Opinion on Tax Residency Certificate

Recipient: The Circle Foundation

Date – 16th Mar, 2023
Issue #1:
Could you outline the process and timelines for getting a TRC in the US and UK?

General Overview:
Any individual who is a non-resident of India, as per Indian IT law, should obtain a Tax
Residency Certificate from the country’s government or the territory of which he/she
claims to be a resident. This TRC has to contain the following details, namely:-
1. Taxpayer’s name
2. Taxpayer status (firm, company, individual etc.)
3. Nationality or specified territory/country of incorporation (in case of a LLP, company
or Firm) or registration
4. Taxpayer's tax ID number
5. Residential status
6. Certificate validity period and
7. Taxpayer address for the time period in which the certificate is applicable;

Opinion
Process to Obtain TRC in US
Step 1 - Use Form 8802 to request Form 6166, a letter of U.S. residency certification for
purposes of claiming benefits under an income tax treaty or value added tax (VAT)
exemption.
Step 2 – Fill Form 8802 that can be found in the following link -
https://www.irs.gov/forms-pubs/about-form-8802 (Also attached in Annexure I)
Along with it Instructions for form 8802 in attached in Annexure II for your reference.
Step 3 – Pay the mentioned User Fee for $85. After you have received your electronic
payment confirmation number, and entered it on page 1 of Form 8802, you can submit
Form 8802 and all required attachments by mail, private delivery service, or fax (see
below for limitations on the use of faxed transmissions).
If you are paying the user fee by e-payment, send Form 8802 and all required
attachments to:
Department of the Treasury
Internal Revenue Service
Philadelphia, PA 19255-0625

Or, by private delivery service to:

Internal Revenue Service
2970 Market Street
BLN# 3-E08.123
Philadelphia, PA 19104-5016
Fax.
You can fax up to 10 Forms 8802 (including all required attachments) for a maximum of
100 pages to the fax numbers below. You must use a fax cover sheet stating the number
of pages included in the transmission.
The following fax numbers are available..
• 877-824-9110 (within the United States only, toll free).
• 304-707-9792 (inside or outside the United States, not toll free).

Timeline for the process to Obtain TRC in US

Usually, it takes 4-6 weeks for the entire process to obtain the Tax residency certificate.
Process to Obtain TRC in UK
Step 1 – To Apply for Certificate of residence (CoR). You can do it in three ways
(i) You can use the online service (You will need to sign in using Government Gateway
user ID , if new user you create new one)
(ii) email a form (you will not need to sign in to an online account)
(iii) if you’re an agent applying on behalf of an individual or sole trader you can apply
online
Step 2 – Based on the method of application, online or email , once done submit the
application.

Timeline for the process to Obtain TRC in UK

Usually, it takes 2-3 weeks for the entire process to obtain the Tax residency certificate.
Issue #2:
Could you outline the process for claiming tax rebates when a UK or US citizen is paid by
an Indian organization?
General Overview:

You may have incomes from more than one country. Such incomes may be taxable in
both countries due to their domestic laws even though you are a tax resident in only one
of those countries. Thus, to avoid paying such double taxes on the same income in both
the source country and country of residence, double taxation avoidance agreements
(“DTAA”) (otherwise known as tax treaties) are entered between various countries. Such
agreements offer the taxpayers the benefit of tax paid in the other country with which it
has a tax treaty.

The Indian government has various DTAA with various countries. These tax treaty
provisions apply only to residents of those countries which are parties to such tax treaties.
Therefore, it becomes pertinent to confirm which country the person is a tax resident of.
One of the main pieces of documentary evidence to establish tax residency and support
eligibility for a DTAA relief claim is a tax residency certificate (“TRC”).
Opinion
The US / UK citizen can file their tax returns as required in their country and income
earned in India will not be taxable in citizen home country if applicable withholding taxes
are paid to the Indian government and as per the DTAA agreement of countries with India.
However, for any specific advice on the same, they may reach out to any local consultant
in their country while filing their tax returns.
TDS must be deducted by Indian Entity before making payments to Non-Resident as per
applicable withholding rates. (So the payment to Non Resident will be net off TDS)
TRC is needed to avoid taxation on same income in their home country.