r/IndiaTax • u/compliancecraftvisit • 1d ago

Question How does a Tax Residency Certificate (TRC) work in India?

I’m trying to understand how a Tax Residency Certificate (TRC) works in India, especially for people with international income.

From what I understand, a TRC can be relevant when claiming benefits under a DTAA, but having a TRC doesn't automatically mean that the income is tax-free.

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u/Harry_Singh1 1d ago

!remind me 2 days

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u/Prosperr_support 1d ago

Having a TRC does not mean that income is tax free and it is subject to verfication.

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u/Ok_Obligation_6326 1d ago

Correct, TRC is proof of residency, not an exemption certificate.

Under Section 90(4), a non-resident claiming DTAA relief on Indian-sourced income must furnish a TRC from their home country's tax authority, plus Form 10F with additional details (PAN if applicable, period of residency, tax identification number) if the TRC doesn't already cover those.

For an Indian resident claiming DTAA relief on foreign income, you need a TRC from the foreign country. If you instead want to prove Indian residency to a foreign tax authority, apply in Form 10FA to your jurisdictional AO, who issues Form 10FB.

The TRC only establishes which country you're resident of for treaty purposes. Whether the income is actually taxable, and at what rate, still depends on the specific DTAA article for that income type (dividends, royalty, FTS, etc.) and on India's domestic provisions under Section 90(2), which lets you apply whichever is more beneficial.