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

The Assessing Officer is deciding whether to issue a certificate under Rule 214 of the Income-tax Rules, 2026 for a payment to a non-resident. Which of the following is among the matters he must take into consideration in relation to the recipient?

He must consider the tax payable on the assessed, returned or estimated income of the preceding four tax years. Rule 214(3) ties the certificate to the recipient's tax position: estimated income of the current year, past four years, existing liabilities and advance tax, TDS and TCS already paid.

  1. ATax payable on the assessed, returned or estimated income of the preceding four tax yearsCorrect
  2. BThe payer's net worth at the end of the previous tax year
  3. CTax payable on the estimated income of the next three tax years only
  4. DThe turnover of the payer in the preceding ten tax years

Explanation

Rule 214(3) lists tax on estimated income of the relevant tax year, tax on assessed, returned or estimated income of the preceding four tax years, existing liability under the new and old Acts, and advance tax, TDS and TCS for the relevant year. The other options concern the payer or other periods and are not listed.

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