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Importance of Tax Residency Certificate (TRC) in Non-Resident Payments?

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


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?


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?


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?


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?


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

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