Treaty Relief: TRC, Form 10F and Foreign Tax Credit

Double taxation is dealt with from two sides. A non-resident earning in India relies on a tax treaty to cut Indian tax, for example on interest, dividends, royalties or capital gains. To do that, the non-resident needs a tax residency certificate from home and a set of supporting particulars, filed as Form 10F under the 1962 Rules or Form No. 41 under the 2026 Rules. A resident earning abroad pays foreign tax first and then claims credit for it in India. That needs Form 67 under the 1962 Rules or Form No. 44 under the 2026 Rules, filed on time. Each is a short form, and missing it is the most common reason relief is refused.

Which Act applies

	1961 Act / 1962 Rules	2025 Act / 2026 Rules
Treaties	s.90 (s.90A for specified associations)	s.159(1) and (2)
Non-resident’s certificate and particulars	s.90(4) and (5); rule 21AB, Form 10F	s.159(8); rule 75, Form No. 41
Resident’s own certificate of residence	rule 21AB(3) and (4); Forms 10FA, 10FB	rule 75(3) and (4); Forms No. 42, 43
Relief where there is no treaty	s.91	s.160
Foreign tax credit	rule 128, Form 67	rule 76, Form No. 44 (Form No. 45 for settled disputes)

The 1961 Act and Rules govern AY 2026-27 and earlier years. The 2025 Act and 2026 Rules govern tax year 2026-27 onwards.

Part 1: the non-resident claiming a treaty rate

The rule. Under section 159(4) of the 2025 Act, where a treaty applies, the Act applies “to the extent they are more beneficial to that assessee”. Section 159(8) attaches two conditions. A non-resident may claim relief “only when”:

• “(a) a certificate of his being a resident in any country or specified territory, is obtained by him from the Government of that country”; and
• “(b) he provides such other documents and information, as may be prescribed.”

Section 90(4) and (5) of the 1961 Act are to the same effect.

The prescribed information. Rule 75(1) of the 2026 Rules requires the other documents and information under section 159(8)(b) to be “as per Form No. 41”. Rule 21AB(1) of the 1962 Rules listed the Form 10F particulars:

• status (individual, company, firm and so on);
• nationality or country of incorporation;
• the tax identification number in the country of residence, or another unique identifying number;
• the period for which the residence certificate applies;
• the address abroad during that period.

Rule 21AB(2) excused particulars already contained in the certificate. Both rules require the assessee to keep documents substantiating the information, and the income-tax authority may call for them (rule 75(2); rule 21AB(2A)).

Where it is used. The certificate and form go first to the Indian payer, who uses them to deduct at the treaty rate. Section 2(90)© of the 2025 Act allows deduction on payments to non-residents at the Finance Act rate or the treaty rate, “whichever is applicable”. The payer’s accountant relies on them in Form No. 146 (Form 15CB). See Paying a Non-Resident: Forms 15CA and 15CB. The same documents support the treaty claim in the non-resident’s return.

Filing the form. Rule 75 names the form but not the mode of filing. Rule 332 of the 2026 Rules lets the Director General of Income-tax (Systems), with the Board’s approval, specify which forms are to be furnished electronically and lay down the procedure. The procedure for Form No. 41, including how a non-resident without a PAN files it, is the one the e-filing portal specifies under that rule.

What to have ready.

• The tax residency certificate from the foreign tax authority, covering the Indian tax year or the part of it in which the income arises. A certificate for a calendar year may not match an Indian tax year running from April to March.
• The foreign tax identification number and the foreign address.
• The treaty article relied on, and any conditions in it, such as beneficial ownership or a limitation-of-benefits clause.
• A PAN if one is held. Where there is none, rule 217 of the 2026 Rules lists the details that avoid the higher no-PAN rate.

Is the certificate conclusive?

In Authority for Advance Rulings (Income Tax) v. Tiger Global International II Holdings (Supreme Court, 15 January 2026, 2026 INSC 60), three Mauritius companies held tax residency certificates and Category I Global Business Licences. They sold shares of a Singapore company that derived its value substantially from Indian assets, and claimed exemption under Article 13(4) of the India–Mauritius treaty. The Authority for Advance Rulings rejected their applications as prima facie designed to avoid tax. The Delhi High Court reversed it, relying on CBDT Circular No. 789 and the Finance Ministry’s clarification of 1 March 2013 that the certificate would be accepted as conclusive.

The Supreme Court allowed the Revenue’s appeals. Section 90(4) “only speaks of the TRC as an ‘eligibility condition’” and “does not state that a TRC is ‘sufficient’ evidence of residency”. After the amendments introducing section 90(2A) and Chapter X-A (general anti-avoidance), “the mere holding of a TRC cannot, by itself, prevent an enquiry” where the interposed entity was a device to avoid tax. The Court held that capital gains on transfers after the cut-off date of 1 April 2017 were taxable in India.

Section 159(8) of the 2025 Act repeats the words of section 90(4). The certificate is still a condition of relief, and the reasoning in Tiger Global bears on its weight.

Part 2: the resident claiming foreign tax credit

The rule. Rule 76(1) of the 2026 Rules allows “an assessee, being a resident” credit for foreign tax paid “in the tax year in which the income corresponding to such tax has been offered to tax or assessed to tax in India”. Rule 128(1) of the 1962 Rules is the same for a previous year. The main points of rule 76:

• Where the income is taxed in India over more than one year, the credit is spread in the same proportion (rule 76(2)).
• “Foreign tax” means the tax covered by the treaty, or, for a non-treaty country, tax of the nature described in section 160(3)(a) (rule 76(3)).
• Credit is set against tax, surcharge and cess, “but not in respect of any sum payable by way of interest, fee or penalty” (rule 76(4)).
• Disputed foreign tax gets no credit until the dispute is settled. The claim is then made within six months of settlement, in Form No. 45 (rule 76(5), (6) and (15)).
• Credit is computed separately for each source and country, and is the lower of the Indian tax on that income and the foreign tax paid. Foreign tax in excess of the treaty rate is ignored (rule 76(7)(a)).
• Conversion is at the State Bank of India’s telegraphic transfer buying rate on the last day of the month before the month in which the tax was paid or deducted (rule 76(7)(b)).

For a non-treaty country, section 160 of the 2025 Act (section 91 of the 1961 Act) gives a deduction at the lower of the Indian rate and the foreign rate on the doubly taxed income.

What to have ready. Rule 76(10) and (11) require:

• a statement of the foreign income and foreign tax in Form No. 44;
• a certificate or statement of the nature of the income and the tax, from the foreign tax authority, from the person who deducted it, or signed by the assessee;
• where the assessee signs the statement, proof: an online payment acknowledgement or challan where tax was paid, or proof of deduction where it was deducted.

In practice this means the foreign employer’s tax statement or the foreign return and assessment, payment receipts, and a source-by-source computation of the Indian tax on the same income.

Deadline. Rule 76(12) requires Form No. 44 and the supporting certificate within twelve months from the end of the tax year in which the income is offered to tax, provided the return for that year was furnished within the time under section 263(1) or (4). For an updated return under section 263(6)(a), they must be furnished on or before the date of that return (rule 76(13)).

For the 1961 Act years, rule 128(9) was substituted by Notification No. 100/2022 dated 18 August 2022, with effect from 1 April 2022. Form 67 became due by the end of the assessment year, provided the return was furnished within the time under section 139(1) or (4). A proviso required Form 67 for an updated return under section 139(8A) by the date of that return. The portal’s Form 67 FAQ still says the form “should be filed before the due date of filing of return as specified u/s 139(1)”. That reflects the rule before the 2022 amendment.

Verification. Under rule 76(16), Form No. 44 must be verified by an accountant where the assessee is a company, or where the foreign tax paid for the tax year is Rs 1,00,000 or more. This is new in the 2026 Rules. The portal’s Form 67 FAQ states that a chartered accountant’s certificate was not mandatory for Form 67. Form No. 45 needs an accountant’s verification wherever Form No. 44 for the year did (rule 76(17)).

Refund of foreign tax. Where a carry-back of loss abroad, a revision or any other reason leads to a refund of foreign tax already credited in India, Form No. 44 must be filed again (rule 76(14); rule 128(10) of the 1962 Rules).

Portal steps. The portal’s Form 67 user manual describes e-file > Income Tax Forms > File Income Tax Forms, selecting the form and the assessment year, filling Part A (income and credit claimed) and Part B (refunds and disputed tax), attaching the certificate and proof of payment, and e-verifying. The FAQ lists Aadhaar OTP, EVC or DSC for verification. The return itself carries the claim in Schedules FSI and TR, according to the portal’s ITR-2 manual.

When Form 67 was late

In Duraiswamy Kumaraswamy v. PCIT (Madras High Court, [2023] 156 taxmann.com 445), the petitioner had worked in Kenya and became resident in India. He filed his return on 10 August 2019 but filed Form 67 only on 2 February 2021, before the assessment was completed. Following the Supreme Court’s reasoning in CIT v. G.M. Knitting Industries on Form 3AA, the High Court held that filing under rule 128 “is only directory in nature” and that credit could not be refused for the delay.

The same Court applied that decision in V. Srinivasan v. Deputy Director of Income Tax (24 September 2024, W.P. No. 2722 of 2024). There the Centralized Processing Centre had ignored a Form 67 filed with the return and then rejected the rectification request. The Court set aside the order and directed credit to be considered. Both decisions concern rule 128 of the 1962 Rules. Rule 76(12) of the 2026 Rules again ties the deadline to a return filed within time, so the same question can arise under it.

Summary

1. A non-resident claiming a treaty rate obtains a tax residency certificate covering the Indian tax year and files Form No. 41 (Form 10F) with the required particulars.
2. The non-resident gives both to the Indian payer before payment, and keeps the supporting documents.
3. A resident with foreign income offers it to tax in India and computes the credit source by source, at the lower of Indian and foreign tax.
4. The resident files Form No. 44 (Form 67) with the foreign tax certificate and proof of payment. For the 2026 Rules, the deadline is twelve months from the end of the tax year with a timely return. An accountant verifies it where foreign tax is Rs 1,00,000 or more.
5. If foreign tax is later refunded or a dispute is settled, the resident files the further form required.

The next guide, NRI Returns, Refunds and Lower TDS, covers when a non-resident must file, which form applies, and how to reduce tax deducted in advance.