How to Claim DTAA Benefits in India: TRC, Form 10F, and Step-by-Step Process

India has Double Tax Avoidance Agreements (DTAAs) with 95+ countries. These treaties allow businesses and individuals to reduce the withholding tax on cross-border payments — dividends, interest, royalties, and technical services fees — from the domestic rate (typically 20-40%) to a much lower treaty rate (5-15%). But treaty benefits do not apply automatically. You must follow a specific process to claim them. This guide explains exactly what to do.

What is a DTAA and Why Does it Matter?

A DTAA is a bilateral treaty between two countries that prevents the same income from being taxed twice — once in the source country (India, in our context) and once in the residence country (where the recipient is based). For cross-border business payments, the key effect is that a lower withholding tax rate specified in the treaty overrides the higher domestic rate, provided the recipient is eligible.

For example, the domestic Indian withholding rate on royalties paid to a foreign entity is 20%. Under the India-Singapore DTAA, this reduces to 10%. For a company paying USD 500,000 in annual royalties to a Singapore entity, this saves USD 50,000 in withholding tax every year.

Step 1 — Confirm Treaty Eligibility

The recipient must be a tax resident of the treaty country: Being incorporated in Singapore is not enough. The entity must be a tax resident — i.e., managed and controlled from Singapore, paying taxes in Singapore, and able to demonstrate this to the Indian tax authority.

The income type must be covered: DTAAs cover specific income types in specific articles. Royalties, Fee for Technical Services (FTS), dividends, interest, and capital gains are typically covered. Confirm which article applies to your specific payment.

The entity must be the beneficial owner: The recipient must be the actual beneficial owner of the income — not a conduit or nominee. Post-2016, India strictly requires beneficial ownership analysis, particularly for Mauritius and Singapore structures.

Step 2 — Obtain a Tax Residency Certificate (TRC)

What it is: A TRC is a certificate issued by the tax authority of the foreign country confirming that the entity is a tax resident of that country for the relevant year.

Who obtains it: The foreign recipient of the income (the non-resident entity or individual). They obtain it from their home country's tax authority.

Validity: TRCs are typically year-specific. A TRC for 2025 does not automatically cover 2026. Renew annually.

How to get it: UK: HMRC Certificate of Residence. USA: IRS Form 6166. Singapore: IRAS Certificate of Residence (applied online, issued in 2-4 weeks). UAE: Federal Tax Authority Residence Certificate.

Step 3 — Submit Form 10F

Form 10F is an Indian-law requirement introduced under Section 90(5) of the Income Tax Act. It is a self-declaration by the non-resident entity providing additional information required under Indian law, particularly:

Status (company, individual, trust) of the non-resident.

Country of incorporation or birth.

Tax identification number in the treaty country.

Period for which the TRC applies.

Address in the treaty country during the period.

How to file: Form 10F must be filed electronically on the Indian Income Tax e-filing portal (incometax.gov.in) by the non-resident themselves, using a PAN obtained in India. The PAN requirement for Form 10F has been a source of friction, however, you can still file without having a PAN in India by mentioning PANNOTAVABL.

Step 4 — Beneficial Ownership Declaration

Beyond the TRC and Form 10F, the Indian withholding agent (the payer) should obtain a self-declaration from the non-resident confirming that:

• The non-resident is the beneficial owner of the income — not holding it on behalf of another entity.

• The arrangement is not structured primarily to obtain treaty benefits.

• The non-resident has genuine economic substance in the treaty country.

This declaration is not mandated by any specific form but is critical for the withholding agent's own risk management. If the declaration is later found to be false, the withholding agent may be treated as in default.

Step 5 — Apply the Treaty Rate and Deduct TDS Accordingly

Once all documents are in place: Deduct TDS at the applicable treaty rate (e.g., 10% instead of 20% for royalties under the India-Singapore DTAA).

File Form 27Q: The quarterly TDS return for payments to non-residents. Report the treaty rate applied and the treaty relied upon.

Retain documentation: Keep TRC, Form 10F, beneficial ownership declaration, and any underlying contracts on file for 6 years. The Income Tax department can scrutinise these years later.

GAAR — The Override Risk

India's General Anti-Avoidance Rule (Section 95-102) applies from 1 April 2017 and can override treaty benefits where the main purpose of an arrangement is to obtain a tax benefit and it lacks commercial substance. GAAR is relevant particularly for:

• Singapore or Mauritius holding companies with no local substance.

• Round-trip financing arrangements where money goes out of India and comes back as foreign investment.

• Treaty shopping — creating an entity in a treaty country purely to access lower withholding rates.

GAAR does not apply where the treaty benefit sought is a consequence of genuine commercial transactions. The safeguard is substance: employees in the treaty country, decisions made locally, real business activity.