FPIs will have to furnish residency certificate to avail treaty tax benefit

Foreign portfolio investors (FPIs) will have to submit their tax-residency certificate (TRC) to companies in which they have invested, to avail lower treaty rates on dividends, said a senior government official.

He said the Central Board of Direct Taxes (CBDT) will soon come out with a detailed circular to allay concerns and help companies and FPIs to transition to the new system smoothly. 

At present, the withholding tax provisions do not allow Indian companies to apply lower treaty rates while deducting tax at source (TDS) on dividends paid to FPIs.

On February 1, the government in the Union Budget proposed to apply TDS