CBDT Grants PAN Quoting Changes to Non-Residents in IFSC for Relief

Over the years, a number of incentives and perks have been offered in an effort to support the International Financial Services Centre (IFSC) and draw in international financial institutions. The Central Board of Direct Taxes (CBDT) has unveiled a new relief provision this year with the goal of improving non-residents’ convenience when using IFSC-banking facilities. Notification dated October 10, 2023, G.S.R. 728(E). The requirement to quote the Permanent Account Number (PAN) in certain transactions is the subject of this relief.

Exemption for Foreign Companies

One of the major changes concerns foreign businesses who conduct business in the IFSC. A foreign firm is exempt from quoting PAN in certain transactions under Rule 114B if it has no taxable income in India and has not obtained a PAN. This exemption recognises the special status of international businesses operating in India-France Standard Class (IFSC), where their income could not be liable to Indian taxes. However, these international businesses must use Form 60 to make a declaration in place of PAN.




This exemption enhances ease of operation and streamlines the regulatory requirements for international enterprises operating in the IFSC.

Exemption for Non-Residents

Non-residents who are exempt from quoting PAN in transactions covered by Rule 114BA and do not have taxable income in India can now take use of this exemption. Since it acknowledges that non-residents working in IFSC banking entities might not be subject to Indian taxation for their financial activities there, this exemption is especially beneficial to them. This change ensures a business-friendly atmosphere, lowers administrative burdens, and expedites the compliance procedure for non-residents.

Similar Exemption for Rule 114BB

The CBDT has extended to the transactions listed under Rule 114BB an exception akin to that which is stipulated in Rule 114BA. This expands the range of transactions that qualify for the PAN quoting exemption for non-residents. It demonstrates the CBDT’s dedication to simplifying needless regulations in order to foster a business-friendly environment within the IFSC.

Amendment of Form No. 60

In accordance with these modifications, Form No. 60, a declaration form that must be submitted by anyone engaging in transactions listed under Rule 114B but lacking a PAN, has been modified. This updated form further promotes ease of operation by guaranteeing non-residents have a streamlined and effective way to comply with regulatory requirements.

Form No. 10F for Non-Residents

Despite rumors in the media that the CBDT has made it possible for non-residents to file Form No. 10F without getting a PAN, it’s crucial to remember that as of the time this article was written, the department has not released an official statement. However, this possible development might make compliance even easier for non-residents.




Permanent Establishment (PE) Exposure Consideration

It is important to remember that these revisions are especially helpful to non-residents, whose income is not subject to Indian taxation since they do not have Permanent Establishment (PE) exposure as specified by tax treaties. Nonetheless, it is essential to carry out a thorough examination of the risk of PE exposure in order to guarantee that the income will not be subject to taxation in India.

Non-residents must comprehend the nuances of tax treaties and the existence or absence of PE in order to guarantee that their income is not subject to taxation.




Significant relief is provided to non-residents who operate in IFSC-banking units by the recent revisions made by the CBDT regarding the necessary quoting of PAN in specific transactions. These modifications make the IFSC an even more alluring location for international financial institutions by improving operational simplicity and lowering regulatory complexity. It is crucial for non-residents to carefully analyze the tax treaties and PE exposure when these revisions take effect in order to make sure that their income stays untaxable in India. These changes demonstrate the Indian government’s dedication to establishing a thriving international financial centre within IFSC and streamlining non-residents’ compliance requirements.