If your Indian company makes royalty payments to a South Korean entity, you must file Form 10F along with a Tax Residency Certificate (TRC) to claim the reduced 10% DTAA rate. Without Form 10F, the default withholding tax under Section 115A applies at 20% + Surcharge + Cess. Form 10F is mandatory for any foreign company seeking DTAA benefits in India, and failure to submit it means your South Korean counterpart pays significantly more tax. Taxocity has helped hundreds of foreign companies stay compliant since 1975.

• DTAA rate for South Korea-India royalties: 10%
• Default rate under Section 115A (without DTAA): 20% + Surcharge + Cess
• Form 10F must be filed online on the Indian Income Tax portal

What is Form 10F?

Form 10F is a self-declaration form prescribed under Rule 21AB of the Income Tax Rules, 1962, read with Section 90(5) of the Income Tax Act, 1961. It is filed by a non-resident recipient of income (such as a South Korean company receiving royalty from India) to confirm that they are eligible to claim DTAA benefits.

The Central Board of Direct Taxes (CBDT) made online filing of Form 10F mandatory via the Indian Income Tax e-filing portal. This means the foreign company (South Korean entity) must have a PAN card and an Income Tax portal login in India to file Form 10F electronically.

South Korea-India DTAA: Royalty Tax Rate

The India-South Korea Double Taxation Avoidance Agreement (DTAA) provides a concessional withholding tax rate on royalties paid from India to South Korean residents. Under the treaty, the applicable rate on royalties is 10% of the gross amount.

Compare this with the default provision under Section 115A of the Income Tax Act, which mandates tax at 20% + applicable Surcharge + Health and Education Cess on royalty income earned by a foreign company from India. Claiming the DTAA rate of 10% can result in substantial tax savings for the South Korean recipient.

Provision	Tax Rate on Royalty	Form 10F Required?
Section 115A (Default)	20% + Surcharge + Cess	No
South Korea-India DTAA	10%	Yes (Mandatory)

Note: Under Section 115A, if the foreign company does not wish to claim DTAA benefits, they may pay tax at 20% + Surcharge + Cess and are not required to file an Income Tax Return (ITR) in India. However, if DTAA benefit at 10% is claimed, filing ITR in India becomes mandatory.

Mandatory Documents for Form 10F (South Korea-India DTAA)

To successfully file Form 10F and claim DTAA benefits for royalty payments, the South Korean company must arrange the following documents:

1. Tax Residency Certificate (TRC)

The TRC is issued by the tax authority of South Korea (National Tax Service of Korea) confirming that the company is a tax resident of South Korea. This is the foundational document for claiming any DTAA benefit. The TRC must be valid for the relevant financial year in which royalty income is received.

2. PAN Card (India)

The South Korean company must obtain a Permanent Account Number (PAN) in India. A PAN is required to create a login on the Indian Income Tax portal and to file Form 10F electronically. Without PAN, Form 10F cannot be filed online.

3. Income Tax Portal Login

Once PAN is obtained, an account must be registered on the Income Tax e-filing portal (incometax.gov.in) in the name of the foreign company. This is the platform where Form 10F is submitted online.

4. No Permanent Establishment (PE) Declaration

The South Korean entity must provide a No PE Declaration confirming that it does not have a Permanent Establishment in India. If a PE exists, the income would be taxable in India as business income and the DTAA royalty article may not apply.

5. Digital Signature Certificate (DSC) of Authorised Signatory

A critical and often overlooked requirement is the Digital Signature Certificate (DSC) of the foreign company's authorised signatory. Regular DSCs of Indian directors or partners will not work. The DSC must belong to the foreign authorised signatory of the South Korean company.

To obtain a DSC for a foreign individual, the following is required:

• Email OTP and phone OTP verification of the foreign individual
• Video verification of the foreign individual
• Address proof (such as a Driving License or equivalent)
• Photograph
• Copy of passport

How to File Form 10F for Royalty Payments

Step 1: Obtain PAN for the South Korean Company

Apply for a PAN card in India on behalf of the South Korean entity. This requires submission of registration documents, proof of address, and passport copies of the authorised signatory. Taxocity's compliance team can assist with the PAN application process for foreign companies.

Step 2: Register on Income Tax Portal

Using the PAN obtained, create a login on the Indian Income Tax e-filing portal (incometax.gov.in). This enables the South Korean company to access Indian tax filing systems.

Step 3: Obtain DSC of Foreign Authorised Signatory

Arrange a DSC for the authorised signatory of the South Korean company. This DSC is needed to digitally sign and submit Form 10F online. The process involves video verification and document submission as described above.

Step 4: Obtain TRC from South Korea's National Tax Service

The South Korean company must secure a valid Tax Residency Certificate from the Korean tax authority confirming their South Korean tax residency status for the relevant year.

Step 5: File Form 10F on the Income Tax Portal

Log into the Income Tax portal using the South Korean company's credentials and file Form 10F by providing the following details:

• Status (company, individual, etc.)
• Nationality / country of incorporation (South Korea)
• Tax Identification Number in South Korea
• Period of residential status
• Address in South Korea during the relevant period

Step 6: Submit No PE Declaration

Provide the No Permanent Establishment declaration to the Indian payer (the company making the royalty payment). This declaration, combined with the TRC and Form 10F, completes the DTAA compliance package.

Step 7: File ITR in India (If DTAA Benefit Claimed)

If the South Korean company claims the 10% DTAA rate on royalties, it is mandatory to file an Income Tax Return (ITR) in India. The ITR must be signed using the DSC of the foreign authorised signatory. Non-filing of ITR while availing DTAA benefit can expose the South Korean entity to penalties and interest under Indian tax law.

What Happens Without Form 10F?

If Form 10F is not filed or is incomplete at the time of payment, the Indian payer (TDS deductor) is legally required to deduct tax at the higher default rate of 20% + Surcharge + Cess under Section 115A. This results in a higher tax burden on the South Korean recipient and creates potential disputes over refunds.

Additionally, the Income Tax Department may disallow the DTAA benefit claimed by the South Korean company during assessment proceedings, leading to demand notices and interest under Sections 234A, 234B, and 234C of the Income Tax Act.

Key Differences: Section 115A vs DTAA Route

Factor	Section 115A (No DTAA)	South Korea-India DTAA
Tax Rate on Royalty	20% + Surcharge + Cess	10%
Form 10F Required	No	Yes
TRC Required	No	Yes
No PE Declaration Required	No	Yes
ITR Filing in India	Not required	Mandatory
PAN in India Required	Yes (for TDS credit)	Yes (mandatory)
DSC of Foreign Signatory	Not required	Required for ITR filing

Common Mistakes to Avoid

• Using the wrong DSC: The DSC of an Indian resident director or a CA does not work for filing Form 10F or ITR for a foreign company. Only the DSC of the foreign authorised signatory is valid.
• Expired TRC: A Tax Residency Certificate must cover the year in which income is received. Submitting an expired TRC invalidates the DTAA claim.
• No PAN for the foreign company: Without PAN, neither Form 10F nor ITR can be filed electronically in India.
• Not filing ITR after claiming DTAA: Availing the 10% DTAA rate and then not filing ITR in India is a compliance violation that attracts penalties.
• Assuming Section 115A is always better: While Section 115A avoids ITR filing, the tax rate is significantly higher. For substantial royalty payments, the DTAA route at 10% almost always results in lower total tax outflow.

How Taxocity Helps with South Korea-India DTAA Compliance

Taxocity has been providing end-to-end tax and compliance support since 1975, with a 4.8/5 rating from over 5,000 clients. Our team of real human experts handles the full DTAA compliance lifecycle for foreign companies earning royalty income from India:

• PAN application for the South Korean company
• Income Tax portal registration and account setup
• Assistance in obtaining DSC for the foreign authorised signatory (including video verification coordination)
• Online filing of Form 10F
• Drafting of No PE Declaration
• Filing of ITR in India for the South Korean entity
• Ongoing advisory on GST registration and GST filing obligations, if applicable

With our 100% compliance guarantee, you can be confident that all filings are accurate, timely, and in full conformity with Indian tax law. We handle the complexity so your South Korean business partners can focus on what they do best.

Key Takeaways

1. The South Korea-India DTAA provides a 10% withholding tax rate on royalties, compared to 20% + Surcharge + Cess under Section 115A.
2. Form 10F is mandatory for any South Korean company claiming DTAA benefits on royalty income from India.
3. Filing Form 10F requires PAN, Income Tax portal login, TRC, No PE Declaration, and DSC of the foreign authorised signatory.
4. The DSC must be obtained by the foreign signatory of the South Korean company, not by any Indian resident.
5. Claiming the DTAA benefit at 10% makes ITR filing in India mandatory for the South Korean entity.
6. Under Section 115A (no DTAA benefit), the rate is 20% + Surcharge + Cess but ITR filing is not required.

Sources

• https://www.incometax.gov.in/ - Income Tax e-filing portal (Form 10F online filing)
• https://www.incometaxindia.gov.in/pages/international-taxation/double-taxation-avoidance-agreements.aspx - CBDT DTAA list and India-South Korea treaty text

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Disclaimer: The information provided in this article is for general informational purposes only and does not constitute tax advice. Tax laws and DTAA provisions are subject to change, and their application varies based on individual facts and circumstances. Please consult a qualified tax advisor before making any tax-related decisions.