NRIs getting income tax notices for claiming lower tax rate benefit under DTAA; Know how to resolve this situation

non-resident Indians (NRIs) those who claimed benefit of lower or nil rate of taxation under the Double Taxation Avoidance Agreement (DTAA) are receiving income tax notice(s) for failing to file Form 10F. The Income Tax Act, 1961, allows NRI taxpayers to declare their income and file ITR by applying for lower or nil rate of income tax (in some cases) under DTAA.
For availing the benefit of lower or nil taxes under DTAA, NRIs must submit a Tax Residency Certificate (TRC) and Form 10F. This form could be filled any time before filing Income Tax Return (ITR). As per the existing Indian tax law, there is no deadline to file Form 10F and it can be filed electronically by all NRIs who may or may not have a PAN card.
The mentioned income tax notice given to NRIs read as follows: “Incorrect claim u/s 143(1)(a)(ii): Adjustment to total income has been done as per Schedule Capital gains & Special Income, and for this DTAA benefit is to be claimed then relevant statutory form shall be filed. This required adjustment to the income within the meaning of Section 143(1)(a) and accordingly this is an opportunity provided to respond within the time allowed.”

Read below to know the reason why this is happening, how to solve it and what should NRIs do now to save themselves from this problem.

Why are NRIs getting income tax notice under Section 143(1)(a)?

The tax notice under Section 143(1)(a) is being sent because the said NRI has not filed Form 10F, which as per the Income Tax Department should have been filed to claim DTAA