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FM To Address Concerns Over TRC During Budget Debate

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The finance ministry sought to assure worried investors saying their concerns on Tax Residency Certificate (TRC) for claiming treaty benefits will be 'suitably' addressed during discussion on Finance Bill in Parliament.

"Since a concern has been expressed about the language of sub-section (5) of Section 90 (of I-T Act), this concern will be addressed suitably when the Finance Bill is taken up for consideration," the ministry said in a statement.

Concerns are being expressed that the provision regarding the TRC would make it difficult for investors routing their funds from low-tax countries like Mauritius, Cyprus and Singapore to avail the benefits of Double Taxation Avoidance Agreement (DTAA).

The Ministry said nothing new has been done with regards to TRC and Finance Minister P Chidambaram would clarify the government's position during debate on the Finance Bill.

The Finance Bill 2013 proposed to "amend Sections 90 and 90A in order to provide that submission of a tax residency certificate is a necessary but not a sufficient condition for claiming benefits under the agreements referred to in sections 90 and 90A".

As per this, a person holding TRC will also have to be the beneficial owner to claim benefits under DTAA "as TRC is necessary, but not sufficient condition for availing benefits".

The statement said, with respect to investments from Mauritius, the circular 789 "continues to be in force, pending ongoing discussions between India and Mauritius".