Tax residency certificate
This query is : Resolved
09 January 2014
Sir
We are importers of merchandise (mainly medical instruments) from various US Companies. In order to pay these companies, do we have to ask for Tax residency certificate else apply With Holding tax.
Please help.
We are importers of merchandise (mainly medical instruments) from various US Companies. In order to pay these companies, do we have to ask for Tax residency certificate else apply With Holding tax.
Please help.
10 January 2014
Ask your banker for the required documents.
10 January 2014
Sir, the Bank need only 15CA and 15CB, Form A1. They are not clear on TRC.
26 July 2025
Got it! Here’s a clear explanation about **Tax Residency Certificate (TRC)** and its role in payments to foreign companies:
---
### When to ask for a **Tax Residency Certificate (TRC)**?
* If you are **making payments abroad** (e.g., to US companies), **tax withholding (TDS)** may apply under Indian tax laws.
* However, **Double Tax Avoidance Agreement (DTAA)** between India and the other country (USA here) can reduce or eliminate withholding tax if the recipient company provides a valid **Tax Residency Certificate** issued by their tax authority.
* The TRC proves that the recipient is a tax resident of the treaty country and eligible for treaty benefits.
---
### What documents are usually required for foreign remittances?
* **Form 15CA** — Declaration of remittance.
* **Form 15CB** — Chartered Accountant certificate validating tax compliance.
* **Form A1** — If applicable (for certain remittances).
* **TRC** — Requested to avail lower or nil withholding tax under DTAA.
---
### Why banks ask for TRC?
* To apply **correct TDS rate** based on the treaty benefits.
* Without TRC, banks usually deduct tax at the higher domestic rate (typically 30% or applicable rate).
* Providing TRC helps reduce tax deduction at source as per treaty rates.
---
### Practical advice:
* **Ask the US companies to provide their TRC** issued by the US tax authorities.
* Submit this TRC along with Form 15CA and 15CB to your bank.
* This will allow you to apply the lower treaty withholding tax rates instead of the default higher rates.
* Without TRC, your bank will deduct tax at the higher rate as per Indian law.
---
If you want, I can help you draft a formal request for TRC to send to your US vendors. Would you like that?
---
### When to ask for a **Tax Residency Certificate (TRC)**?
* If you are **making payments abroad** (e.g., to US companies), **tax withholding (TDS)** may apply under Indian tax laws.
* However, **Double Tax Avoidance Agreement (DTAA)** between India and the other country (USA here) can reduce or eliminate withholding tax if the recipient company provides a valid **Tax Residency Certificate** issued by their tax authority.
* The TRC proves that the recipient is a tax resident of the treaty country and eligible for treaty benefits.
---
### What documents are usually required for foreign remittances?
* **Form 15CA** — Declaration of remittance.
* **Form 15CB** — Chartered Accountant certificate validating tax compliance.
* **Form A1** — If applicable (for certain remittances).
* **TRC** — Requested to avail lower or nil withholding tax under DTAA.
---
### Why banks ask for TRC?
* To apply **correct TDS rate** based on the treaty benefits.
* Without TRC, banks usually deduct tax at the higher domestic rate (typically 30% or applicable rate).
* Providing TRC helps reduce tax deduction at source as per treaty rates.
---
### Practical advice:
* **Ask the US companies to provide their TRC** issued by the US tax authorities.
* Submit this TRC along with Form 15CA and 15CB to your bank.
* This will allow you to apply the lower treaty withholding tax rates instead of the default higher rates.
* Without TRC, your bank will deduct tax at the higher rate as per Indian law.
---
If you want, I can help you draft a formal request for TRC to send to your US vendors. Would you like that?
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