If your US-based company makes royalty or fees for technical services (FTS) payments to an Indian entity, or you are a foreign company receiving such income from India, Form 10F is mandatory to claim benefits under the India-USA Double Taxation Avoidance Agreement (DTAA). Without a valid Form 10F along with a Tax Residency Certificate (TRC), the Indian payer is required to deduct TDS at the higher domestic rate under Section 206AA or Section 195 of the Income Tax Act, 1961. Taxocity has helped hundreds of foreign companies navigate this compliance since 1975, with a 4.8/5 rating from 5,000+ clients.

• TDS on royalty under India-USA DTAA: 15% (vs. 20%+ under domestic law for non-residents without PAN)
• Form 10F must be filed electronically on the Indian Income Tax portal before the royalty payment is made
• Foreign companies need a PAN card and Income Tax login to file Form 10F in India

What is Form 10F and Why is it Required for Royalty Payments?

Form 10F is a self-declaration form prescribed under Rule 21AB of the Income Tax Rules, 1962, read with Section 90(5) of the Income Tax Act, 1961. It is filed by a non-resident (foreign) entity to provide information that is not available in their Tax Residency Certificate (TRC) but is required to claim DTAA benefits in India.

For royalty and Fees for Technical Services (FTS) payments flowing between the USA and India, the India-USA DTAA (signed in 1989 and effective from 1990) caps the withholding tax rate. However, to avail this concessional rate, the foreign payee must submit Form 10F along with:

• A valid Tax Residency Certificate (TRC) issued by the US Internal Revenue Service (IRS) or competent US tax authority
• A No PE (Permanent Establishment) Declaration confirming that the foreign entity does not have a permanent establishment in India
• A valid PAN card of the foreign entity in India
• An active Income Tax login on the Indian e-filing portal
• A DSC (Digital Signature Certificate) of the authorised foreign signatory to file the form and ITR (if applicable)

Important: The DSC required here is the organisational/representative DSC linked to the foreign authorised signatory, not a regular individual DSC of any Indian director or partner.

What are the TDS Rates on Royalty Under India-USA DTAA?

The TDS rate applicable on royalty payments depends on whether the payee has filed Form 10F and holds a valid TRC:

Scenario	TDS Rate (Individual)	TDS Rate (Company / Other than Individual)
With valid Form 10F + TRC (DTAA benefit claimed)	15%	15%
Without PAN, without Form 10F (Section 206AA applies)	20% or applicable rate, whichever is higher	20% or applicable rate, whichever is higher
With PAN but no DTAA claim (Section 115A)	20% (plus surcharge + cess)	20% (plus surcharge + cess)
Fees for Technical Services (FTS) under DTAA	15%	15%

Note on Section 115A: A US company receiving royalty or FTS from India can choose to pay tax at the Section 115A rate of 20% without filing an ITR in India, provided they do not wish to claim the DTAA rate. However, if the DTAA rate (15%) is availed, the foreign entity must file an Income Tax Return (ITR) in India for that assessment year.

How to File Form 10F Online: Step-by-Step Process

Since May 2023, Form 10F must be filed electronically on the Indian Income Tax e-filing portal (incometax.gov.in). Paper submission is no longer accepted for most cases. Here is the complete process:

Step 1: Apply for a PAN Card for the Foreign Entity

The US company must first obtain a Permanent Account Number (PAN) in India. This involves filing Form 49AA (for foreign entities/individuals) with the Income Tax Department. PAN is mandatory to register on the e-filing portal and to file Form 10F online.

Step 2: Create an Income Tax Login on the E-Filing Portal

Once the PAN is allotted, the foreign company must register on the Income Tax portal using the PAN as the user ID. The login requires a valid email ID and mobile number for OTP verification.

Step 3: Obtain a Digital Signature Certificate (DSC) for the Foreign Authorised Signatory

To file Form 10F (and any subsequent ITR), a DSC of the authorised foreign signatory is required. The process for obtaining a DSC for a foreign individual involves:

• Email and phone OTP verification from the foreign individual
• Video verification of the foreign individual
• Address proof (e.g., driving licence or equivalent government ID)
• Passport-size photograph
• Copy of valid passport

This DSC must be registered on the Income Tax portal before Form 10F can be submitted.

Step 4: Obtain a Tax Residency Certificate (TRC) from the IRS

The US company must apply for Form 6166 (the US TRC) from the Internal Revenue Service (IRS). This certificate confirms the tax residency of the entity in the United States and is a prerequisite for filing Form 10F.

Step 5: Prepare the No PE Declaration

The foreign company must prepare a self-declaration confirming that it does not have a Permanent Establishment (PE) in India as defined under Article 5 of the India-USA DTAA. If a PE exists, royalty/FTS income becomes taxable in India as business income at standard rates.

Step 6: File Form 10F on the E-Filing Portal

Log in to the Income Tax portal, navigate to e-File > Income Tax Forms > File Income Tax Forms, and select Form 10F. Fill in the required details as specified in Rule 21AB, including:

• Legal status (individual, company, etc.)
• Country of residence and tax identification number
• Period for which TRC is valid
• Address in the country of residence
• PAN (if allotted in India)

Sign and submit using the registered DSC of the authorised signatory.

What Information Must Form 10F Contain?

As per Rule 21AB, Form 10F must contain the following details that are not already covered in the TRC:

Information Required	Details
Status (individual/company/firm)	Legal nature of the foreign entity
Nationality / Country of incorporation	USA in this case
Tax Identification Number	US EIN (Employer Identification Number) or SSN
Period of residence	Period covered by the TRC
Address in country of residence	Registered address of US company
PAN in India	If allotted (mandatory for e-filing)

DTAA Benefits: Royalty vs. Fees for Technical Services Under India-USA Treaty

The India-USA DTAA covers both royalty (Article 12) and Fees for Technical Services (FTS) (Article 12 read with Protocol). Understanding the distinction is important because the tax treatment and treaty articles differ:

Royalty Payments

Royalties under Article 12 of the India-USA DTAA include payments for use of, or the right to use, any copyright of a literary, artistic, or scientific work; patents; trademarks; secret formulas; software licences; and industrial, commercial, or scientific equipment. The concessional DTAA rate is 15% on the gross amount.

Fees for Technical Services (FTS)

FTS includes payments for managerial, technical, or consultancy services, including the provision of technical knowledge, experience, or skill. Under the India-USA DTAA, FTS is also taxed at 15% on a gross basis at source, subject to the No PE condition and valid Form 10F + TRC.

When is ITR Filing Mandatory for the Foreign Company?

If the US company opts to pay tax under Section 115A (at 20%), they are not required to file an ITR in India. However, if they claim the DTAA benefit of 15%, filing an ITR in India for the relevant assessment year becomes mandatory, along with:

• A valid PAN card
• An active Income Tax login
• DSC of the authorised foreign signatory to e-verify/submit the return

Common Mistakes to Avoid When Filing Form 10F for USA-India Royalty Payments

• Submitting paper Form 10F: Electronic filing is mandatory since May 2023. Paper submission is not accepted and the deductor cannot rely on it for concessional TDS.
• Not renewing the TRC annually: The TRC (US Form 6166) must be valid for the period of the royalty payment. An expired TRC renders Form 10F invalid.
• Filing without PAN: Without an Indian PAN, TDS will be deducted at 20% under Section 206AA, even if a TRC exists.
• Using wrong DSC: The DSC must be of the authorised signatory of the foreign company, not of any Indian employee or director.
• Missing No PE Declaration: Without a valid PE declaration, the Indian payer may face scrutiny for applying the concessional rate.
• Ignoring ITR obligation after claiming DTAA: Claiming DTAA benefit creates a mandatory ITR filing obligation in India for the foreign company.

How Taxocity Helps US Companies with Form 10F and DTAA Compliance

Taxocity provides end-to-end DTAA compliance support for foreign companies receiving royalty or FTS income from India. Our team of real human tax experts manages the entire process, including:

• PAN application for the foreign entity (Form 49AA)
• Income Tax portal registration and login setup
• Guidance on obtaining DSC for foreign authorised signatories (including video verification coordination)
• Preparation and e-filing of Form 10F with DSC
• Drafting the No PE Declaration
• Advisory on Section 115A vs. DTAA rate choice
• Filing ITR in India for the foreign company where DTAA benefit is claimed
• Coordination with the Indian payer for correct TDS deduction

With a 100% compliance guarantee and a legacy of serving clients since 1975, Taxocity ensures your cross-border royalty transactions are structured correctly from day one.

Key Takeaways: Form 10F for USA-India Royalty Payments

1. Form 10F is mandatory for any US company claiming the 15% DTAA rate on royalty or FTS income from India.
2. The form must be filed electronically on the Indian Income Tax e-filing portal with a valid DSC of the foreign authorised signatory.
3. A PAN card and Income Tax login for the foreign company are prerequisites for e-filing Form 10F.
4. A valid Tax Residency Certificate (US Form 6166), No PE Declaration, and Form 10F must all be in place before the royalty payment is made.
5. If the DTAA rate is claimed, the foreign company must file an ITR in India for that year.
6. Without Form 10F and TRC, TDS applies at 20% or higher under Section 206AA or Section 195.
7. The DSC of the foreign signatory requires email/phone OTP, video verification, address proof, photograph, and passport copy.

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Disclaimer: This article is intended for general informational purposes only and does not constitute tax advice, legal advice, or a professional opinion. The tax implications of cross-border royalty payments and DTAA applicability are highly fact-specific. You should consult a qualified tax advisor or chartered accountant before taking any action based on the information provided herein. Tax laws and treaty provisions may change, and individual circumstances may differ significantly.