What is Tax Residency Certificate?
A Tax Residency Certificate, or TRC, is a document issued by the income-tax department that certifies you were a tax resident of India for a specified year. Foreign clients and tax authorities ask for it because treaty benefits under a DTAA are available only to residents of the treaty countries. The TRC is the standard evidence of that residence.
Under the earlier income-tax rules, Indian residents applied in Form 10FA and received the certificate in Form 10FB. The Income-tax Act, 2025 took effect from 1 April 2026 and has renumbered many forms and rules, so check the current form references and process with your CA before applying.
Why it matters for exporters
When you export services, your foreign client may be required by its own law to withhold tax from your payment. A DTAA can lower or remove that withholding, but the client usually needs your TRC (and sometimes a local form) on file before it can apply the treaty rate. Without it, the client may deduct tax at its full domestic rate, and you receive less.
A lower credit than expected also affects your export paperwork. The EDF records each invoice and its net realisable value, and your bank later matches what actually arrived. If tax was withheld abroad, keep the client's withholding certificate with the FIRA so you can explain the gap to your AD bank and claim foreign tax credit in India. The EDF itself does not change your income-tax obligations.
Example
Tara Learning Solutions LLP is about to sign a two-year e-learning contract worth EUR 60,000 a year with a European client. The client's procurement team asks for a TRC covering the current year before the first payment. Tara's CA applies for it early. Meanwhile, Tara raises invoices normally and lists them in its monthly EDF. When the TRC arrives, the client applies the treaty rate from the next payment.
Common confusion
A TRC is not your PAN card or GST certificate, and it is not issued by your bank. For when clients ask and how to apply, see Tax Residency Certificate: when foreign clients ask for it. This is general information, not tax advice.