Who files Form 10FA and who issues Form 10FB?
The resident taxpayer files Form 10FA; the Indian tax authority issues Form 10FB. That split is worth holding on to, because people ask for help with filing Form 10FB and there is no such filing. Form 10FA is the application, made by the Indian resident who needs to prove Indian residency in order to claim treaty relief in another country. Form 10FB is the certificate that comes back. A foreign payer will generally want the certificate rather than the application, so the work is not finished when the application goes in.
Do I need Form 10FB before my foreign client can reduce its withholding?
In practice, yes. A payer abroad applies its own domestic rate to a non-resident unless it holds evidence that a reduced treaty rate applies, and the certificate is the evidence its compliance function is looking for. An application in progress is not evidence. This is why the timing runs the other way from how most people plan it: the certificate has to be in the payer hands before the payment is made, not before the year is filed, because once the deduction has been taken it becomes a recovery problem in the payer own country.
Can a company apply on Form 10FA or is it only for individuals?
An Indian resident taxpayer applies, and that includes a company. The certificate has to name the person whose residency is being certified, and that person has to be the recipient of the foreign income. A certificate in a director personal name does not help a company that is invoicing abroad, and a foreign payer comparing the certificate against its contract and its invoice will say so. Decide who the contracting party is, and therefore whose income the receipt is, before the application is made rather than after it has been refused.
Which income year should my Form 10FA application cover?
The year the foreign income arises in. The application has to match that year, and the commonest error is to apply for the year in which you happen to be making the application. Where fees are paid across a boundary between years, or where a contract runs over more than one year, the answer may be several certificates rather than one covering a convenient span. Work back from the dates the foreign payments are expected on, and treat those dates as the thing the application is built around.
I am an Indian resident with Canadian rental income, do I need Form 10FB?
If you want a treaty rate applied at source in Canada, you need to be able to evidence your Indian residency, and the certificate is how that is done. A Canadian payer or agent withholds at the domestic non-resident rate on rent unless it is satisfied a reduced rate applies. Note that a treaty does not always reduce the rate on every kind of income, so the first question is whether there is relief to claim at all. If there is, the certificate has to reach the withholding agent before the rent is remitted.
Does Form 10FB prove I am not resident anywhere else?
No, and assuming it does causes trouble. The certificate says that India treats you as resident for the period stated. It does not decide a competing claim by another country, and a foreign authority that considers you resident under its own law will not drop that view because India has certified its own. Dual residence is resolved by the tie-breaker in the relevant treaty, on facts such as a permanent home and the centre of your personal and economic relations. Settle that question first, because an application made while it is open can produce a certificate that answers nothing.
What happens if two countries both say I am resident?
The treaty tie-breaker resolves it to one residence, applied in order: where your permanent home is, then your centre of vital interests, then your habitual abode, then nationality, with a competent-authority referral if all of those fail. It is an evidence exercise rather than an election — you document the home and the life around it. Getting a single residence settled is what makes every other position in both returns consistent. See the residency tie-breaker.
What is DTAA?
DTAA — a Double Taxation Avoidance Agreement — is India's term for a tax treaty. It allocates taxing rights between India and the other country, caps withholding on cross-border payments, and gives relief for income taxed twice by either exempting it or crediting the foreign tax. Relief is claimed, and from the Indian side that normally means a tax residency certificate, Form 10F and Form 67. See DTAA relief.
