Last reviewed: 17 September 2026. If your firm or your NRI client is still relying on Form 10F to claim a treaty (DTAA) rate on royalty, interest, fee-for-technical-services or dividend income paid out of India, that route quietly closed for anything earned on or after 1 April 2026. We are now well into FY 2026-27 — this is not a future change to plan around, it is the form that already applies to every payment being made this month. Form 41, prescribed under Section 159(8) of the Income-tax Act, 2025 and Rule 75 of the Income-tax Rules, 2026, has taken its place.
Form 10F is retiring — what Form 41 actually changes
The two forms serve the same purpose — letting a non-resident put their treaty residency and income details on record so an Indian payer can withhold tax at the DTAA rate instead of the domestic rate — but the mechanics differ enough that carrying over last year's habit is a mistake. Rule 75 organises Form 41 into four parts: basic identity details, residential status with the country of residence and Tax Identification Number (TIN), the nature of income and the specific DTAA article being invoked, and finally the TRC declaration with verification. Form 10F's single-part self-declaration did not require this level of income-wise and article-wise specificity.
| Point of comparison | Form 10F (old) | Form 41 (new) |
|---|---|---|
| Governing provision | Rule 21AB, Income-tax Rules, 1962 (under Section 90(5)/90A(5)) | Rule 75, Income-tax Rules, 2026 (under Section 159(8), Income-tax Act, 2025) |
| Applies to income earned | Up to 31 March 2026 | From 1 April 2026 onward |
| Who submits it | Non-resident recipient, on the e-filing portal | Non-resident recipient, on the e-filing portal (separate Form 41 workflow) |
| PAN requirement | PAN preferred; limited non-PAN workaround | PAN optional — OTP-based non-PAN category built into the filing route |
| TRC requirement | Mandatory alongside the form | Mandatory alongside the form — unchanged |
| Structure | Single-part self-declaration | Four parts: identity, residency/TIN, income nature and DTAA article, TRC declaration and verification |
Who needs to file, and how often
Form 41 is filed by the non-resident recipient — a foreign company or an individual NRI receiving India-sourced royalty, fee for technical services, interest, dividend or business profits — not by the Indian company or individual making the payment. It is filed once per tax year on the government e-filing portal and is meant to cover every Indian payer for that particular nature of income; a taxpayer receiving both royalty and interest from Indian sources would typically need to address both income streams in the filing rather than assume one submission covers everything. NRIs who also repatriate these receipts out of India afterwards should read this alongside our NRI repatriation and Form 15CA/15CB guide — Form 41 fixes the withholding rate at source, repatriation is the separate step of moving the net proceeds abroad.
Practically, the Indian payer's role is to ask for, and retain, the non-resident's Form 41 acknowledgement and a current TRC before the first payment of the year goes out, and to keep that documentation with the deduction file — not to file anything on the non-resident's behalf.
No Indian PAN? The non-PAN route still works
A foreign payee without an Indian PAN is not locked out. The portal supports a non-PAN category registration using OTP verification against the overseas email and mobile number on file, so the absence of a PAN is not, by itself, a reason to fall back to Form 10F or skip the filing altogether. That said, a non-resident who receives India-sourced income on a recurring basis — an annual licence fee, ongoing interest on an NRO deposit, recurring consulting fees — is better placed obtaining a PAN: it removes the need to redo non-PAN verification every year and materially speeds up any refund claim if a shortfall in TDS ever needs to be recovered through a return.
Worked example: royalty payment, with and without Form 41
Consider an Indian licensee paying an annual software royalty to a US company under the India-US DTAA, where the treaty royalty rate is 15%.
| Item | Figure |
|---|---|
| Nature of payment | Annual royalty for software licence |
| Amount paid to a US company | USD 3,00,000 (~₹2.52 crore at ₹84/USD) |
| TDS without Form 41 + TRC (domestic rate) | 20% (plus surcharge/cess as applicable) = ~₹50.4 lakh withheld |
| TDS with valid Form 41 + TRC (India-US DTAA royalty rate) | 15% = ~₹37.8 lakh withheld |
| Difference held up if documentation is missing at payment time | ~₹12.6 lakh — recoverable only by the US company filing an Indian return and claiming refund |
The ₹12.6 lakh gap in this example is not lost — the US company can claim it back by filing an Indian income-tax return and seeking a refund of the excess deducted. But that refund route routinely takes multiple return cycles to conclude, which is the practical reason to treat Form 41 and the TRC as a pre-payment checklist item, not paperwork to chase after the fact.
What Indian payers and deductors must satisfy themselves on
Section 393 of the Income-tax Act, 2025 — carrying forward the substance of the erstwhile Section 195 — still places the burden of a correct deduction on the payer, not the recipient. Applying a DTAA rate without a valid Form 41 acknowledgement and TRC on file, on the assumption that "the client is definitely a US tax resident," is the single most common shortcut we are seeing this quarter, and it is the payer, not the non-resident, who carries the downside. A deduction officer who later disputes the treaty rate can raise a short-deduction demand under Section 201(1A), run interest at 1%/1.5% per month on the shortfall, and expose the deductor to a Section 271H penalty if the default is not regularised within the statutory window. Building a standing checklist — Form 41 acknowledgement, TRC copy, PAN (if held), and the specific DTAA article claimed — into the payables process before the first remittance of the year removes this exposure at source. This is a different route from a Section 195 lower-TDS certificate on an NRI property sale, which fixes the rate through a jurisdictional Assessing Officer order rather than a treaty declaration — the two are not interchangeable, and using one where the other is needed is a recurring point of confusion.
Timeline: which form applies to which period
| Income relates to | Form that applies |
|---|---|
| Payments/income up to 31 March 2026 (broadly FY 2025-26, relevant for AY 2026-27 filings now underway) | Form 10F (Rule 21AB) continues to be the correct form |
| Payments/income from 1 April 2026 onward (FY 2026-27, the year in progress right now) | Form 41 (Section 159(8), Rule 75) is mandatory — Form 10F should not be used |
Because both forms remain visible as separate tabs on the portal during this transition, the practical risk is a payee (or a payer's compliance team) defaulting to the familiar Form 10F workflow out of habit for a payment that actually falls in the new-Act period. Confirm the exact portal labels and workflow at the time of filing — administrative rollout of a newly notified form can lag the legal effective date by a few weeks, and the underlying obligation does not wait for the portal to catch up.
Common mistakes we are already seeing
- Treating one Form 41 filing as covering all income types, when royalty, interest and FTS may each need to be addressed within the form.
- Applying the treaty rate on the strength of a TRC alone, without a matching Form 41 acknowledgement on file.
- Indian payers not asking for documentation until year-end reconciliation, by which point several quarters of payments have already gone out at the wrong rate.
- Assuming a non-resident without a PAN cannot claim DTAA benefit at all, and defaulting to the domestic rate unnecessarily.
Frequently asked questions
Is Form 10F still valid for any income at all?
Form 10F under Rule 21AB continues to apply only to income received up to 31 March 2026 (broadly, FY 2025-26 and earlier, relevant for the AY 2026-27 return being filed now). For any royalty, fee for technical services, interest, dividend or business income earned from 1 April 2026 onward, Form 41 under Section 159(8) of the Income-tax Act, 2025 read with Rule 75 of the Income-tax Rules, 2026 is the operative form, not Form 10F.
Who actually files Form 41 — the NRI/foreign payee or the Indian company making the payment?
The non-resident recipient files Form 41 on the government e-filing portal, not the Indian payer. The non-resident then shares the acknowledgement, along with a valid Tax Residency Certificate (TRC), with each Indian payer so the payer has documentation on file before applying a treaty (DTAA) rate instead of the higher domestic withholding rate.
Can a non-resident file Form 41 without an Indian PAN?
Yes. The portal allows a non-PAN category filing using OTP-based verification of the overseas email and mobile number, so a foreign company or NRI without an Indian PAN is not locked out of claiming DTAA benefit. That said, anyone receiving India-sourced income regularly is better served by obtaining a PAN — it avoids repeated non-PAN verification and simplifies any refund claim if TDS is ultimately deducted at a higher rate.
Does filing Form 41 once cover every Indian client or payer for the year?
One Form 41 filing is meant to cover all payments of the same nature of income (say, all royalty receipts) from all Indian payers for that tax year — it is not filed payer-by-payer. Different heads of income (royalty versus interest versus FTS) may need to be declared separately within the form, so the filing should be reviewed income-stream-wise, not assumed to be a single blanket declaration.
What happens if an Indian company applies the DTAA rate without collecting Form 41 and a TRC?
Section 393 (the Section 195 equivalent under the new Act) still requires the payer to satisfy itself that a lower or treaty rate is properly claimable before deducting tax at that rate. Applying a DTAA rate without the recipient's Form 41 acknowledgement and TRC on file exposes the payer to a short-deduction demand under Section 201(1A), 1%/1.5% per month interest, and a Section 271H penalty exposure if the shortfall is not regularised — the payer bears this risk, not the non-resident.
Is a Tax Residency Certificate (TRC) enough on its own, without Form 41?
No. The TRC establishes residency in the treaty country but Form 41 is the statutory declaration under Section 159(8) that formally puts the specific income, its nature and the applicable DTAA article on record with the Indian tax administration. Both are required together — a TRC without Form 41, or Form 41 without a valid TRC, does not complete the compliance.
We already deducted tax at the domestic rate before the payee could arrange Form 41 — can the excess be recovered?
Yes, but only through the payee's own India income-tax return, claiming credit for the tax deducted and a refund of the excess over the treaty rate. Refunds on this route commonly take several return cycles to process, which is exactly why arranging Form 41 and the TRC before the payment (or before the first payment of the year) is the practical priority, not a paperwork afterthought.
We assist NRIs and foreign payees with Form 41 and TRC-backed filings, and Indian companies with payer-side documentation and TDS return correctness under Section 393. Reach out before the next remittance, not after a notice.
NRI Lower TDS Certificate TDS Return Filing Talk to usThis article reflects the law and portal position as understood on 17 September 2026. Income-tax Act 2025 provisions, form numbers and portal workflows are newly rolled out and administrative guidance can be refined; verify the current form, section reference and applicable DTAA article for your specific fact pattern before relying on this for a filing or a TDS decision. This is general guidance, not a substitute for engagement-specific advice.