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With the increasing globalization of employment, investments, and business transactions, cross-border taxation has become an important area of Indian income-tax law. Indian residents earning income abroad and non-residents earning income from India often seek relief under Double Taxation Avoidance Agreements (DTAA) or claim Foreign Tax Credit (FTC).
Double taxation relief is available to taxpayers who have income that is taxed both in India and in another country under a tax treaty. The Income-tax Act, 2025 substantially retains these concepts while simplifying legislative structure and renumbering provisions and forms. Taxpayers dealing with cross-border income should ensure timely and accurate filing of these forms to avoid denial of treaty benefits, foreign tax credits, and unnecessary litigation.
One important compliance form connected with international taxation of nonresident Indian is Form 10F under Rule 21AB of Income Tax Rules, 1962 (Now Form 41 under Rule 75 of Income Tax Rules 2026) – used primarily by non-residents for claiming DTAA benefits in India. The relevant section under Income Tax Act 2025 is section 159 (earlier section 90A of Income Tax Act 1961).
Filing Form 41 ensures that the supporting information required under Rule 75 is properly furnished so that the claim for relief can be made correctly. Form 41 is made available on the e-filing portal and can be submitted through online only. Form 41 must be filed prior to executing the foreign remittance and before the Indian remitter calculates and pays the Tax Deducted at Source (TDS). Form 41 cannot be filed after the money left India.
The Chartered Accountant requires a successfully generated e-verified copy of Form 41 to reference it in Form No.146 (CA certificate/old Form 15CB). The Indian bank will block the concessional treaty rate if the form is not filed beforehand. Form 41 needs to be filed once in a year and it is valid only for the specific Indian Financial Year (1st April to 31st March). The form needs to be filed immediately after the foreign payee receives their updated Tax Residency Certificate (TRC) from their home government for the current year. Form 41 asks for the specific validity period of the TRC, the dates on both documents must align perfectly.
If Form 41 is not furnished, DTAA benefit may be denied and higher TDS under domestic law may apply. Further litigation with deductor or department may occur. For e.g.: Royalty taxable at 10% under DTAA may suffer 20% TDS under domestic provisions if Form 41/TRC is not submitted. Form 10F/41 is generally required to claim DTAA benefit when non-resident shareholders claim lower TDS on dividends or foreign consultants receiving professional fees or NRIs claiming DTAA benefit on interest income or foreign entities earning any other income taxable in India.
The Income-tax Department made electronic filing of Form 10F (now form 41) mandatory for non-residents claiming DTAA benefits. Given the increasing scrutiny of international transactions and automated CPC processing, procedural compliance with these forms has become as important eligibility criterion. Non-Resident Indians having income from India are advised to follow these procedural requirements to avoid paying higher tax in India when DTAA provides for lesser rate of tax.
Disclaimer: The opinions and views expressed in this article/column are those of the author(s) and do not necessarily reflect the views or positions of South Asian Herald.
