How to Obtain India’s Tax Resident Certificate in Form 10FB

India’s Tax Resident Certificate, also known as the TRC, is a crucial document that allows Indian citizens to avail tax relief under the Double Taxation Avoidance Agreements (DTAA). It is issued by the Income Tax Authority of India to individuals who are considered residents of the country for tax purposes. In this article, we will explore the various aspects of the Tax Resident Certificate and provide a step-by-step guide on how to obtain it using Form 10FB.

What is the Tax Resident Certificate (TRC)?

The Tax Resident Certificate is an essential document required to avail tax relief under the DTAA. It is issued by the individual's home country, in this case, India, to certify their tax residency status. The TRC is then furnished to foreign countries with which India has a DTAA agreement. It allows individuals to either avoid Tax Deducted at Source (TDS) deduction by foreign tax authorities or claim a tax refund by filing a tax return in the foreign country.

To be considered a resident of India for tax purposes, an individual must meet one of the following criteria:

1. Stay in India for 182 days or more in the financial year.
2. Stay in India for 60 days or more in the current financial year and have stayed in India for 365 days or more in the four preceding years. (For Non-Resident Indians, the 60-day requirement is replaced with 180 days.)

For example, if Mr. Nitin, a project manager, visits Singapore for eight months during the financial year 2017-18 and stays in India for the remaining four months, he will be considered an Indian resident for tax purposes if he had stayed in India for 365 days or more during the financial years 2016-17, 2015-16, 2014-15, and 2013-14.

Types of Foreign Incomes Covered by DTAA

The DTAA applies to various types of foreign income. Some of the key categories include:

1. Interest on fixed deposits
2. Interest on savings bank accounts
3. Capital gains earned in a foreign country
4. Salary received in a foreign country

It's important to note that the DTAA helps in avoiding double taxation on these foreign incomes by allowing individuals to pay taxes at a concessional tax rate as per the agreement between India and the foreign country.

How to Obtain India’s Tax Resident Certificate (TRC) using Form 10FB

Obtaining India's Tax Resident Certificate involves a manual process that requires a visit to the Assessing Officer's (AO) office. Here is a step-by-step guide on how to obtain the TRC using Form 10FB:

Step 1: Locate Your Assessing Officer (AO) Online

To begin the process, you need to locate your Assessing Officer (AO) online through the e-filing website. Enter your Permanent Account Number (PAN) and registered mobile number to find the contact details of your AO. This information is usually available in the left corner of the page under the tab "Quick Link."

Step 2: Prepare Documentation of Your Movement In and Out of India

Prepare a document that explains your movement in and out of India. This document should include details of your stamped passport, including entry and exit stamps. If you have used electronic check-in or check-out through smart gates, save your air tickets as evidence. Calculate the number of days you spent in foreign countries and clearly state your stays in India for the remaining days in the financial year.

Step 3: Download and Fill Form 10FB

Download Form 10FB from the official Income Tax Department website. This form is specifically designed for obtaining the Tax Resident Certificate. Fill in the form with the required information, including the purpose of the TRC. For example, you may state that the certificate is needed to release the deducted tax amount from salary income earned abroad. Attach a photocopy of your passport and mark all the arrival and departure stamps, as mentioned in Step 2.

Step 4: Submit the Form to the Assessing Officer (AO)

Physically submit the filled-up Form 10FB, along with the supporting documents, to the Assessing Officer (AO). The AO may ask you to visit their office for further discussion and verification of the application. It is essential to satisfy the AO's requirements and provide any additional information or clarification they may need. Once satisfied, the AO will issue the Tax Resident Certificate in Form 10FB.

Conclusion

The Tax Resident Certificate (TRC) is a crucial document for Indian residents who want to avail tax relief under the Double Taxation Avoidance Agreements (DTAA). By following the step-by-step process outlined in this article, individuals can obtain the TRC using Form 10FB. With the TRC, they can avoid double taxation on their foreign income and ensure compliance with the tax laws of both India and the foreign country. It is essential to carefully follow the process and provide all the necessary documentation to obtain the TRC successfully.

Remember, the Tax Resident Certificate is specific to each individual and their unique tax situation. It is advisable to consult with a tax professional or seek guidance from the Income Tax Department for personalized assistance and accurate information.