB

See rule 24AB (4)

Certificate of residence for the purpose of Section 90 and 90A

	1.	Name
	2.	Status
	3.	PAN (Permanent Account Number)
	4.	Address of the person during the period of Tax Residency Certificate

Certificate

It is hereby certified that the above-mentioned person is a resident of India for the purposes of the Income Tax Act, 1961.

This certificate is valid for the period ________.

Issued on _____ the day of ______, ________.

Name of the Assessing Officer

Designation

*Seal*

How to apply for Tax Residency Certificate or TRC?

To apply for TRC as a resident of India, you need to fill and submit Form No. 10FA to the Assessing Officer. The format for form 10FA is here.

The officer after checking your status will issue a certificate of residence. This will be in Form No. 10FB.

The validity of TRC is generally the end of the Financial Year as TRC is issued every year to determine residency.

That‘s all in the post. Do let me know your queries through the comments section below or via email madhupam at the rate thewealthwisher.com.