Tax Residency Certificate (Purchase/ Services)

[kayur Patel]

Dear All,

Whether 'TRC' is required in case of gross-up of tax by the tax deductor for payments to non-resident?

Whether 'TRC' is required for payments made to all the non-residents i.e. for Purchase as well as services?

Whether obtaining 'No PE ceritificate' for purchase is sufficient compliance for taking the tax treaty benefits for NIL withholding?

Your valuable suggestions are welcome on the above.

Thanks in advance...

[RAJENDRA JOSHI]

Dear Sir,

In my opinion, TRC is required only if we are claiming benefit under relevat DTAA. In case of Payment to NR for purchases, We need not required TRC. In accordance with Sec 5, Purchases is not taxable as arrucal of income to foreign company is outside india. Income accrues where property in goods is transfer. Since it is not taxable as per Indian Income Tax Act, we need not look for DTAA and hence TRC is not necessary.

I request others to provide a necessary guidance regarding other queries asked by Mr kayur Patel and correct me if I am wrong.

Payment to NR has become an important issues, specially when it comes to issuing 15CB certificate. Request others to throw some light on documents to be obtain before issuing 15CB.

Regards,

Chetan

 

 

AI Summary

Tax Residency Certificate requirement: TRC needed only when claiming treaty relief; purchases generally outside taxable scope. TRC is required only when claiming benefits under a relevant DTAA; purchases of goods are generally outside Indian taxable scope as income accrues where property is transferred, so TRC is not necessary for purchase payments when no treaty relief is sought. For service payments, TRC necessity depends on whether DTAA relief is claimed; gross-up alone does not mandate a TRC. The reply also flags documentary and certification requirements related to withholding compliance.