Claiming tax benefits under DTAA? Things you should know

A person who earns income must pay tax in the country he earns in as well as the country he resides in. In order to avoid this, India has signed Double Taxation Avoidance Agreements (DTAAs) with many countries so that the income is taxed only once.

To claim this benefit, one needs to know whether the country one resides in or earns income in has a DTAA with India. One has to file Form 10F, a tax residency certificate and self declaration in the prescribed format to the entity responsible for deducting tax at source.

Form 10F

This can be obtained from the bank or downloaded at www.incometaxindia. gov.in/forms/income.../103120000000007197.pdf.

Details like the applicant’s nationality, tax identification number, address and period of residential status has to be filled and the form has to be signed.

Verification

Form 10F must be verified by the government of the country in which the assessee is a resident for the period applicable.

Self Declaration

It is a declaration that the assessee resided in the foreign country which is covered under a DTAA with India and hence, the tax rate applicable to the income is at the rate mentioned in the DTAA.

Tax residency certificate
A tax residency certificate must be obtained from the country in which the person was residing in a particular financial year. A tax residency certificate is issued on submission of required documents and payment of prescribed fees.

Points to note
1. PAN of the assessee needs to be provided in Form 10F and the self declaration form.

2. In order to know whether a particular country is under a DTAA, one can access the following link: http://www.incometaxindia. gov.in/Pages/internationaltaxation/dtaa.aspx

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)