Form 10F Requirement for Royalty Payment Under Italy-India DTAA: Complete Guide 2025-26

If your Indian business is paying royalties or fees for technical services (FTS) to an Italian company, you must obtain Form 10F from the foreign recipient to lawfully apply the Italy-India DTAA rate of 20% instead of the default withholding tax rate. Form 10F is a self-declaration of tax residency status required under Section 90(5) of the Income Tax Act, 1961, and without it, the payer is liable to withhold tax at the higher domestic rate (typically 20% under Section 115A or up to 40% in other cases). This guide is for Indian businesses, CFOs, and finance teams making cross-border royalty or FTS payments to Italian entities.

• Italy-India DTAA caps royalty and FTS tax at 20% — same as Section 115A, but treaty protection offers additional safeguards
• Form 10F must be accompanied by a Tax Residency Certificate (TRC) from Italian tax authorities
• The foreign company must also submit a No Permanent Establishment (No PE) Declaration to avail DTAA benefits

What is Form 10F and Why Does It Matter for Italy-India Royalty Payments?

Form 10F is a statutory self-declaration form prescribed under Rule 21AB of the Income Tax Rules, 1962. It is filed by the non-resident recipient (in this case, the Italian company or individual) to confirm details that may not be included in their Tax Residency Certificate (TRC) — such as their tax identification number, nationality, address, and the period of residential status.

For royalty or FTS payments from India to Italy, Form 10F is the gateway to claiming treaty benefits under the India-Italy Double Taxation Avoidance Agreement (DTAA). Without this form, the Indian payer (deductor) cannot apply the treaty rate, and the transaction becomes exposed to higher TDS liability and potential litigation during tax assessments.

As per the CBDT's mandate effective from July 2022, Form 10F must be filed electronically on the Income Tax e-filing portal. This means the Italian foreign company must have an active Income Tax login in India, which itself requires a valid Indian PAN card.

Italy-India DTAA: Royalty and FTS Tax Rate

Under the India-Italy DTAA, the withholding tax rate on royalties and fees for technical services (FTS) paid by Indian residents to Italian residents is 20% (plus applicable surcharge and cess). This is the same rate as Section 115A of the Income Tax Act, 1961.

Payment Type	Domestic Rate (Section 115A)	Italy-India DTAA Rate	DTAA Benefit?
Royalties	20%	20%	Treaty protection, documentation certainty
Fees for Technical Services (FTS)	20%	20%	Treaty protection, documentation certainty
Other business income (with PE)	Higher slab rates	Taxed in India if PE exists	Requires No PE Declaration

Important note: Even though the DTAA rate for Italy equals the Section 115A rate at 20%, availing the DTAA still matters because it provides treaty-level protection against double taxation and gives the Italian company a clear legal basis to avoid being taxed again in Italy on the same income. If a foreign company wishes to claim DTAA benefits in India, it is also required to file an Income Tax Return (ITR) in India.

What Are the Form 10F Requirements for Royalty Payments to Italy?

To comply with Indian tax law and claim Italy-India DTAA benefits on royalty and FTS payments, the following documents and filings are mandatory:

1. Tax Residency Certificate (TRC)

A TRC must be obtained by the Italian company from the Italian Revenue Agency (Agenzia delle Entrate). This certificate certifies that the Italian entity is a tax resident of Italy. The TRC must be valid for the financial year in which the payment is made.

2. Form 10F (Electronic Filing)

The Italian company must electronically file Form 10F on the Indian Income Tax portal. This requires:

• PAN card of the foreign (Italian) company in India
• Income Tax login credentials (created on the Indian IT portal)
• Digital Signature Certificate (DSC) of the authorized signatory of the Italian company
• Details: name, address, tax identification number, country of residence, and period of residency

3. No Permanent Establishment (No PE) Declaration

The Italian company must provide a self-declaration stating it does not have a Permanent Establishment (PE) in India. If a PE exists, the royalty income attributable to the PE would be taxable as business income in India at regular rates, not the DTAA royalty rate.

4. Income Tax Return (ITR) Filing

If the Italian company is claiming DTAA benefits (rather than paying under Section 115A), it must file an ITR in India. This is a firm requirement under Indian tax law for any non-resident claiming treaty protection.

However, if the Italian company chooses to pay tax under Section 115A at 20% and does not invoke the DTAA, it is not required to file an ITR in India — provided the tax has been duly withheld by the Indian payer.

DSC Requirements for Foreign (Italian) Signatories

One of the most complex steps in this process is obtaining a Digital Signature Certificate (DSC) for the authorized signatory of the Italian company. This is required to electronically file Form 10F and the ITR on the Indian Income Tax portal. A regular DSC of any Indian director or partner will not be accepted — it must be the DSC of the authorised foreign signatory.

The following documents and steps are required to obtain a DSC for a foreign individual:

• Email OTP and Phone OTP verification from the foreign individual
• Video verification of the foreign individual (live or recorded, as per the certifying authority's process)
• Address proof (e.g., Driving Licence, national ID, or utility bill)
• Passport copy (photo and personal details pages)
• Photograph of the foreign individual

This process involves coordination with Indian DSC certifying authorities who are authorized to issue DSCs to foreign nationals. Taxocity specializes in managing this end-to-end coordination for Indian businesses and their Italian counterparts.

Step-by-Step Process: Complying With Form 10F for Italy-India Royalty Payments

Step 1: Apply for PAN for the Italian Company

The first step is to apply for a Permanent Account Number (PAN) for the Italian entity in India. PAN is mandatory to create an Income Tax login and to file Form 10F electronically.

Step 2: Create Income Tax Login

Once PAN is obtained, register the Italian company on the Income Tax e-filing portal (incometax.gov.in). This login is required for all future filings, including Form 10F and ITR.

Step 3: Obtain TRC from Italian Authorities

The Italian company must apply to the Agenzia delle Entrate (Italian tax authority) for a Tax Residency Certificate covering the relevant financial year.

Step 4: Obtain DSC for the Foreign Authorized Signatory

Arrange a DSC for the Italian company's authorized signatory through an Indian DSC certifying authority. This requires video verification, passport, address proof, and OTP verification.

Step 5: File Form 10F Electronically

Log in to the Income Tax portal with the Italian company's credentials and file Form 10F electronically using the DSC of the authorized signatory. Ensure all TRC details are correctly referenced.

Step 6: Submit No PE Declaration to the Indian Payer

Provide the signed No PE Declaration to the Indian company making the royalty payment. This document should be retained for audit and assessment purposes.

Step 7: Deduct TDS and File ITR (if DTAA Benefits Claimed)

The Indian payer deducts TDS at 20% under the Italy-India DTAA (or Section 115A if DTAA is not invoked). If the Italian company claims DTAA benefits, it must file an ITR in India for the relevant financial year.

Key Differences: Section 115A vs. Italy-India DTAA Route

Factor	Section 115A Route	Italy-India DTAA Route
Tax Rate on Royalty / FTS	20%	20%
ITR Filing Required in India?	No	Yes
Form 10F Required?	No	Yes
TRC Required?	No	Yes
No PE Declaration Required?	No	Yes
Protection from Double Taxation?	Limited	Full treaty protection
PAN Required?	Yes (to avoid 20% default rate)	Yes (mandatory)

For most Italian companies receiving royalties from India, the Section 115A route is simpler since it avoids ITR filing. However, if the Italian company has significant India-sourced income and wants full double-tax treaty protection, the DTAA route with Form 10F is the preferred path.

Penalties for Non-Compliance

Non-compliance with Form 10F and TRC requirements can have serious consequences for Indian payers:

• Disallowance of the DTAA rate: TDS will be demanded at the higher domestic withholding rate (20% under Section 115A is already the standard, but for other payments it can go higher)
• Interest under Section 201(1A): Simple interest at 1.5% per month on short-deducted TDS from the date of payment to the date of actual payment
• Penalty under Section 271C: Penalty equal to the amount of tax not deducted
• Disallowance of expense under Section 40(a)(i): The royalty expense may be disallowed in the Indian company's P&L, increasing taxable income

How Taxocity Helps with Italy-India DTAA Compliance

Taxocity, trusted by businesses since 1975 and rated 4.8/5 from 5,000+ reviews, offers complete end-to-end DTAA compliance support for cross-border royalty and FTS transactions. Our team of real human experts (not chatbots) manages every step:

• PAN application for the foreign (Italian) company in India
• Income Tax portal registration and login setup
• DSC procurement for foreign authorized signatories (including video verification coordination)
• Form 10F electronic filing
• TRC guidance and checklist for Italian counterparts
• No PE Declaration drafting
• ITR filing in India for foreign companies claiming DTAA benefits
• TDS computation, Form 27Q filing, and GST compliance for the Indian payer

With our 100% compliance guarantee, you never have to worry about missed deadlines, incorrect filings, or regulatory exposure. From the first royalty payment to ongoing compliance, Taxocity is your expert partner.

Also explore our related services: Private Limited Company Registration, GST Registration, and LLP Registration — all in one place.

Sources

• Income Tax India - DTAA Information
• Income Tax e-Filing Portal - Form 10F
• Ministry of Corporate Affairs, India

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Disclaimer: The information provided in this article is for general informational purposes only and does not constitute tax, legal, or financial advice. Tax laws and DTAA provisions are subject to change. Please consult a qualified tax advisor or chartered accountant before making any decisions regarding cross-border payments, DTAA compliance, or related matters. Taxocity's team of experts is available to provide personalized guidance for your specific situation.