Select Practical Issues in Certification of Taxability of Foreign Remittances in Form 15CB – Part 1

BACKGROUND The certification of taxability of foreign remittances in Form 15CB remains one of the most practiced areas in international taxation for a Chartered Accountant (‘CA’) in India. While the entire gamut of tax treaties and interplay with domestic tax provisions would apply while analysing the taxability of foreign remittances, there are various practical issues a CA faces while issuing Form 15CB. While it is impossible to cover all such practical issues, the authors, through this article, divided into multiple parts, seek to cover some issues that one comes across, and possible practical solutions for such issues. At the outset, it may be highlighted that as in the case of legal issues, multiple views and solutions may be possible on a particular issue. With the increase in the rate of tax for royalty and FTS, the claim for treaty benefit becomes a far more crucial issue. In the first part of the article, the authors seek to cover some of the issues related to the tax residency certificate and the issue of Form 10F. ISSUES RELATING TO TAX RESIDENCY CERTIFICATE (‘TRC’) Issue 1: Whether TRC is mandatory? Section 90(4) of the Income Tax Act, 1961 provides that the benefit of a Double Taxation Avoidance Agreement (‘DTAA’) shall be available to a non-resident only in case such non-resident obtains a TRC from the tax authorities of the relevant country in which such perso