When a foreign client's accounts team emails asking for your "TRC", they want proof from the Indian tax department that you are an Indian tax resident, so they can apply the lower withholding rate in their country's tax treaty with India. In India, you apply for a tax residency certificate using Form 10FA, and the certificate itself is issued in Form 10FB. Getting it right can mean the difference between a client withholding a large slice of every payment and paying your invoice almost in full.
Key takeaways
- A TRC is the client's evidence that you can claim treaty benefits under the DTAA between India and their country.
- You apply through Form 10FA; the income-tax authority issues the certificate in Form 10FB. Both are handled through the income-tax e-filing system.
- The certificate covers a specified period, so clients often ask for a fresh one each year.
- Some countries also want their own forms (for example, US clients typically ask for a W-8 form) in addition to, or instead of, a TRC.
- If tax is still withheld abroad, you may be able to claim foreign tax credit in India. Keep every withholding certificate.
Why a foreign client asks for it
Many countries require a business paying a foreign supplier to withhold tax on certain payments, then pass that tax to their own government. Tax treaties often reduce or remove that withholding for residents of the treaty partner, and some treaties limit the source country's right to tax business income altogether unless the supplier has a presence there.
The client cannot simply take your word for it. Their tax authority expects them to hold evidence of your residency before they apply a treaty rate. The TRC is that evidence. Without it, a cautious client may withhold at the full domestic rate, and you then spend months trying to recover the excess.
Whether withholding applies at all, and at what rate, depends on the client's country, the type of service and the treaty wording. Do not assume; ask the client what their rules require. This is general information, not legal or tax advice.
Form 10FA and Form 10FB: who does what
| Form | Filed or issued by | Purpose |
|---|---|---|
| Form 10FA | You, the Indian resident applicant | Application for a certificate of residence |
| Form 10FB | Indian income-tax authority | The certificate of residence itself |
Form 10FA asks for your basic identity details, PAN, the period for which you want the certificate, and the purpose, along with supporting information about your residential status. The authority reviews it and, if satisfied, issues Form 10FB. Exact fields, attachments and processing steps are set by the income-tax department and can change, so follow the current instructions on the e-filing portal and involve your CA if anything is unclear.
Do not confuse these with Form 10F, which is a different form used by non-residents in connection with Indian tax. Clients sometimes mix up the names.
What to have ready before you apply
The smoother your file, the fewer questions later.
- PAN of the entity applying (company, LLP, firm or individual).
- Proof of incorporation or registration for businesses, and address details matching your PAN records.
- Income-tax return for the relevant year, if filed, showing your residential status.
- The period you need covered, usually the financial year in which the client will pay you.
- The client's country, since certificates are commonly requested for use in a specific jurisdiction.
- Any format the client wants. Some clients send a template or ask for specific wording; check whether Form 10FB will satisfy them.
A worked example
Lotus Lane Analytics LLP in Hyderabad signs a ₹48 lakh annual analytics contract with Brandt Mobility GmbH in Munich. Brandt's tax team says that without a TRC they will withhold German tax on each payment.
Lotus Lane's CA files Form 10FA for financial year 2026-27, stating Germany as the country where the certificate will be used. When Form 10FB is issued, Lotus Lane emails a copy to Brandt along with its company details and any form Brandt's tax adviser asks for.
| Step | Who | Typical output |
|---|---|---|
| Client requests TRC | Brandt's accounts team | Email listing documents needed |
| Apply in Form 10FA | Lotus Lane, through its CA | Application acknowledgement |
| Certificate issued | Income-tax authority | Form 10FB |
| Share with client | Lotus Lane | TRC plus any country-specific form |
| Client applies treaty position | Brandt | Reduced or nil withholding, if eligible |
| Year-end | Lotus Lane | Keep TRC, invoices, withholding certificates on file |
Lotus Lane also notes the renewal date in its compliance calendar, because Brandt will want a fresh certificate for 2027-28.
Country-specific forms clients may add
A TRC is often only half the request.
US clients usually ask for a W-8 form, the W-8BEN-E for entities or W-8BEN for individuals, to document foreign status and any treaty claim. Our guide to W-8BEN and W-8BEN-E for Indian service providers explains the fields.
European and other clients may ask for a TRC plus their own declaration form, or a confirmation that you have no permanent establishment in their country. Ask exactly what they need in one email rather than discovering it in instalments.
Your DTAA basics guide covers how treaties allocate taxing rights in more depth.
If tax is withheld anyway
Sometimes the certificate arrives late, or the client's rules require withholding regardless. Ask the client for the official withholding certificate or tax receipt showing the amount deducted and paid to their government. In India, you may be able to claim credit for that foreign tax against your Indian tax on the same income, which involves filing Form 67 within the prescribed time. Your CA will know the current deadline and conditions.
Withholding also affects how much reaches your account. If USD 10,000 is invoiced and the client remits USD 9,000 after withholding, your bank sees a shortfall against the invoice. Keep the withholding certificate ready, because your AD bank will want to understand the gap when it matches realisation. The EDF itself remains a FEMA declaration and does not change your tax obligations.
Frequently asked questions
What is a tax residency certificate in India?
It is a certificate issued by the Indian income-tax authority confirming that a person or entity is resident in India for tax purposes for a specified period. Foreign clients use it to apply reduced withholding under a tax treaty. It is issued in Form 10FB.
How do I apply for a tax residency certificate?
You apply in Form 10FA through the income-tax e-filing system, giving your PAN, the period, the purpose and supporting information. Many businesses have their CA prepare and file it. Follow the current instructions on the portal, since procedures can change.
How long is a TRC valid?
It covers the period stated in the certificate, which is usually the financial year you applied for. Clients often ask for a new certificate each year, so add the renewal to your compliance calendar.
Do US clients need a TRC or a W-8BEN-E?
US clients usually ask for a W-8BEN-E (for entities) or W-8BEN (for individuals). Some also ask for a TRC to support a treaty claim. Ask the client's accounts team exactly what they need.
Can I recover tax a foreign client withheld?
You may be able to claim foreign tax credit in India on the same income, which generally requires Form 67 and the client's withholding certificate. Separately, the client's country may have a refund process. Speak to your CA about which route fits your case.
Bottom line
A TRC is a small piece of paper with a big effect on how much of each invoice you actually receive. Apply early, keep it current and send it with your first invoice of the year. When you bill that client, the free export invoice generator helps you produce a clean, treaty-ready invoice with your tax details in place.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.