Who actually has to get a tax residency certificate for India?
The person receiving the Indian income, not the person paying it. If you are a non-resident claiming a treaty rate on interest, dividends, royalties, fees or gains arising in India, the certificate is yours to obtain, in your name, from the revenue authority of the country you are resident in. The Indian payer role is only to hold a copy before it deducts, and to deduct at the full domestic rate if it does not have one. That division matters when a payer offers to sort the paperwork out: it cannot, because only your own authority can certify your residency.
Does my Indian bank need a residency certificate for my deposit interest?
If you want the treaty rate on that interest, yes. A bank is a payer like any other and applies the deduction the law gives it. Without a certificate in your name for the period the interest arises in, it deducts at the domestic rate for non-residents, and it will keep doing so at every interest credit until the certificate is on its file. Banks also tend to want the document lodged at branch or relationship level, so allow for their internal routing as well as for the issuing authority own lead time.
Which country issues my tax residency certificate?
The one you are resident in. India does not issue the certificate it asks for; it requires the certificate of the treaty partner, issued by that country revenue authority under that country procedure. For a Canadian resident that means applying to the Canada Revenue Agency. This is why the document cannot be produced to order from the Indian end, and why the lead time is outside anybody control on the Indian side. It is also why a certificate issued for some other purpose, or by any body other than the revenue authority, will not do.
Does one residency certificate cover several years of Indian income?
Not usually. The certificate speaks to a period, and income arising outside that period is not covered by it. In practice a recurring stream of Indian income, such as deposit interest, dividends on a long-held holding or rent, needs the certificate renewed and lodged again with the payer for each period concerned, and needs it in hand before the payment rather than after. The common failure is not the first year, which everybody remembers, but the year after, where the payer quietly reverts to the domestic rate because the file has expired.
My name on the certificate does not match my Indian records, is that a problem?
Yes, and it is one of the commonest reasons relief is refused at source. India requires the certificate in the right name, and a payer comparing a certificate against its own records will stop where they differ: a married name, an initial expanded on one document and not the other, a transliteration. The payer is not being obstructive, since it carries the deduction risk. The correction has to be made where the mismatch is, which is often at the issuing authority rather than in India, so reconcile every document against one form of the name before anything is lodged.
Who applies for the certificate when Indian income is held jointly?
Each holder, separately and in their own name. A certificate naming one joint holder does not evidence the residency of the other, and a payer working through a joint account will apply the treaty rate only to the share of the person it holds a certificate for. Where holders are resident in different countries the position is more awkward still, because each has to apply to a different authority under a different procedure, and a different treaty may govern each share. Establish whose income each share actually is before anyone applies for anything.
How do I file Form 67?
Form 67 is the claim for foreign tax credit in an Indian return, filed online before you file the return it relates to. It reports the foreign income, the tax paid abroad and the treaty article relied on, and it needs the foreign tax evidence behind it. File it late or leave it out and the credit is at risk even when the underlying tax was genuinely paid. See foreign tax credit in India.
Is dividend income from Indian shares taxable for an NRI?
Yes. Dividends are taxed in the shareholder's hands, and the paying company withholds on payment to a non-resident. The treaty can reduce that withholding, but only if the documents are with the company before it pays: a tax residency certificate from your country, Form 10F, and a PAN on the register. Without them the domestic rate applies and your route back to the difference is a refund claim on an Indian return. See residency certificates and Form 10F.
