Income tax alert: Govt allows non-resident taxpayers to manually file Form 10F till March 31 for claiming TDS benefit

New Delhi: The income tax department has allowed non-resident taxpayers not having PAN to file Form 10F manually till March 31, 2023, a move which would ease their compliance burden and enable them to claim lower TDS rate.

The Central Board of Direct Taxes (CBDT) had in July made it mandatory for non-resident taxpayers to file Form 10F electronically to claim benefit of lower Tax Deducted at Source (TDS).

However, taxpayers faced problems in electronic filing of the form as the income tax portal did not allow a taxpayer who does not have a Permanent Account Number (PAN) to file Form 10F.

In a notification, the CBDT said to mitigate genuine hardship to such taxpayers, it has been decided that such category of non-resident taxpayers who are not having PAN and not required to have PAN as per relevant provisions of the I-T Act would be exempted from mandatory electronic filing of Form 10F till March 31, 2023.

"It is reiterated that such category of taxpayers may make statutory compliance of filing Form 10F till March 31, 2023 in manual form as was being done prior to issuance of the (July) notification," the CBDT said in a notification dated December 12.

Nangia Andersen LLP M&A Tax Partner Sandeep Jhunjhunwala said sans the notified transactions requiring quoting of PAN, non-residents can transact with Indian parties without the aversion of a higher 20 per cent withholding tax rate if prescribed details such as name, e-mail id, address, contact number, TIN and a valid tax residency certificate (TRC) are furnished to resident Indian payer.

"The partial relaxation notified by the CBDT would definitely eliminate the compliance pinpricks around the requirement of obtaining PAN by non-residents, only for the purpose of obtaining electronic 10F. The easing up, however, is only till March 31, 2023 and non-residents may want to keep their fingers crossed on further developments related to digital shift of compliances in India," Jhunjhunwala said.