Govt issues clarification on tax residency certificate

 Tax department will not question residency status of an investor upon receiving tax residency certificate 

 

The government said concerns pertaining to TRC will be addressed when the Finance Bill is taken up for consideration by the Parliament. Photo: Ramesh Pathania/Mint  

                

                 New Delhi: In a bid to assure foreign investors, the government has clarified that the tax residency certificate (TRC) produced by an investor will be accepted by the authorities and the tax department will not question his residency status upon receiving the certificate.

The government, in a statement, also said concerns pertaining to TRC will be addressed when the Finance Bill is taken up for consideration by the Parliament.

A foreign investor has to obtain a TRC from the resident country to claim tax benefits under the double tax avoidance agreements India has with other countries. Giving respite to investments routed from Mauritius, the government also stated that circular number 789 continues to be in force, pending treaty negotiation between India and Mauritius.

Circular 789, issued in the year 2000, provides that tax residency certificate issued by Mauritius Revenue Authority is sufficient evidence for claiming tax treaty benefits.

The inclusion of the clause that TRC is a necessary but not sufficient condition in the Finance Bill tabled in Parliament on Thursday had apprehensions among foreign institutional investors, who route their investments into India from tax havens like Mauritius.

New Delhi: In a bid to assure foreign investors, the government has clarified that the tax residency certificate (TRC) produced by an investor will be accepted by the authorities and the tax department will not question his residency status upon receiving the certificate.

The government, in a statement, also said concerns pertaining to TRC will be addressed when the Finance Bill is taken up for consideration by the Parliament.

A foreign investor has to obtain a TRC from the resident country to claim tax benefits under the double tax avoidance agreements India has with other countries. Giving respite to investments routed from Mauritius, the government also stated that circular number 789 continues to be in force, pending treaty negotiation between India and Mauritius.

Circular 789, issued in the year 2000, provides that tax residency certificate issued by Mauritius Revenue Authority is sufficient evidence for claiming tax treaty benefits.

The inclusion of the clause that TRC is a necessary but not sufficient condition in the Finance Bill tabled in Parliament on Thursday had apprehensions among foreign institutional investors, who route their investments into India from tax havens like Mauritius. 

 

TOUHID HUSSAIN

PGDM 2nd SEM