People who earn income in more than one country often face double taxation.
This means the same income is taxed both in the country where it is earned and in the country where the person lives.
For example, an Indian earning abroad, or a foreigner earning in India, could face taxes in both countries.
To prevent this, countries sign agreements called Double Taxation Avoidance Agreements (DTAA).
These treaties help taxpayers avoid paying tax twice on the same income.
One key document to benefit from DTAA is the Tax Residency Certificate (TRC).
What is a Tax Residency Certificate (TRC)?
A TRC is an official certificate issued by the Income Tax Department or the tax authority of a foreign country.
It confirms that you are a tax resident of that country for a specific financial year.
Benefits of TRC:
Confirms your tax residency for a particular year.
Allows you to claim tax relief under DTAA.
Reduces TDS (Tax Deducted at Source) on income such as interest, dividends, royalty, or salary from foreign sources.
Example: US withholding tax on dividends is normally 30%, but with an Indian TRC, it can drop to around 15%.
Needed for global stock investments, foreign banks, and brokers like Interactive Brokers.
How to Get a TRC in India
If you are an Indian resident earning income outside India, you can apply for a TRC from the Indian Income Tax Department.
Step 1: Fill Form 10FA
Submit online on the Income Tax e-filing portal or physically to your Assessing Officer (AO).
Required documents may include PAN, Aadhaar, address proof, passport, foreign income details, and previous tax returns.
Step 2: Verification by Income Tax Officer
Officer checks your residence status using the 182-day rule, past tax returns, and proof of earning and living in India.
Step 3: TRC Issued in Form 10FB
Once approved, you receive your TRC in Form 10FB, the official certificate confirming your tax residency.
How to Get a TRC from a Foreign Country
If you are an NRI or working abroad, you need a TRC from that country’s tax authority.
Examples:
UAE → Tax Residency Certificate via Ministry of Finance
USA → IRS Form 6166
Singapore → IRAS Certificate
Most countries provide a simple online application process through their tax authority websites.
