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

Meridian Exports Ltd applies in Form No. 129 for determining the appropriate proportion of a sum payable to a non-resident that is chargeable to tax. Under Rule 214 of the Income-tax Rules, 2026, what is the position about the certificate the Assessing Officer issues?

The certificate is valid only for payments to the non-resident named in it and only for the period of the tax year specified in it, and the Assessing Officer may cancel it before that period expires. It is not usable for other payees or for an unlimited term.

  1. AIt is valid only for payment to the non-resident named in it and for the period of the tax year specified in it, unless cancelled earlierCorrect
  2. BIt is valid for payments to any non-resident for the whole tax year and cannot be cancelled
  3. CIt is valid for the named non-resident for five tax years from the date of issue
  4. DIt is valid for any payee, provided the payer is the same person who applied

Explanation

Rule 214(4) says the certificate is valid only for payment to the non-resident named therein and for the period specified, unless the Assessing Officer cancels it before expiry. The options allowing any payee or a fixed multi-year validity contradict this.

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