India clarifies tax residency certificate requirements included in recent Budget proposals

March 2013


The Indian Budget for 2013-2014, presented in Parliament on February 28, proposed an amendment that would change the evidence required to prove tax residency. Under the proposal tax residency certificates are still considered essential to grant treaty benefits, but they would no longer constitute sufficient evidence in isolation.>Shortly after the budget proposals were announced and following concerns expressed by various stakeholders, the Central Board of Direct Taxes clarified, on March 1, 2013, that the proposed amendment was not intended to question tax residency certificates.>This newsalert summarizes the government’s position on tax residency certificates in the context of treaty claims with India and the impact of this clarification to foreign investors.

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