Non-residents without a Permanent Account Number (PAN) can now electronically file Form 10F that is required along with a tax residency certificate to avail of benefits of the tax treaty. The Central Board of Direct Taxes has enabled non-residents who do not have a PAN to e-file Form 10F on the income tax portal by creating an account without the requirement of first obtaining a PAN.
A new option of ‘Non-Residents not holding and not required to have PAN’ is now available on the income tax portal’s registration tab although there is no official notification on this. A one-time password is required for registration and the user will have to provide their details as well as details of key persons in India.
The relaxation comes soon after it became mandatory to file Form 10F online from October 1 this year. PAN is required for registration online. The CBDT had in July 2022 made electronic filing of Form10F mandatory but it was subsequently postponed to April 1, 2023, for non-residents not having PAN and not required to have PAN, owing to practical challenges in obtaining an online Form 10F in the absence of a PAN. This requirement was further extended to September 30, 2023.
Form 10F is a self-declaration required to be submitted by non-resident taxpayers as a covering of Tax Residency Certificate. It enables non-residents to get relief on TDS on income accruing from India. Under the Income Tax Act, a non-resident entity or individual is not eligible to assert the benefits of the tax treaty, unless they furnish a valid tax residency certificate obtained from their country of residence. In case, the tax residency certificate fails to encompass all essential particulars, the non-resident has to furnish manual Form 10F.
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Tax experts said this relaxation will be a great relief as many non-residents but said that a user guide would be beneficial for those using the facility and clarifications on a digital signature.
“This relaxation of obtaining a PAN in India to create the income tax portal login holds considerable significance for numerous non-residents who have been averse to obtaining an Indian PAN due to the absence of any taxable income within India’s jurisdiction, thereby allowing non-residents to fulfil their compliance obligation of obtaining Form 10F without the PAN prerequisite,” said Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen. He, however, cautioned that it is important to prudently evaluate and address any technical intricacies before issuing an official notification to ensure ease of compliance and an equitable system for non-residents fostering compliance, without undue complexities
Yeeshu Sehgal, Head of Tax Market, AKM Global welcomed the move and noted that the tax portal previously did not allow a taxpayer without a PAN to file Form 10F. “This requirement had created a hurdle for non-residents who wish to claim the benefits of the double tax avoidance treaties. It is important to note that there are still some areas where clarity is needed such as the requirement to file the tax return by such non-resident taxpayers in case a treaty benefit is availed and whether now such a tax return can be filed with login details or will the PAN still be required,” Sehgal said. Another area is the requirement to sign the form 10F electronically through a digital signature (DSC) of authorised signatory who in turn needs to apply for PAN for themselves and subsequently their DSC for signing on form 10F, he further said.
