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Process of Obtaining a Tax Residence Certificate in India

If a person wishes to avail of tax relief under Double Tax Avoidance Agreements, then they need to have a document called Tax Residence Certificate. The document is issued by the country of which you are a resident and is furnished only to those foreign countries with whom the home country has a DTAA agreement.

In India, the authority for issuing the certificate rests with the Income Tax Department. For understanding the criteria of being a resident in India you can go through the following points. An individual is said to be a resident:

  • If they stay in India for 182 days or more in the previous year.
  • If they stay in India for 60 days or more in the current financial year and have stayed in India for 365 days or more in the preceding four years.

Such an assessee should make an application in Form No. 10FA to the assessing officer, for meeting the agreement requirements referred to in section 90 and 90A. On the receipt of the application by the assessing officer as referred to in sub-rule (3), he shall satisfy himself by scrutiny of documents submitted. On complete compliance, the officer will issue the certificate for the assessee.

Tax residence certificate for non-resident Indians.

An assessee who is a non-resident in India should obtain the Tax Registration Certificate from the Government of the country or the territory of which he/she is a legal resident. This certificate shall contain the following information.

  • Name of assessee
  • Status (Individual/ HUF/Company)
  • Nationality (in case of an individual)
  • The country or the specific territory of registration
  • Residential status for tax purposes
  • The period till which the certificate is applicable
  • The specified address for the validity of the certificate
  • The Tax Identification Number in the specified country or noted territory, or a unique identification number by the government of such territory, in case of unavailability of TIN.

All the above information should be provided in Form 10F by the assessee.

The certificate mentioned in sub-rule (1) must be verified by the government of the country or noted territory for verifying the genuineness of assessee in the tax payment system.

Subject to the provisions of sub-rule (2), for sub-section (5) of section 90A and sub-section (5) of section 90, the below-mentioned information should be provided by an assessee in Form 10F

  • Status (HUF/ Individual/ Company)
  • Nationality, in case of an individual or the country or area of registration, in case of any person other than an individual.
  • The residential status period.
  • Address of assessee in India or the territory outside India, during the time for which the certificate is applicable.
  • The TIN of assessee in the country or the territory of residence. If the TIN is not available then the unique number used for verifying the identity of the person in the specified region.

There is no requirement of providing the information or any such part thereof if it is already mentioned in the certificate referred to in sub-section (4) of section 90A or 90.

The assessee should keep the documents that are necessary to substantiate the provided rule under sub-section (1) and the Income-Tax authorities necessitate providing of said documents about the claims for any kind of relief under an agreement referred to in the sub-section (1) of section 90A and section 90.

Step-wise Procedure.
  • Find your assessing officer (AO) on the web through the official website by entering the registered mobile number and PAN.
  • Prepare a document that explains your in and out movement through the stamped passport. If your check-in or check-out is made online, then the air tickets should be retained for providing proof to the assessing officer.
  • Download the Form 10FA and then submit it physically to the assessing officer. It is necessary to disclose the reason for the tax resident certificate. You also need to attach a copy of the Passport with all the stamps of departure and arrival.
  • After all the submissions, the officer may ask you to visit him to discuss the documents. After complete satisfaction, the assessing officer will finally issue the TRC in Form 10FB.

The certificate will help you avoid double taxation on your income as per the above-mentioned DTAA agreement.

Indian Startups endure unprecedented Challenges but still find Opportunities during COVID-19 Pandemic

Although the first half of 2020 was supposed to be a banner financial period and witness accelerated growth throughout numerous sectors, the COVID-19 pandemic had other ideas.  In every industry sector, we saw unprecedented economic challenges, especially among early-stage startups.  It’s not about the industry sector that suffered the least or most amount of damage anymore, but rather the extent to which each sector was hurt, hence the decline in company formation in India.

From the standpoint of damage assessment, the hospitality and travel sectors suffered the most in the way of economic losses and realistically, these will most likely be the two sectors that have the longest recovery period under what is now the “new normal.”  Furthermore, sectors such as logistics, manufacturing, transportation, and other areas that are classified as “people intensive” will be facing difficult challenges as well. However, there is hope that things will get better over the next few months.

How have Emerging Sectors been affected?

Emerging sectors such as the hygiene industry gained prominence as a result of the COVID-19 pandemic and good hygiene has been a hot topic of debate in India.  Unfortunately, very little action has been taken over the years.  However, this will likely change because of the global impact of widespread contamination risks. The Prime minister, Narendra Modi had been emphasizing and launching campaigns to improve hygiene and sanitation for the past few years. This has improved the situation but a lot still needs to be done.

Whether it’s a matter of community, personal, or surface area hygiene, the landscape has changed dramatically over the past several months.  Even now, we’ve been seeing a dramatic increase in the number of India attract investment post-COVID-19 efforts among numerous early-stage startup companies.

Adversity – a significant Source of Opportunity

Ever heard the expression “War not only destroys, but also creates opportunities for those who are resilient and keen to rebuild.”? Well, the world has been at war with the Coronavirus and it has provided many difficult challenges yet amazing opportunities.  We’ve seen numerous economic, financial, and physical challenges including:

  • Cash flow impact attributed to lost sales
  • Funding and investment plans being put on hold
  • Growth setbacks for companies of all sizes
  • Manpower shortages in labor-intensive industries including agriculture, construction, manufacturing, and so on)

Coincidently, this has given rise to numerous opportunities on a global scale such as increased online sales and product innovations. Indian companies are now focusing on delivering their products to the consumer’s residence.  And guess who will benefit the most from all this? Those startups who figure out a method that meets these demands and fulfills the needs of the consumer will benefit the most.

The bottom line is simple.  Indian startups that are capable of creating products that address the needs of the global marketplace will witness accelerated growth that surpasses pre-Coronavirus economic times. The future looks bright.

Why are High Net Worth Individuals In India Looking To Invest Overseas?

High net-worth individuals (or HNI’s as they are often called) have recently generated a surge of international investing as they urged Indian-owned family offices to develop partnerships with foreign investors in Singapore and Gulf countries.  According to the Reserve Bank of India’s (RBI) liberalized remittance scheme (LRS), an Indian citizen is allowed to invest up to $250,000 abroad each year in bonds and stocks.  Over the past 4 to 5 years, India has been outperformed by global markets.  The fact that the Rupee has depreciated against the US dollar has made them more attractive to foreign investors.

Why should You consider investing Abroad?

Singapore has been putting its marketing efforts into attracting foreign investors from around the world.  As a foreign investor, establishing a business is relatively easy.  Singapore and UAE are cosmopolitan, multicultural sovereign countries that are well connected globally.  Furthermore, their business environment is conducive to creative and knowledge-driven companies.  Most importantly, these countries are strategically located at the main intersection of Europe and Southeast Asia and have excellent infrastructure.

Currently, even in the pandemic the governments of the Gulf Corporation have given rebates on taxes and other levies have been removed to ensure that family business in Gulf Cooperation with restricted liquidity and lower profits are able to maintain and thrive during these difficult times.

Compared to other countries, Singapore’s attractive tax system, sophisticated banking system, and strong legal framework have given it the competitive edge.  Other positive factors that have helped this city-state attract foreign investors include:

  • An educated workforce
  • Ease of Singapore company incorporation
  • Lower corporate taxes
  • Numerous investment opportunities and incentives
  • Strict enforcement of intellectual property laws

In addition to the above, Gulf countries and Singapore is an excellent place to live, learn, and work.  These countries have long been recognized as some of the most competitive entities globally and are a frontrunner in several industry areas including:

  • asset and wealth management
  • insurance treasury operations
  • international banking
  • maritime finance
  • trade finance


As a result, many international companies have established a base in Singapore and in the Middle Eastern countries and have taken advantage of what it has to offer foreign investors.  They have utilized its diverse capital markets and their state-of-the-art financial investment services. The basic incentive for HNIs to invest in Gulf countries and Singapore is the tax advantage and investment policies that offer better growth prospects for their businesses.

What else makes Singapore attractive to foreign investors?

In recent years, Singapore has gained prominence as a favorable destination for the centralization of certain activities such as finance, IT, and logistics.  This provides companies with certain benefits including enhanced productivity, lower operating costs, and superior customer service.  Compared to other countries, company formation in Singapore is relatively easy.  The city-state offers certain incentives that are targeted towards foreign investors from specific industries who can apply directly to the city-state government for them.  For the foreign investor, Singapore offers one of the highest rated communications infrastructures when compared to Hong Kong and Malaysia.

Empowered Group Formed in India to Attract Investment in Post-COVID-19 World

India will be a much more investment-friendly nation post COVID-19 thanks to reforms introduced by the Centre. Indian Prime Minister Narendra Modi approved the formation of a cabinet of empowered government officials whose main mission is to attract investment.

Company formation in India will become much easier post COVID-19. This is largely because of measures initiated by Indian Prime Minister Narendra Modi. He approved the establishment of a group of empowered secretaries. This group is to be led by cabinet secretary Rajiv Gauba. Its goal is to make India a more appealing place to invest by FDI as many large companies are looking to mitigate risks by diversifying the investments in new geographical areas.

Many entrepreneurs are finding that India Company Incorporation is much easier post-COVID-19. They are looking at other less risky parts of the world to invest in and to do business in. They see India as being strategic because it is a gateway to lucrative markets in the US, EU, China, and other strategic geographic regions. The newly formed empowered group’s task is to exploit these opportunities and transform India into one of the major players in the global value chain.

Industries want to diversify by migrating to different geographic locations. Officials know that this is large because of COVID-19. The empowered group of secretaries will ensure that as much of this new investment money will end up in India as possible. The Indian government has established Project Development Cells (PDC) in every ministry. This is according to information and broadcasting minister Prakash Javadekar in a press briefing after the meeting.  He said that this will support new industries in the initial stages and fill in the gap within the domestic industries.

Entrepreneurs will be encouraged to enter into emerging and new industries. The measure is expected to dramatically boost and encourage the Indian industry. India envisions itself as becoming a $5 trillion economy by 2025. These measures are designed to ensure that this happens. Different ministries and departments in state governments and the national government will be integrated to work together strategically in terms of investment and similar incentive policies. This will facilitate India reaching its 2025 economic goal.

CEO Niti Ayog, Amitabh Kant and the commerce, revenue, and economic affairs secretaries would also be participating members. The secretary for the department that promotes industry and internal trade (DPIT) would be the convenor. Secretaries of any concerned departments would co-opt in this role. In the post-COVID 19 world, India stands to gain by better economic and tax policies, handholding new domestic industries in the initial stages and streamlining the policies for more FDIs.

The empowered group will evaluate investors and investments through a number of parameters that included project creation and actual investments. Government departments would be given deadlines for the completion of certain projects. The Kolkata port, Shyama Prasad Mookherjee Port was renamed. He was an academician, thinker and a prominent BJP icon. The renaming was approved by the cabinet.

Another major decision taken by the cabinet was to re-establish Pharmacopoeia Commission for Indian Medicine & Homoeopathy (PCIM&H) under AYUSH ministry. The merger will promote the better use of ancient knowledge, infrastructural facilities and financial resources available.

Attracting new Companies to India requires improved Contract Enforcement and Infrastructure Upgrades

Despite its negative implications, many experts feel that the outbreak of the Coronavirus has created a unique opportunity to bring new business investments to India.  They also contend that the country needs to put forth a concerted effort to attract new companies and investments that would create new jobs and generate economic wealth.  Ultimately, the goal would be new India company incorporation and promoting “Made in India” products.  With improved capabilities and advanced technological skills, India under Modi’s leadership is on the cusp of being in the limelight globally.

However, certain steps must be taken to entice companies away from China. Some of the experts are of the view that with many companies looking to move base elsewhere from China, will find that India is a better place to do business with the multitude of benefits the Modi government has initiated to help improve the ease of doing business.

Many experts contend that the key enticing companies to invest in India is improving contract enforcement and upgrading the country’s infrastructure.   The impact seen from the COVID-19 pandemic, is the fact that many countries are looking for alternative manufacturing sites in order to increase their supply chains.  When you take India’s lack of bureaucratic red tape, minimal labor costs, and reduced corporate taxes into consideration, the country is on the verge of being the next global manufacturing hub.

With India’s improved tax regimen and reduced taxations, it will help in attracting investments by companies looking to manufacture their products overseas. The tax sops will benefit both India and the overseas companies looking to migrate from China. By improving and seamless integration of FDI policies and trade regulations, India is coming to the forefront runner as a manufacturing hub for various companies and industries.

With more companies planning to move out of China, it holds potential for India to tap into the gap and offer its trade and manufacturing know-how.

Additional Considerations

In order to promote new company formation in India and present companies with an alternative to China-based operations, the Indian Government will need to take certain measures in order to accomplish this goal including:

  • establishing a mechanism for laws related to commercial and foreign exchange
  • overhauling their power utilities
  • putting a contract enforcing mechanism in place by creating specialized commercial courts

In addition to these measures, the government could also consider the reduction of certain related costs such as stamp duties.  India has been provided with a unique opportunity due to the Coronavirus and the impact it has had on the global economy.  It has literally opened the door for more foreign companies to establish their base of operations in India.

India looking to attract US Companies away from China

As the US continues blaming Beijing for the role it played in creating the COVID-19 virus and the Coronavirus pandemic, India is now looking to attract US companies away from China and promoting India company incorporation.  This past April, the Indian government contacted over 1,000 US companies and provided incentives for them to leave China and establish their operations in India.  The country has placed the highest priority on the following industries:

  • auto parts manufacturers
  • food processing units
  • leather
  • medical equipment suppliers
  • textiles

According to Indian Government officials involved in the effort, more than 550 products could be affected by this relocation.  In a recent interview, Prime Minister Narendra Modi stated an investment surge of this magnitude would shore up India’s economy which has been devastated by the lockdown that was put in place to combat the virus.  Consequently, the need to create new jobs is even more urgent now that there are an estimated 122 million individuals that lost their jobs as a result of the pandemic.

With the constant blame and battering by US President Trump, China is seeing worsening global trade ties due to the mismanagement of the COVID-19 outbreak. With more companies planning to moving out of China for diversification of supply chain, many European Union members are looking to reduce dependence on China.

For India, a surge in the foreign investments will be a way to boost the battered economy due to the long lockdown to control the COVID-19 outbreak. It will help Prime Minister Modi realize the target of improving the manufacturing sector to meet the aim of 25% of GDP by 2022. Additionally, it will help push through the required reforms in taxes, land and labor laws. Most of the foreign forms have been informed that India is more economical than moving their manufacturing to their own countries.

Bringing in new India company formation would also provide an opportunity to pass labor, land, and tax reforms that have been stalled by bureaucratic red tape and have hindered significant business investments for many years.  While this would also enable India to establish a strong presence in numerous global supply chains, it will require some very serious governance and infrastructure investments as well.  It is well known that India has long been facing tough competition based in southeast and southern Asia.

In terms of affordable labor and the securing of land, India is better economically for companies than Japan or the US despite the overall costs being higher than what they are in China.  The Indian Government has also offered assurances that they would consider requests to change the labor laws which have always been viewed as a major obstacle for many companies.  The government is also considering delaying digital transaction taxes for e-commerce companies as well.

With abundant capital available in the US versus other countries, India is poised to respond those US companies looking to end their relationship with China.  More and more companies are now realizing there is no longer a need to keep all of one’s eggs in a single basket, or in this case, China.

Make in India Boosted by PM Modi’s Rs 20 Lakh Crore Package to Tide Over COVID- 19 Pandemic

Considering the detrimental effect of the COVID-19 pandemic that has led to the lockdown for over 8 weeks, Prime Minister Narendra Modi recently announced a special economic package of Rs. 20 lakh crores. He stressed on the importance of being self-reliant as a road map for successful economic development. He said that after carefully formulating economic support to all sections of the society, it will focus on not just a single industry or business but covers MSMEs, cottage industries and all local businesses.

Announcing the relief package under ‘Atmanirbhar Bharat Abhiyan’, he stressed that it will not only strengthen the Indian supply chain globally but will ensure that land, labor, law and liquidity will boost all economic sections of the businesses and industries including agriculture.

The mega economic package is being seen as a big boost to the businesses and industries that have suffered a setback due to the lockdown imposed to combat the COVID-19 pandemic. There have been many projections about India’s economic growth that it might just be 2% in the current financial year. The PM’s economic package has been unveiled based on similar economic boost given by other countries like Japan and USA. The relief package is built on five pillars – demography, system, economy, demand, and infrastructure.

PM Narendra Modi said that the pandemic has taught the country that being self-reliant is the only way forward. He said being vocal about local products will help businesses flourish again and facilitate the economy.  He was confident that 21st century belonged to India as with new energy and determination, the nation will move forward.  The relief package is about 10% of the Indian GDP and the details were outlined by the Finance Minister, Nirmala Sitharaman. Covering all aspects of the Indian economy, not just the large industries, PSUs but Micro, Small and Medium Enterprises (MSMEs) and agriculture sector were given equal impetus by the allocation of funds. When most countries are dependent on imports, this relief package is all about facilitating the Indian economy and local manufacturing and production.

He quoted the making of PPEs and N95 masks as an example. Though these items were being imported earlier, with the advent of the demand during pandemic, the local production of these items has created a new industrial need. Now, 2 lakh units are being manufactured every day locally. About the pandemic, the PM Narendra Modi was of the view that India needs to learn to live with it while the lockdown bought some time for the government to strengthen the healthcare system.

During the first lockdown, the MSMEs has got impetus from the government to reduce dependence on imports and stress on Make in India. The MSMEs had sought regulations to streamline the prices on various products manufactured by different industries with tax holidays and discounts. They suggested that post- COVID 19, government identifies industries that are heavily dependent on Chinese imports and encourage Make in India for those products.

For Foreign and Non-Resident Indian Visitors relaxed Residency Rules in Wake of COVID-19 Pandemic

As per the Income Tax Act, 1961 Section 6 provides for the residential status of the individual based on the stay during the financial year that commences from April to March every year. This year due to the hardship created by the Coronavirus pandemic, foreign nationals and non-resident Indian visitors who have come to India for business, employment, or personal reasons have been unable to leave and return home.  As a result, the CBDT (Central Board of Direct Taxes) has relaxed residency rules under Section 6 of the Act vide Circular No. 11/2020 dated May 8th, so that visitors who are compelled to stay will not have to change their non-residential status.  Residency rules have been relaxed as follows:

  • For those individuals who haven’t been able to leave the country on or before March 31st and have been quarantined as a result of the COVID-19 pandemic after March 1st and evacuated on or before March 31st
  • For those individuals who haven’t been able to leave the country on or before March 31st from the date of quarantine until their departure (or March 31st as may be the case) or has evacuated India on or before March 31st

The CBDT’s clarification will provide relief for individuals who were about to exceed the threshold for non-resident status/RNOR (Resident but Not Ordinarily Resident) because of being quarantined in India during the financial year of 2019-20.  Currently, there is no relief being provided for an extended stay during the 2020-21 fiscal year.  However, the CBDT is aware of the issue and is reassuring individuals that they will be provided with relaxed residency rules. The Organization for Economic Corporation and Development (OECD) has given guidelines to encourage countries to adopt coordinated measures adopted by Ireland, UK and Australia.

Consequently, relief will be provided to those individuals who were visiting India and were unable to leave because of the COVID-19 lockdown.  Individuals should have the proper documentation and be able to demonstrate that they were forced to stay in India because of the lockdown.  Furthermore, the OECD (Organization for Economic Co-operation and Development) has recommended that tax authorities shouldn’t change an individual’s residential status of senior executives and main functionaries of the companies, based on these circumstances.

Additionally, the circular did not provide relaxation in regard to any ‘permanent establishment’ (PE) of the company that are staying under the lockdown or forced extension of the stay period.

India may become the new Home for 200 American Manufacturing Companies wanting to leave China

It’s been nearly a year since President Mukesh Aghi of the USISPF (US-India Strategic and Partnership Forum) announced that 200 US companies are considering a move out of China into India after the 2020 general election.  For those that are searching for a viable alternative to manufacturing base in the Communist nation, this is a tremendous opportunity for these companies.  According to Aghi, these companies have been focused on investing in India since last year.

In an interview with Press Trust of India, Aghi stated that the recommendation made by USISPF would accelerate reforms and create more transparency when critical business decisions must be made.  As a result, US companies are looking at the decision-making process while taking a domestic approach to data localization and e-Commerce rather than a global one.  Aghi also suggested that these reforms need to be accelerated for doing business in India becomes more transparent during the process. He was of the view that Indian companies need to go all out to market their services and ensure streamlining the global supply chain services as these are critical issues. With much needed reforms in this area, it would lead to an increase in employment and job creation.

The need to entice these companies to relocate their manufacturing bases out of China is paramount.  Furthermore, customs and land appropriation issues must be elements of the global supply chain.  As a result, this could create thousands of employment opportunities for India company incorporation.  In addition to the above, former Assistant US Trade Representative for South and Central Asian Affairs, Mark Linscott, is working with USISPF members to develop a recommendation for how the Indian Government can improve its exports.

It would appear that establishing a Free Trade Agreement between the US and India is the next logical step in the process if the US wants to avoid importing the same type of cheap goods that are currently coming out of China.  A Free Trade Agreement will eliminate that concern by creating barriers to Chinese products while gaining access to the Indian market.  At the same time, India would have more access to the US market. 

Most importantly, issues such as a Generalized System of Preferences or GSP would diminish.  A high-level manufacturing council has already been developed among member companies for the purpose detailing what India must do in order to become a manufacturing hub.  As it currently stands, these member companies have invested over $50 billion over the past 4 years.

MSMEs Sector Is Going To Get a Major Boost by Government

MSMEs, which are also known as the micro, small, and also medium enterprises or companies, are all set to get great news by the Government. A huge boost-up is going to happen for all the micro-enterprises, small enterprises, and medium enterprises.

Recently, on a conference Nitin Gadkari, the Union Minister has stated one imperative fact addressing the entire MSMEs sector. He has stated that the Modi Government is going to give a huge boost to all the MSMEs across the country. He said all these to the people of the nation at the first-ever Bunts Star Achievers Awards of 2020. IBCCI or the Indian Bunts Chamber of Commerce & Industry was the main organizer of this programme.

The micro, small, and also medium enterprises account for almost forty-eight per cent of exports and take up nearly 11 crore people as well. Nitin Gadkari spoke a lot of noteworthy facts on Sunday, which is mainly great for those companies who are doing business in India. All of the small to medium and also micro-enterprises are going to avail a lot of advantages.

Apart from that, the MSME minister has also added one crucial fact that India requires a reliable and effective institute for all the enterprises and entrepreneurship too. But the major thing that the Government is thinking is how fast they can make their decision. Once they are ready with their decision, they will start executing this, and that would be considered as the hallmark of the Government as well. He has also claimed that despite the global economic downturn, India was known as the fastest developing and growing economy.

When it comes to India company incorporation, a few important things are crucial for stabilizing the environment as well as development. What mainly matters is the ultimate change of the knowledge to wealth and also waste to wealth, said Gadkari. But only thinking of development and environment is not enough because holistic thinking is crucial so that the entire infrastructure growth and expansion is not delayed.

In this conference, Sadananda Gowda, who is Union Chemicals and Fertilizer Minister, has stated that since BJP-led party NDA has come to power, the ease and simplicity of doing this business has enhanced to this World Bank global ranking counts 63, which was 134 initially. In this topic of the MSMEs sector, the former chief minister of Karnataka D. V. Sadananda Gowda has also pitched one crucial and major part. He said that recently GST had altered the entire scenario. The GST council is known as one of the autonomous bodies, and there was not a single event of dissent that happened in the last three years. Along with that, he has declared that by the end of 2025, some of the massive infrastructure projects are coming here. That is worth almost a hundred crores, which will be quite big and beneficial for the industries as well.

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