Inadequacy of Tax Residency Certificates Against Tax Abuse

While a Tax Residency Certificate (TRC) serves as an essential statutory eligibility condition for claiming benefits under a Double Taxation Avoidance Agreement, it does not grant absolute immunity from enquiry into tax avoidance. Following statutory amendments, including the insertion of Sections 90(4) and 90(5) of the Income Tax Act, 1961, a TRC constitutes prima facie evidence of residence but is neither conclusive nor binding on tax administration or courts. The tax authorities retain the power to look beyond formal documentation to determine whether an entity is a mere conduit or see-through structure interposed without genuine commercial substance to defeat domestic tax laws.(The authority for advance rulings Vs Tiger Global International II holdings) | 2026 INSC 60)