Tax Residency Certificate Requirement In India — Bumpy Road Ahead?

Summary

The Indian government has, in the recent past, introduced a mandatory requirement of furnishing Tax Residency Certificate (TRC), for non-residents seeking tax treaty (Treaty) benefits. After undergoing a few changes, the current provisions state that in order to claim this benefit the non-resident would have to produce TRC issued by the Treaty partner. The government would also prescribe details and documents that the non-resident would be required to furnish. This write-up traces these legislative developments over the last one year and their impact on the non-residents.

Journey so far

• Finance Act 2012¹, made it mandatory for non-residents seeking Treaty benefits to produce a TRC with prescribed particulars from the Government of the Treaty partner country. The rationale² was to refrain third party residents, from claiming unintended Treaty benefits. Subsequently, the particulars required in the TRC were notified³. The TRC was also required to be