Non-resident Indians (NRIs) earn income abroad from their employment, but may also have some sources of income in India. If you are an NRI, you may have found yourself in the common predicament of paying taxes twice on the same income — in India and abroad. However, by furnishing Form 10F, you can take advantage of the double taxation avoidance agreement (DTAA) that India may have with the country of your employment.
In this article, we’ll explore the meaning of Form 10F, why it is necessary, who is eligible to furnish it and the benefits it offers.
What is Form 10F?
Form 10F is a self-declaration form that non-resident Indians need to submit to the Income Tax Department in India. This form helps NRIs benefit from the double taxation avoidance agreement (DTAA) between India and the country in which they earn income. The tax form is valid for one financial year only. If you are a non-resident Indian, ensure that you submit this form every year to obtain the specific tax benefits it offers.
The Significance of Form 10F
If you are a tax resident in another country than India, your home country will typically issue a Tax Residence Certificate (TRC). This document contains crucial information required as per the DTAA between the foreign country and India, and such details are essential to help you avoid double taxation of your income.
However, if your TRC does not provide all the information according to the DTAA, you may be ineligible for the associated tax benefits. To avoid this issue, you must furnish Form 10F online or electronically. Without this tax form, your DTAA benefits will be withdrawn and your income may be taxed twice — in India and abroad.
Additionally, if you claim the DTAA benefits in your tax return without furnishing Form 10F in the Income Tax Act, you may be categorised as an ‘assessee in default.’
Who Needs to Submit Form 10F?
The short answer to this is that any NRI who wants to claim the benefits of the DTAA India has with their country of residence must furnish Form 10F. Some NRIs may avoid filing this form because they have a Tax Residence Certificate (TRC).
However, while a TRC may be necessary, it is often not sufficient to claim the benefits of the DTAA. So, any non-resident Indian who lives in a country that has a DTAA with India must submit Form 10F to enjoy the tax benefits of the agreement and avoid double taxation of their income. Since it is a self-declaration form that can be furnished online, the process of submitting the document is fairly straightforward.
Filing Form 10F: Documents Required
To furnish Form 10F electronically, the following documents and details are essential.
- Permanent Account Number (PAN) card
- Tax Residence Certificate
- Proof of residence in your country of residence
- The period of your residential status as mentioned in the Tax Residence Certificate (TRC)
- Details of your taxpayer status (such as individual, trust, firm, company etc.)
- Proof of nationality (if you are an individual)
- Proof of registration or incorporation (for other entities)
- The tax identification number (TIN) or its equivalent in your country of residence
Additionally, you will also have to sign your Form 10F electronically using a digital signature certificate
Decoding the Requirement of PAN for Filing Form 10F
Many non-resident Indians may not have a PAN because they reside abroad. This becomes a hassle for filing Form 10F online because NRIs need to log into the income tax e-filing portal to submit the form — and logging in requires PAN details.
Furthermore, the absence of a PAN also means that any tax deducted at source (TDS) in India will be deducted at a higher rate. These pitfalls make it essential for NRIs to obtain a PAN before furnishing their Form 10F.
For FY 2023 alone, the Indian government has offered a one-time relief to non-resident assessees to furnish Form 10F manually, without the hassle of submitting their PAN. However, this measure may or may not be carried forward to other financial years. So, if you are an NRI and do not have a PAN yet, it is advisable to obtain one as soon as possible to make tax compliance easier.
Steps to Submit Form 10F Online
To furnish Form 10F under the Income Tax Act online, all you need to do is follow the steps outlined below:
- Step 1: Log into the income tax e-filing portal using your PAN and password.
- Step 2: In the ‘e-file’ tab, select ‘Income Tax Forms’ and choose the ‘File Income Tax Forms’ option.
- Step 3: On the new page, select the third category of persons, i.e. ‘Persons not dependent on any Source of Income (Source of Income not relevant).’
- Step 4: Find the option labelled ‘Double Taxation Relief (Form 10F) from the list of available forms displayed and click on the ‘File Now’ option beside it.
- Step 5: Your PAN will automatically be displayed. From the dropdown menu, select the relevant assessment year and click on ‘Continue’ to proceed.
- Step 6: Read through the instructions and then click on ‘Let’s Get Started.’
- Step 7: Provide the details required and attach a soft copy of your Tax Residence Certificate online.
- Step 8: Sign your Form 10F using your digital signature or using the electronic verification code.
- Step 9: Preview the document, review the information and submit your Form 10F online.
Benefits of Filing Form 10F
Filing Form 10F offers several benefits to NRI taxpayers. Here is a closer look at the advantages of submitting this form electronically using your PAN.
- You can avoid double taxation of your income and claim the benefits offered by the double taxation avoidance agreement.
- You can avoid the higher rates of tax deductions that apply to those without a PAN.
- You can claim tax deductions and exemptions on any eligible income you earn in India.
Conclusion
Form 10F is a vital document for non-residents who earn income in countries that have a double taxation avoidance agreement (DTAA) with India. Additionally, furnishing this document also makes it possible for NRIs to claim tax benefits like deductions and exemptions in India. While the government may have offered a one-time relief for NRI assesses to file their Form 10F offline. However, it is advisable to obtain a PAN if you do not have one yet to avoid any inconvenience in the future.
FAQs
Do I need to furnish Form 10F even if I have a TRC?
If your Tax Residence Certificate (TRC) does not contain all the details required to take advantage of the DTAA, you must file Form 10F to avoid double taxation.
What is the penalty for not filing Form 10F?
Form 10F is a self-declaration form. So, there is no penalty for not furnishing this document. However, if you do not submit it, you may suffer double taxation of your income.
Can I file Form 10F online?
Yes, Form 10F is typically filed online and requires your PAN details. However, recently, the government offered a one-time relief for non-resident taxpayers for FY23 alone, allowing them to submit the form manually.
Is Form 10F mandatory if I reside in a country that does not have a DTAA with India?
If you are earning income in a country that does not have a double taxation avoidance agreement (DTAA) with India, you cannot file Form 10F.
Do residents need to file Form 10F?
No. Form 10F in the Income Tax Act is solely for non-residents who live in countries that have a DTAA with India. Residents should not submit this form.
