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

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.

The procedure prevailing prior to Notification No. 03/2022 did not require non-resident taxpayers to mandatorily obtain PAN to claim treaty benefit by furnishing Form 10F which could be furnished in hard copy or soft copy format to persons obliged to deduct tax while making payments to such non-residents. The Notification No. 03/2022 makes it mandatory for non-residents to obtain PAN to have access to e-filing portal and then e-file Form 10F to claim treaty benefits.

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 :-

Modify Notification No. 03/2022 to make mandatory e-filing of Form 10F applicable only to NR taxpayers having PAN

1. Enable the payer/deductor to e-file Form 10F of the NR payee/deductee as part of Form 15CA compliance

2. Also, for NR taxpayers having PAN, the e-filing portal may be modified to enable furnishing of Form 10F for F.Y. 2022-23.

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.