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CA Final · Direct Tax Laws & International Taxation · Non Resident Taxation

Kiran Ltd. plans to pay a sum to Brightwave Inc., a non-resident, and applies in Form No. 129 for a certificate determining the appropriate proportion of the sum chargeable to tax. The Assessing Officer issues a certificate under Rule 214 of the Income-tax Rules, 2026, valid for the period from 1 July to 31 December of the tax year. Which statement is correct?

The certificate is valid only for payments to the named non-resident, Brightwave Inc., and only for the specified period, unless the Assessing Officer cancels it before expiry. Rule 214(4) ties validity to both the named recipient and the stated part of the tax year.

  1. AThe certificate is valid only for payments to Brightwave Inc. and only for the period specified, unless cancelled earlier by the Assessing OfficerCorrect
  2. BThe certificate is valid for payments to any non-resident for the whole tax year
  3. CThe certificate cannot be cancelled once issued
  4. DThe certificate remains valid until Brightwave Inc. files its return

Explanation

Rule 214(4) states the certificate is valid only for the payment to the non-resident named in it and for the period of the tax year specified, unless the Assessing Officer cancels it before expiry. So it is limited to Brightwave Inc. and to 1 July to 31 December. The option allowing any non-resident ignores the 'named' restriction.

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