Monetary threshold for TRC likely to be introduced in Budget

 The Dollar Business Bureau The Union Government is leaving no stone unturned to make the Budget 2015 an absolute delight for the industry. Close to the expectations on the reversal of the inverted duty structure and implementation of the Goods and Services Tax (GST), the Finance Ministry is likely to fix a monetary threshold for furnishing of the Tax Residency Certificate (TRC) for ease of doing business in India. The TRC is usually furnished by small time overseas entities for availing tax benefits under bilateral treaties. Though all companies that pump in foreign direct investment (FDI) furnish TRC, according to tax authorities, the larger companies do not face much problem because they have adequate administrative machinery to deal with the regulatory requirements. The TRC which, introduced in Finance Act 2012, is mandatory for non-residents to produce it from the home country’s revenue authority to avail tax treaty benefits in India. Currently, foreign investors have to provide the tax identification number, residential status, period of TRC and the address of the assesse. Experts say the difficulty in TRC lies in recording the day-to-day transactions which are miniscule and exempting them by introducing a monetary threshold will be of great help for the foreigners. The non-resident can as well self-certify the necessary particular and furnish it to the Indian resident making the payment. Industry sources say that Union Finance Minister will likely address this issue in the Budget 2015 to be presented on February 28.  

This article was published on February 18, 2015.