Representations for removal of practical difficulties faced by non-resident taxpayers in complying with Notification No. 3/2022 dated 16 July 2022 issued by Directorate of Income Tax (Systems) for mandatory e-filing of Form 10F as modified by CBDT notification No 2022/ 9227 dated 12 December 2022

Shri Sanjay Malhotra, IAS

Revenue Secretary

Department of Revenue

Ministry of Finance

Government of India

Room No.128-B, North Block

New Delhi – 110 001

Sir,

Re : Representations for removal of practical difficulties faced by non-resident taxpayers in complying with Notification No. 3/2022 dated 16 July 2022 issued by Directorate of Income Tax (Systems) for mandatory e-filing of Form 10F as modified by CBDT notification No 2022/ 9227 dated 12 December 2022  

This has reference to Notification No. 03/2022 dated 16th July 2022 issued by Directorate of Income Tax (Systems) New Delhi in exercise of powers conferred under Rule 131(1)/(2) of the Income-tax Rules mandating, inter alia, furnishing of Form 10F electronically and verification through electronic verification code (EVC). This representation seeks to highlight practical challenge faced by non-resident (NR) taxpayers not having PAN in making compliance as per Notification. This also has reference to CBDT notification No 2022/ 9227 dated 12 December 2022 which provided relaxation exempting non-resident (NR) taxpayers from e-filing Form 10F if such NR does not have PAN and is not required to have PAN under provisions of Income tax Act. However, such relaxation is applicable only up to 31 March 2023

The above requirement increases compliance burden on both payers and non-resident payees – more particularly, in case of “net of tax” payments. It is submitted that mandatory e-filing of Form 10F by the NR payees/deductees is merely a duplicated requirement which does not provide any additional information to the Tax Department beyond what is already furnished by payers in quarterly TDS statements in Form 27Q.  It also contradicts the exemption from obtaining PAN provided in s.206AA read with Rule 37BC for non-residents earning certain types of incomes. Hence, it is represented that the practical difficulty faced by NR taxpayers not having PAN in mandatory e-filing of Form 10F may be resolved by adopting one of the following alternatives :-

1. Instead of temporary relief till 31 March 2023, NR taxpayers not having PAN and not required to obtain PAN under the Act may be permanently exempted from e-filing Form 10F.

2.Option may be given to NR taxpayers having PAN to furnish Form 10F electronically to the Tax Department or in hard/ soft copy to deductors as was being furnished prior to the e-filing mandate. This will align with international practice where e-filing of TRC is not mandated to claim treaty reliefs. Alternatively, enable the payer/ deductor to e-file Form 10F of the NR payee/deductee as part of Form 15CA compliance.A detailed note on the above representation is attached herewith for your consideration.

We request the CBDT to consider the above representations favourably and resolve the practical difficulty faced by NR taxpayers on an expeditious basis. This is in view of the fact any hurdle on TDS compliance u/s. 195 impacts the day to day regular business transactions of the industry.

Further, we request CBDT to grant an opportunity for virtual meeting with our representative to put forward the stakeholder views in more detail.

We will be grateful if our suggestions are duly considered. If any further details are needed, we will be happy to discuss and elaborate on our suggestions.

Thanking you