If your Indian company pays royalties to a Chinese entity, Form 10F is mandatory to claim the 10% DTAA rate instead of 20% (+ surcharge + cess) under Section 115A. Without a valid Form 10F, the Tax Residency Certificate (TRC), No PE Declaration, and PAN card, the lower China-India DTAA rate cannot be applied. The Chinese company must also have an active Income Tax login and a DSC of its authorised foreign signatory to file ITR in India.

• China-India DTAA caps royalty/FTS withholding at 10%
• Default Section 115A rate is 20% + surcharge + cess
• Filing Form 10F online requires the foreign company's PAN and IT portal login

What is the China-India DTAA for Royalties?

The Double Taxation Avoidance Agreement between India and China limits the withholding tax on royalties and Fees for Technical Services (FTS) to 10% of the gross amount. This is significantly lower than the domestic Indian rate of 20% + surcharge + cess applicable under Section 115A of the Income Tax Act, 1961.

However, to benefit from this concessional rate, the Chinese recipient must satisfy all compliance conditions prescribed by Indian tax law. Simply having an agreement in place is not sufficient; documentary evidence must be submitted before the payment is made.

What is Form 10F?

Form 10F is a self-declaration form prescribed under Rule 21AB of the Income Tax Rules, 1962. It is filed by a non-resident to provide information that is not contained in its Tax Residency Certificate (TRC) but is required under Section 90(5) or Section 90A(5) of the Income Tax Act.

As per the Income Tax Department of India, Form 10F must now be filed electronically on the income tax e-filing portal. Paper submissions are no longer accepted for most non-residents.

Information Declared in Form 10F

• Status of the non-resident (individual, company, etc.)
• Permanent Account Number (PAN) in India, if allotted
• Nationality or country of incorporation
• Tax identification number in the country of residence
• Period for which the TRC is applicable
• Address in the country of residence during the period

Why Form 10F is Mandatory for China-India Royalty Payments

Under Section 90(4) of the Income Tax Act, a non-resident cannot claim DTAA benefits unless it furnishes the Tax Residency Certificate issued by its country's tax authority. Additionally, under Section 90(5), the non-resident must provide additional information in Form 10F if such information is absent from the TRC.

Since most Chinese TRCs issued by the State Taxation Administration (STA) do not contain all the details prescribed under Indian law, Form 10F must invariably be filed before any royalty payment is made or TDS is deducted at the DTAA rate of 10%.

Failure to file Form 10F means the payer (Indian company) must deduct TDS at 20% + surcharge + cess under Section 115A, significantly increasing the tax cost for the Chinese licensor.

Complete Checklist: Documents Required

To apply the 10% DTAA rate on royalty or FTS payments to a Chinese company, the following must be in place:

Document / Requirement	Purpose	Who Arranges
Tax Residency Certificate (TRC)	Proves Chinese tax residency to claim DTAA	Chinese company from China's STA
Form 10F	Supplementary declaration for DTAA benefit	Chinese company (filed on India IT portal)
No Permanent Establishment (No PE) Declaration	Confirms no taxable presence in India	Chinese company (self-declaration)
PAN Card (India)	Required to register on IT portal & file ITR	Applied for by Chinese company
Income Tax Portal Login	Needed to file Form 10F online	Created using PAN
DSC of Authorised Foreign Signatory	Required to file Form 10F and ITR electronically	Obtained via authorised agency

Important: Organisational DSC is Required

A regular personal DSC of a director or authorised representative will not work. The Chinese company must obtain an Organisational DSC in the name of the authorised signatory linked to the company's identity. This is a common compliance gap that causes filing rejections.

How to Get DSC for a Foreign Signatory

Obtaining a Digital Signature Certificate (DSC) for a foreign authorised signatory involves the following:

• Email OTP and phone OTP verification of the foreign individual
• Video verification of the foreign individual (live video call)
• Address proof such as a valid driving licence or equivalent government ID
• Photograph of the individual
• Copy of a valid passport

This process requires coordination with a Certifying Authority licensed by the Ministry of Electronics and Information Technology (MeitY) in India. Taxocity manages this end-to-end for foreign companies, avoiding delays caused by incomplete documentation.

Step-by-Step Process to Claim DTAA Benefit

Step 1: Apply for PAN in India

The Chinese company must apply for a Permanent Account Number (PAN) in India using Form 49AA. Without PAN, neither an IT portal login nor Form 10F submission is possible.

Step 2: Register on the Income Tax Portal

Once PAN is allotted, the Chinese company registers on the Income Tax e-Filing Portal as a non-resident taxpayer.

Step 3: Obtain Organisational DSC

Procure an Organisational DSC for the authorised signatory. This is a prerequisite for filing Form 10F and, if required, filing an ITR in India.

Step 4: Obtain TRC from Chinese Tax Authority

The Chinese entity must obtain a Tax Residency Certificate from China's State Taxation Administration (STA) confirming its tax residency status for the relevant financial year.

Step 5: File Form 10F Online

Log in to the IT portal using the company's credentials and DSC, and file Form 10F electronically. This form is valid for the period covered by the TRC.

Step 6: Issue No PE Declaration

The Chinese company provides a signed declaration confirming it does not have a Permanent Establishment in India, which would otherwise make the income taxable in India as business profits rather than royalties.

Step 7: Share Documents with Indian Payer

The Indian company (payer) must retain copies of the TRC, Form 10F acknowledgment, No PE declaration, and PAN before deducting TDS at the 10% DTAA rate.

TDS Rates: Section 115A vs China-India DTAA

Provision	Applicable Rate (Royalty / FTS)	Condition
Section 115A (Domestic Law)	20% + Surcharge + Cess	No DTAA documents submitted
China-India DTAA	10% (flat)	TRC + Form 10F + No PE Declaration + PAN submitted

The payer can apply the lower of the domestic rate or the DTAA rate, provided all compliance documents are in hand before the payment or credit, whichever is earlier, as per Section 206AA read with Section 90.

Do Chinese Companies Need to File ITR in India?

Under Section 115A, a foreign company can pay tax at 20% on royalties/FTS without filing an Income Tax Return (ITR) in India. However, if the Chinese company claims the benefit of the China-India DTAA (10% rate), it is mandatory to file an ITR in India for the relevant financial year.

This is a critical point often overlooked. Claiming the DTAA rate creates an ITR filing obligation, which in turn requires an active IT portal login and a valid DSC of the authorised signatory.

Consequences of Non-Compliance

• Higher TDS deduction: Indian payer must deduct at 20% + surcharge + cess instead of 10%
• Disallowance of deduction: If TDS is short-deducted, the Indian company may face disallowance of the royalty expense under Section 40(a)(i)
• Interest and penalty: Short deduction of TDS attracts interest under Section 201(1A) and penalty under Section 271C
• Refund delays: The Chinese company can claim excess TDS as a refund only by filing an ITR, which requires all the compliance steps outlined above

How Taxocity Helps with China-India DTAA Compliance

Taxocity, trusted since 1975 with a 4.8/5 rating from over 5,000 clients, provides end-to-end DTAA compliance support for royalty payments between Indian and Chinese entities. Our services include:

• PAN application for the Chinese company
• IT portal registration and login setup
• Organisational DSC procurement for the foreign signatory
• Form 10F preparation and online filing
• No PE Declaration drafting
• TDS advisory and ITR filing for the non-resident
• 100% compliance guarantee with real human tax experts

We coordinate with the Chinese entity, manage document collection, and ensure the Indian payer has everything needed to apply the correct DTAA rate before the payment date.

Talk to a DTAA Compliance Expert Today

Key Takeaways

1. The China-India DTAA rate for royalties and FTS is 10%; the Section 115A domestic rate is 20% + surcharge + cess
2. Form 10F must be filed online on the Indian IT portal before the royalty payment is made
3. The Chinese company needs a PAN, IT portal login, and Organisational DSC to file Form 10F
4. A TRC and No PE Declaration are also mandatory alongside Form 10F
5. Claiming the DTAA rate creates an ITR filing obligation in India for the Chinese company
6. A personal/individual DSC of a director does not work; only an Organisational DSC is accepted
7. The Indian payer faces disallowance and penalty risk if DTAA documents are not collected before deducting TDS at 10%

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Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. Tax laws are subject to change, and individual circumstances may vary. Please consult a qualified tax advisor before making any decisions related to DTAA compliance, TDS deduction, or cross-border royalty payments.

Sources

• https://www.incometax.gov.in/ - Income Tax Department of India, Form 10F and DTAA provisions
• Taxocity - LLP Registration
• Taxocity - Private Limited Company Registration