{"id":2474,"date":"2013-03-02T11:48:23","date_gmt":"2013-03-02T06:18:23","guid":{"rendered":"http:\/\/www.itatonline.org\/info\/?p=2474"},"modified":"2013-03-02T11:50:43","modified_gmt":"2013-03-02T06:20:43","slug":"finance-ministry-clarification-regarding-tax-residency-certificate-trc","status":"publish","type":"post","link":"https:\/\/itatonline.org\/info\/finance-ministry-clarification-regarding-tax-residency-certificate-trc\/","title":{"rendered":"Finance Ministry Clarification Regarding Tax Residency Certificate (TRC)"},"content":{"rendered":"

Press Release dated 01.03.2013 issued by the Ministry of Finance<\/strong><\/p>\n

Concerns on Language of DTAA To be Addressed When Finance Bill is Taken up for Consideration
\n<\/strong><\/p>\n

Concern has been expressed regarding the clause in the Finance Bill that amends section 90 of the Income-tax Act that deals with Double Taxation Avoidance Agreements. Sub-section (4) of section 90 was introduced last year by Finance Act, 2012. That sub-section requires an assessee to produce a Tax Residency Certificate (TRC) in order to claim the benefit under DTAA. <\/p>\n

DTAAs recognize different kinds of income. The DTAAs stipulate that a resident of a contracting state will be entitled to the benefits of the DTAA. <\/p>\n

In the explanatory memorandum to the Finance Act, 2012, it was stated that the Tax Residency Certificate containing prescribed particulars is a necessary but not sufficient condition for availing benefits of the DTAA. The same words are proposed to be introduced in the Income-tax Act as sub-section (5) of section 90. Hence, it will be clear that nothing new has been done this year which was not there already last year. <\/p>\n

However, it has been pointed out that the language of the proposed sub-section (5) of section 90 could mean that the Tax Residency Certificate produced by a resident of a contracting state could be questioned by the Income Tax Authorities in India. The government wishes to make it clear that that is not the intention of the proposed sub-section (5) of section 90. The Tax Residency Certificate produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the Income Tax Authorities in India will not go behind the TRC and question his resident status. <\/p>\n

In the case of Mauritius, circular no. 789 dated 13.4.2000 continues to be in force, pending ongoing discussions between India and Mauritius. <\/p>\n

However, since a concern has been expressed about the language of sub-section (5) of section 90, this concern will be addressed suitably when the Finance Bill is taken up for consideration. <\/p>\n","protected":false},"excerpt":{"rendered":"

However, it has been pointed out that the language of the proposed sub-section (5) of section 90 could mean that the Tax Residency Certificate produced by a resident of a contracting state could be questioned by the Income Tax Authorities in India. The government wishes to make it clear that that is not the intention of the proposed sub-section (5) of section 90. The Tax Residency Certificate produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the Income Tax Authorities in India will not go behind the TRC and question his resident status<\/p>\n

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