s.90 — Double taxation relief and the tax residency certificate
The power to make double taxation agreements, the rule that the Act applies only so far as more beneficial to the assessee, and the tax residency certificate and other documents a non-resident must produce to claim treaty relief.
Income-tax Act, 1961
s.90
Income-tax Act, 2025
s.159
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 159 of the Income-tax Act, 2025, which governs tax year 2026-27 onwards, empowers the Central Government to enter into agreements with other countries or specified territories, and to adopt agreements between specified associations, for relief of double taxation, avoidance of double taxation without creating opportunities for non-taxation or reduced taxation, exchange of information and recovery. Sub-section (4) applies the Act to an assessee covered by an agreement only to the extent it is more beneficial to him, (5) says a higher rate for a foreign company is not less favourable treatment, (6) applies Chapter XI (the general anti-avoidance rule) even where it is not beneficial, and (8) allows a non-resident relief only when he (a) obtains a certificate of his residence from the Government of the other country or territory and (b) provides such other documents and information as may be prescribed; rule 75 of the Income-tax Rules, 2026 prescribes Form No. 41, and Forms No. 42 and 43 for a resident's certificate. For years up to 2025-26 the provisions are section 90 of the Income-tax Act, 1961, with section 90A for agreements between specified associations: section 90(2) for the more beneficial rule; section 90(2A), inserted by the Finance Act, 2013 with effect from 1 April 2016, for Chapter X-A; Explanation 1 for the foreign company rate; section 90(4), inserted by the Finance Act, 2012 with effect from 1 April 2013, for the certificate; and section 90(5), inserted by the Finance Act, 2013, for the documents, with rule 21AB of the Income-tax Rules, 1962 prescribing Form No. 10F for the status, nationality or country of incorporation, foreign tax identification number, period and address, except so far as the certificate already contains them, requiring the documents to be kept, and providing Forms No. 10FA and 10FB for a resident's certificate. The Supreme Court held in Tiger Global (15 January 2026) that section 90(4) speaks of the certificate as an eligibility condition, not sufficient evidence of residence, and that holding a certificate does not by itself prevent an enquiry if it is established that the interposed entity was a device to avoid tax; the Ahmedabad Tribunal had held in Skaps Industries (21 June 2018) that relief cannot be refused only for want of a certificate where treaty residence is otherwise proved.
What the provision does
Gives a treaty priority over the Act where the treaty is more beneficial and makes a certificate of residence and prescribed information conditions of a non-resident's claim. It does not make the certificate conclusive proof of residence or shield a device to avoid tax from enquiry; it does not protect an arrangement from the general anti-avoidance rule; and it does not decide residence under section 6, which is a separate question answered first.
Threshold questions
- Is the assessee resident in the other State under that treaty's Article 4(1): usually liability to tax there by reason of domicile, residence, place of management or a similar criterion, but under the India-UAE treaty presence of at least 183 days in the calendar year for an individual and, for a company, incorporation in and management and control wholly in the UAE
- If resident in both States, which State does the tie-breaker in the treaty, as modified by the Multilateral Instrument, give
- Has the non-resident obtained a certificate of residence for the relevant period
- Where the other State's tax year is not April to March, do the certificates between them cover the part of the Indian tax year for which relief is claimed, with the period of each stated in Form No. 41 (item 11) or Form No. 10F (item (v))
- Has Form No. 41, or Form No. 10F for years before tax year 2026-27, been furnished with the prescribed particulars, and are the supporting documents kept
- Is the arrangement within Chapter XI of the 2025 Act or Chapter X-A of the 1961 Act, so that the general anti-avoidance rule applies regardless
In practice
The recurring disputes.
Whether a certificate of residence concludes the question
The non-resident relies on the certificate as the other State's own determination and on Azadi Bachao Andolan (7 October 2003), which upheld Circular No. 789 on certificates, though the Court did not itself call the certificate conclusive. The Delhi High Court in Blackstone (30 January 2023) held that the Revenue cannot go behind it; the Supreme Court granted the Revenue leave against that judgment and stayed it on 12 January 2024, directing that the Revenue should not in the meanwhile collect the amount assessed. In Tiger Global the Supreme Court held the certificate an eligibility condition and not sufficient evidence, and that holding one does not prevent an enquiry where the entity is shown to be a device to avoid tax. Our view is that after Tiger Global a certificate does not close the enquiry, and Blackstone cannot be relied on for the proposition that it does; but where the Department's case is simply that the non-resident is resident in India, it must prove that case on the evidence. How far the enquiry extends where tax avoidance is not alleged is open.
Whether relief can be had without a certificate
Section 159(8) of the 2025 Act allows a non-resident relief only when the certificate is obtained, and section 90(4) of the 1961 Act says he shall not be entitled to claim relief unless it is obtained, which the Revenue reads as a mandatory condition. The Ahmedabad Tribunal in Skaps Industries held that section 90(4), having no non obstante clause against section 90(2), cannot deny relief to an assessee who otherwise proves treaty residence, and remanded for that proof; its further view that a furnished certificate ends the Assessing Officer's enquiry cannot stand with Tiger Global. The Revenue will add that Tiger Global describes the certificate as an eligibility condition. Our view is that the holding that the absence of a certificate does not by itself defeat a claim proved otherwise survives Tiger Global, and that the claimant must still prove residence under Article 4(1) on other evidence; the point is open.
Which tie-breaker applies to a dual resident non-individual
India notified its tie-breakers under Article 4 of the Multilateral Instrument without reservation. Where the other State also notified, as the United Kingdom and the Netherlands did, the place of effective management rule is replaced by competent authority agreement, and absent agreement relief is available only to the extent agreed; where the other State reserved against the Article, as Singapore, the UAE and Mauritius did, the treaty's own rule stands, though under the India-UAE treaty a company is a UAE resident only if it is incorporated and managed and controlled wholly in the UAE, so that one managed partly from India never reaches the tie-breaker. The Revenue reads the replaced rule as suspending relief until the competent authorities agree; the company answers that the Assessing Officer's domestic finding is not the determination the Article requires and that collection should follow the mutual agreement procedure. Our view is that the text supports the Revenue that relief is suspended pending agreement, but not that the Assessing Officer's finding settles the company's residence under the treaty, and that the company should apply to the competent authority at the first sign of a dual-residence claim; how far relief is held back pending agreement is open.
Whether a certificate for a foreign year that does not match the Indian tax year is enough
Section 159(8)(a) of the 2025 Act and section 90(4) of the 1961 Act ask for a certificate of residence without saying what period it must cover; Form No. 41 asks for the tax year (item 7) and, separately, the period (item 11), and Form No. 10F asks for the previous year and, at item (v), the period; the Department's explanatory note to Form No. 41 says the certificate must be valid for the relevant financial year in India. The Revenue reads the condition as unmet for any months of the Indian year the certificate does not cover, relying also on Tiger Global's description of the certificate as an eligibility condition and on Skaps Industries, which, among other reasons, refused a document for a later year as not shown to hold good for the relevant period. The assessee says the section asks only for a certificate of residence, the forms themselves contemplate a different period, and residence for any gap can be proved by other evidence, as Skaps Industries held of a claim without a certificate, and as the Chennai Bench allowed in Sivakarthick Raman (7 July 2025) on China tax returns covering the Indian year, without a certificate and without discussing the point. Tribunal Benches treated foreign certificates as evidence for the period they covered in Sameer Malhotra (Delhi, 28 December 2022) and Narinder Pal Singh (Delhi, 7 March 2023) without deciding the point. Our view is that certificates covering every day of the Indian year for which relief is claimed should be held, with other evidence for any gap, and that where relief is claimed only for part of the year, a certificate covering that part should be enough. The point is open.