Tax residency certificate (TRC), made mandatory in 2012-13 for claiming benefits under double-taxation avoidance agreements, have become cumbersome for foreign investors as it required too many details from the resident country.
The move comes after representations made by foreign investors and clarifications sought by some countries with regard to the TRC form and subsequent rules notified by the Central Board of Direct Taxes (CBDT) in September 2012.
Moreover, the new TRC will also provide clarity on various issues like whether it needs to be issued only once or for every transaction by an investor. Some nations have also sought clarity on how and after what period TRC would have to be renewed.
The finance ministry had introduced TRC in April 2013 to avoid the instances of taxpayers unduly claiming benefits under the DTAA entered into by the India government with some particular countries.