Transitioning From Form 10F to Form 41: New DTAA Compliance Under Income-tax Act, 2025

India’s Income-tax Act, 2025, introduces a more structured compliance framework for non-residents claiming relief under Double Taxation Avoidance Agreements (DTAAs). While the underlying principles governing treaty relief remain unchanged, the new regime places greater emphasis on documentation and digital compliance. This shift is reflected in Section 159(8) of the Act, along with the introduction of Form 41—which replaces Form 10F under the Income-tax Act, 1961.

We outline the legal framework, compliance requirements, and practical implications for non-resident taxpayers and withholding agents.

Legal framework for DTAA relief

Section 159 of the Income-tax Act, 2025 governs India’s treaty framework, enabling the central government to enter into agreements with foreign countries or specified territories for:

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1. Avoidance of double taxation
2. Grant of tax relief
3. Exchange of information
4. Recovery of taxes

A key principle retained under the new law is that taxpayers can apply treaty provisions where they are more beneficial than domestic law.

Section 159(8): Documentation conditions for treaty claims

Section 159(8) introduces a mandatory eligibility condition for non-residents to access DTAA benefits.

Statutory requirement

A non-resident taxpayer can claim treaty relief only if both conditions are satisfied:

1. Tax residency certificate (TRC): A certificate issued by the tax authority of the taxpayer’s country of residence, establishing tax residency.
2. Prescribed information and documentation: Additional details and documents as specified under the rules.

Interpretation and practical impact

Section 159(8) effectively converts treaty relief into a documentation-driven entitlement.

• The TRC serves as primary proof of residency
• The requirement for additional prescribed information ensures that all relevant treaty eligibility details are available, even where the TRC is incomplete

In practice, both conditions must be fulfilled simultaneously; a TRC alone is insufficient.

What is Form 41? The successor to Form 10F under Section 159(8)

The requirement to furnish “prescribed information” is implemented through Form 41, introduced under the new rules.

Form 41 replaces the earlier Form 10F and functions as a supplementary self-declaration to support DTAA claims.

Key under Form 41

1. Tax Identification Number (TIN)
2. Country of residence
3. Address and other prescribed particulars

This ensures that tax authorities and withholding agents can validate treaty eligibility with greater precision.

There is no substantive change in purpose; Form 41 is a renumbered and digitized successor to Form 10F, aligned with the new legislative framework.

Rules and procedures for DTAA compliance

Rule 75 of the Income-tax Rules, 2026, provides the operational framework for implementing Section 159(8) of the Income-tax Act, 2025, and outlines the documentation and procedural requirements for claiming DTAA relief.

1. Form 41 as the prescribed declaration

For non-residents, Rule 75 mandates that the “prescribed information” required under Section 159(8) must be furnished through Form 41.

In effect, this establishes Form 41 as the standard declaration for claiming treaty benefits in India, complementing the TRC.

CLICK TO READ: Key Forms Relevant to Taxpayers and Businesses

2. Maintenance of supporting documentation

Non-resident taxpayers are required to do the following:

1. Maintain adequate documentation supporting the details disclosed in Form 41; and
2. Furnish such documents upon request by the tax authorities

This introduces a verification-based compliance layer, where submission of Form 41 enables the claim, whereas supporting documents substantiate the claim during scrutiny

Rule 75 transforms DTAA claims into a document-backed, verifiable process, ensuring that country-specific treaty benefits are granted based on complete and accurate disclosures.

Who needs to file Form 41?

Form 41 applies to non-resident taxpayers, including individuals, companies, and other entities, who:

• Earn income from India; and
• Seek to claim DTAA benefits, particularly where:
  • They do not have a PAN; or
  • They are not required to file a tax return in India; or
  • They seek lower or nil withholding tax under a treaty

Is Form 41 mandatory?

While not explicitly labeled as “mandatory,” Form 41 is practically indispensable.

• Without Form 41 (and TRC), DTAA benefits may be denied
• The payer may be required to withhold tax at full domestic rates

Timing and frequency of filing

While the Income-tax, Act 2025 does not prescribe any statutory deadline, Form 41 must be furnished.

• At the time of claiming treaty benefit; and
• Ideally before or at the time of tax deducted at source (TDS) deduction

Typically once per financial year, for each relevant stream of income.

Filing process and documentation

Required documents

• TRC (mandatory)
• Tax Identification Number (TIN)

Filing mode

• Online only, via the income tax e-filing portal

Process flow

1. Registration (including for non-residents without PAN)
2. Online submission of Form 41
3. Verification through:
   1. Electronic Verification Code (EVC)
   2. Digital Signature Certificate (DSC)
   3. One-time password (OTP)-based verification (for non-PAN users)

Key compliance considerations

1. No revision permitted after submission
2. No proof of tax payment required
3. PAN not mandatory in eligible cases
4. Aadhaar not applicable to non-residents
5. Mobile number recommended for authentication

CLICK HERE TO KNOW MORE: India’s New Income Tax Act 2025: Preparing for April 1 Rollout

Consequences of non-compliance

Failure to comply with Section 159(8) can result in denial of DTAA benefits at the withholding stage, application of standard domestic tax rates, or disallowance of treaty claims during return processing.

Conclusion

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The Income-tax Act, 2025, preserves India’s DTAA framework while introducing a more structured and technology-driven compliance regime.

Section 159(8), read with Form 41, ensures that treaty relief is properly documented, consistently applied, and aligned with global anti-abuse standards.

For non-residents and Indian payers alike, timely submission of TRC and Form 41 is now central to efficient cross-border tax compliance and withholding accuracy.

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