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

Under Rule 214 of the Income-tax Rules, 2026, an Assessing Officer is deciding an application for a certificate on a payment to a non-resident, Mr. Hiroshi Tanaka. Which of the following is a factor the Assessing Officer must take into consideration for the recipient?

The Assessing Officer must consider the tax payable on the recipient's assessed, returned or estimated income of the preceding four tax years, along with estimated current-year tax, existing liabilities and advance tax, TDS and TCS. Ten-year history, payer turnover and parent net worth are not listed factors.

  1. ATax payable on the assessed, returned or estimated income of the preceding four tax yearsCorrect
  2. BTax payable on the income of the preceding ten tax years only
  3. CThe turnover of the payer in the previous tax year
  4. DThe net worth of the recipient's foreign parent company

Explanation

Rule 214(3) lists: tax on estimated income of the relevant year; tax on assessed, returned or estimated income of the preceding four tax years; existing liability under the 2025 Act and the 1961 Act; and advance tax, TDS and TCS for the relevant year till application or certificate date. Ten years, payer turnover and parent net worth are not listed.

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