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

Kiran Traders wants to pay a non-resident consultant a sum, only part of which is chargeable to tax in India. Under Rule 214 of the Income-tax Rules, 2026, which statement about obtaining a certificate for determining the appropriate proportion is correct?

The application is made in Form No. 129, and the certificate is valid only for payment to the non-resident named in it and for the period specified. It is not usable for other payees, and the Assessing Officer also considers the recipient's preceding four tax years.

  1. AThe application is made in Form No. 129 and the certificate is valid only for the named non-resident and the period specified in itCorrect
  2. BThe application is made in Form No. 129 and the certificate is valid for any non-resident payee until the end of the tax year
  3. CThe Assessing Officer must ignore the recipient's preceding tax years' liabilities
  4. DA fresh application can be made only after the earlier certificate is cancelled

Explanation

Rule 214(1) prescribes Form No. 129. Rule 214(4) limits validity to the named non-resident and the specified period of the tax year, unless cancelled earlier. The AO considers preceding four tax years under 214(3), and a fresh application can be made after expiry or within three months before expiry under 214(5).

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