TRACES Portal: Downloading Form 16A & TDS Certificates for Foreign Payees

Why Form 16A Matters for Foreign Payees

Form 16A for a foreign payee cannot be downloaded from TRACES until the deductor has registered their TAN on the portal and filed Form 144, the quarterly TDS return for non-resident payments. The certificate typically becomes available 3-5 business days after that filing, and the download request itself takes another 24-48 hours to process.

Form 16A exists because when an Indian company makes payments to a non-resident — whether for royalties, fees for technical services, interest, or professional fees — it must deduct Tax at Source (TDS) under section 393(2) of the Income-tax Act, 2025 (Table, Sl. No. 17; section 195 of the Income-tax Act, 1961). The deductor then issues Form 16A to the foreign payee as proof that tax was deducted and deposited with the Indian government. For foreign companies and NRIs, Form 16A is essential for three reasons:

• Claiming tax credits: The foreign payee uses Form 16A to claim credit for Indian taxes paid when filing returns in their home country. Without it, double taxation becomes a reality even when a Double Taxation Avoidance Agreement (DTAA) exists.
• Verifying correct TDS rates: Form 16A shows the exact rate at which tax was deducted — if the deductor applied 20% instead of the applicable DTAA rate of 10%, the payee can identify the overdeduction and request a refund.
• Income tax return filing in India: Non-residents who file Indian returns (to claim refunds on excess TDS) need Form 16A as supporting documentation.

Understanding TRACES: The Platform Behind TDS Certificates

TRACES (TDS Reconciliation Analysis and Correction Enabling System) is the Income Tax Department's web-based portal at tdscpc.gov.in that manages all TDS-related operations. For NRI and foreign payee services, there is also a dedicated portal at nriservices.tdscpc.gov.in.

What TRACES Does

TRACES is the central platform for:

• Downloading Form 130 (formerly Form 16) (salary TDS certificates) and Form 16A (non-salary TDS certificates)
• Viewing Form 168 (formerly Form 26AS) — the consolidated tax credit statement
• Downloading Conso Files and Justification Reports
• Filing correction statements for TDS returns
• Verifying PAN details of deductees linked to a TAN
• Requesting refunds and processing defaults

Three User Types on TRACES

TRACES supports three categories of users, each with different capabilities:

For foreign payees, Form 16A is generated by the deductor (the Indian company making the payment). The foreign payee can verify their TDS credits through the taxpayer login using their Indian PAN.

Step 1: Registering on TRACES as a Deductor

Before downloading Form 16A, the deductor must register their TAN on the TRACES portal. This is a one-time process.

Prerequisites for Registration

• Valid TAN: The Tax Deduction Account Number issued by the Income Tax Department
• Challan details: BSR code, challan serial number, amount, and date from a recent TDS deposit challan
• Token number: From the most recently filed TDS return (Form 144 (formerly Form 27Q) for non-resident payments)
• Active email and mobile number: For receiving activation codes

Registration Steps

1. Visit tdscpc.gov.in and click Register as New User
2. Select Deductor as the user type
3. Enter your TAN, PAN of the deductor, and date of birth or incorporation
4. Provide contact details — registered email address and mobile number
5. Enter verification details: challan information (BSR Code, challan serial number, deposit amount, and date) from a recent TDS payment, plus the token number from your latest Form 144 filing
6. Review the confirmation screen and submit
7. You will receive activation codes on your registered email and mobile within 24 hours
8. Click the activation link and enter both activation codes to complete registration

Critical: You must activate your account within 48 hours of receiving the activation codes. If you miss this window, the registration expires and you must start over.

Step 2: Filing Form 144 — The TDS Return for Non-Resident Payments

Form 16A can only be generated on TRACES after the corresponding quarterly TDS return (Form 144) has been filed and processed. This is the most critical prerequisite.

What Is Form 144?

Form 144 is the quarterly TDS statement specifically for tax deducted on payments made to non-residents and foreign companies. It is distinct from:

• Form 138 (formerly Form 24Q): TDS on salary payments
• Form 140 (formerly Form 26Q): TDS on domestic non-salary payments
• Form 143 (formerly Form 27EQ): Tax collected at source (TCS)

Form 144 Filing Deadlines

Information Required in Form 144 for Foreign Payees

When filing Form 144 for payments to non-residents, you need:

• PAN of the non-resident payee: If available. If not, the TDS rate jumps to 20% or the rate in force, whichever is higher
• Tax Identification Number (TIN): If PAN is not available, provide the payee's TIN from their home country
• Country of residence: Of the non-resident payee
• Email and contact details: Of the payee
• Section code: The section code under which TDS was deducted, selected from the code list published in the return preparation utility for that quarter
• DTAA article number: If treaty rates were applied, the specific DTAA article and country

The late-filing fee under section 427(1) of the Income-tax Act, 2025 (section 234E of the Income-tax Act, 1961) is INR 200 per day until the statement is delivered, and it cannot exceed the amount of tax deductible or collectible for that quarter (section 427(2)).

Step 3: Downloading Form 16A from TRACES

Once Form 144 is filed and processed (typically 3-5 business days after filing), you can download Form 16A.

Step-by-Step Download Process

1. Log in to TRACES: Visit tdscpc.gov.in and log in with your TAN credentials
2. Navigate to Downloads: Go to the Downloads tab in the top menu
3. Select Form 16A: Choose Form 16A from the dropdown
4. Select Financial Year and Quarter: Pick the relevant financial year and quarter for which you want the certificate
5. Choose Validation Type: Select either:
   • Digital Signature Support KYC Validation — requires a Digital Signature Certificate (DSC) installed on your system
   • Normal KYC Validation (without Digital Signature) — uses challan and PAN-based verification
6. Enter Token Number: The token number of the TDS return filed for that quarter
7. Enter Challan Details: BSR Code, challan serial number, challan amount, and date of tax deposit
8. Enter PAN-Amount Combination: The PAN of the specific foreign payee and the exact TDS amount deducted for that payee in that quarter
9. Submit Request: TRACES queues the request for processing
10. Download ZIP File: Once processed (within 24-48 hours), download the ZIP file from the Requested Downloads section

Understanding the Downloaded File

The downloaded ZIP contains:

• Form 16A PDF: The actual TDS certificate in printable format
• Unique certificate number: Each Form 16A carries a unique number that can be verified on TRACES
• Digital signature: If you selected DSC validation, the PDF is digitally signed

Form 16A Contents: What the Foreign Payee Receives

Form 16A is a structured certificate that contains:

Issuance Deadline

The deductor must issue Form 16A to the payee within 15 days from the due date of filing the quarterly TDS return (Form 144). For example, for Q1 (April-June), the Form 144 due date is July 31, so Form 16A must be issued by August 15. Failure to issue on time attracts a penalty of INR 500 per day under section 465(2)(g) of the Income-tax Act, 2025 (the corresponding provision of the Income-tax Act, 1961, section 272A(2)(g), set the rate at INR 100 per day and still governs tax years beginning before 1 April 2026). The penalty cannot exceed the amount of tax deductible (section 465(3)(b)).

Special Considerations for Foreign Payees Without PAN

Many foreign companies and individuals do not have an Indian PAN. This creates complications at multiple levels:

Higher TDS Rate Without PAN

Under section 397(2)(b)(i)(C) of the Income-tax Act, 2025 (section 206AA of the Income-tax Act, 1961), if the payee does not furnish their PAN, TDS must be deducted at the higher of:

• The rate specified in the relevant provision
• The rate in force
• 20%

Under the 1961 Act, tribunals and High Courts consistently held that section 206AA did not override a more beneficial treaty rate where the payee furnished a Tax Residency Certificate (TRC) and the prescribed declaration. The Income-tax Act, 2025 narrows that relief: section 397(2)(c) disapplies the higher-rate rule only for a non-resident not being a company or a foreign company, and then only for interest on specified long-term bonds under section 393(2) (Table, Sl. Nos. 2, 3 and 4) or for other payments “subject to such conditions, as may be prescribed”. Until those conditions are prescribed, a foreign company without a PAN should not assume the treaty rate is available at source, and a Form 41 (formerly Form 10F) and TRC on file remain necessary but may not be sufficient.

Downloading Form 16A Without Payee PAN

When the foreign payee does not have a PAN, TRACES requires alternative identification in Form 144:

• Tax Identification Number (TIN) from the payee's home country
• Complete address of the payee
• Country of residence
• Email address

Form 16A can still be downloaded and issued, but the payee may face challenges using it for tax credit claims in their home country if the format does not match expectations of the foreign tax authority.

NRI Services Portal: Alternative Access for Non-Residents

For NRIs and foreign nationals who have an Indian PAN, the dedicated NRI Services portal at nriservices.tdscpc.gov.in provides an alternative way to access TDS information.

Available Features

• View Form 168: The annual tax statement showing all TDS credits linked to a PAN
• Download Form 130/16A: If already generated by the deductor, the payee can download their copy
• Verify TDS credits: Cross-check that TDS deducted by the payer matches what is reflected in Form 168
• Raise grievances: If there are discrepancies in TDS credits

Common Issue: TDS Credit Mismatch

A frequent problem for foreign payees is that TDS shown in Form 16A does not match the credits in Form 168. This usually happens because:

• The deductor filed Form 144 with incorrect PAN of the payee
• The challan was deposited under a different TAN
• The quarterly return has defaults or errors that need correction

The resolution requires the deductor to file a correction statement on TRACES, which typically takes 2-4 weeks to reflect in the payee's Form 168.

Linking Form 16A with Forms 145 and 146 (formerly Forms 15CA and 15CB) Compliance

For every outward remittance to a non-resident where TDS applies, the Indian company must also file Form 145 (and potentially Form 146 from a Chartered Accountant). The TDS certificate in Form 16A must be consistent with these filings:

• TDS rate in Form 16A must match the rate declared in Form 145/Form 146
• Amount paid must reconcile between Form 16A, Form 145, and bank remittance records
• DTAA article referenced in Form 146 must be consistent with the rate in Form 16A

Inconsistencies between these forms are a red flag for the Income Tax Department and can trigger a scrutiny assessment under section 270 of the Income-tax Act, 2025 (section 143(3) of the Income-tax Act, 1961).

Troubleshooting Common TRACES Issues

Form 16A Not Available for Download

• Cause: Form 144 not yet filed or not processed
• Solution: Verify Form 144 filing status under Statement/Payment > Statement Status on TRACES. Processing typically takes 3-5 business days.

Authentication Failure During Download

• Cause: Incorrect challan details or token number
• Solution: Cross-verify BSR code and serial number from the original challan receipt. The token number must match the exact return for that quarter.

Digital Signature Errors

• Cause: DSC not registered on TRACES, expired DSC, or browser compatibility issues
• Solution: Register DSC under Profile > Register DSC. Use the TRACES-supplied DSC utility for signature-based downloads; browser-embedded Java signing applets are no longer supported by current browsers.

Password Expired or Account Locked

• Cause: TRACES passwords expire periodically, and accounts lock after multiple failed login attempts
• Solution: Use the Forgot Password option. For deductor accounts, you will need to provide TAN, registered email, and challan/token verification details.

DTAA Treaty Rate Application and Form 16A

When a Double Taxation Avoidance Agreement exists between India and the payee's home country, the deductor can apply the lower treaty rate instead of the domestic rate. This directly impacts what appears on Form 16A and has downstream implications for the foreign payee.

Requirements for Applying Treaty Rates

To apply a DTAA rate, the deductor must obtain from the foreign payee:

• Tax Residency Certificate (TRC): Issued by the tax authority of the payee's home country, confirming tax residency status for the relevant financial year
• Form 41: A self-declaration by the non-resident containing details such as country of residence, taxpayer status, nationality, and period of residential status
• No Permanent Establishment declaration: For business profits covered under Article 7 of most DTAAs, confirmation that the payee does not have a PE in India

When these documents are in place and the treaty rate is applied, Form 16A will reflect the lower DTAA rate. This is critical because the foreign payee uses Form 16A to claim foreign tax credits in their home jurisdiction. An incorrect rate on Form 16A can result in either the payee claiming insufficient credits (overpaying tax) or claiming excess credits (triggering audit risk in their home country).

Correcting Rate Errors on Form 16A

If Form 16A shows TDS at 20% but the applicable DTAA rate was 10%, the deductor must:

1. File a correction statement for Form 144 on TRACES with the correct rate and section code
2. The excess TDS deposited can be adjusted against future TDS deposits or claimed as a refund by the payee when filing their Indian income tax return
3. A revised Form 16A will be generated on TRACES once the correction is processed (typically 2-4 weeks)

Integration with Foreign Investment Compliance

For wholly-owned subsidiaries of foreign companies, TDS compliance on outbound payments is one piece of a larger compliance puzzle. The same payments that trigger section 393(2) TDS (section 195 of the Income-tax Act, 1961) may also require:

• Forms 145 and 146 filing: Before the bank processes the outward remittance
• FLA Return filing: Annual reporting to the RBI on foreign liabilities and assets
• Transfer pricing documentation: If the payment is to an associated enterprise, the transaction must be benchmarked at arm's length

Maintaining consistency across all these filings is essential. The TDS rate in Form 16A, the rate declared in Forms 145 and 146, and the pricing in the transfer pricing study must all tell the same story.

Best Practices for Managing TDS Compliance for Foreign Payees

For Indian companies regularly making payments to non-residents, establishing a systematic process saves significant time and avoids penalties:

1. Maintain a TDS calendar: Track quarterly due dates for TDS deposit (7th of each month), Form 144 filing (quarterly deadlines), and Form 16A issuance (15 days after filing deadline)
2. Collect payee documentation upfront: Before making the first payment, obtain the payee's PAN (if available), TRC, Form 41, and DTAA claim details. This prevents last-minute scrambles and ensures the correct rate is applied from the start.
3. Reconcile monthly: Match TDS deducted, TDS deposited (challan amounts), and amounts reported in Form 144 before the quarterly filing deadline
4. Use TRACES for bulk downloads: If you have multiple foreign payees, TRACES supports bulk Form 16A generation — submit requests for all payees at once rather than individually
5. Keep copies for at least six years and three months: that is the outer limit within which a tax year can be reopened under section 282(1) of the Income-tax Act, 2025, so challans, statements and certificates should be retained for at least that long from the end of the tax year

For comprehensive tax advisory support on cross-border payment compliance, including TDS rate optimization under DTAAs and FEMA/RBI compliance, our team handles the entire workflow from payment structuring through Form 16A issuance.

Key Takeaways

• Form 16A is issued through TRACES after the deductor files the quarterly Form 144 TDS return for non-resident payments — it cannot be generated until the return is filed and processed
• Form 144 must be filed quarterly with deadlines of July 31, October 31, January 31, and May 31 — late delivery attracts a fee of INR 200 per day under section 427(1) of the Income-tax Act, 2025 (section 234E of the Income-tax Act, 1961), capped at the tax deductible for the quarter
• Registration on TRACES requires a valid TAN, recent challan details, and the token number from the latest Form 144 — activation must be completed within 48 hours
• Foreign payees without PAN can still receive Form 16A, but the deductor must provide alternative identification (TIN, address, country) in Form 144
• Consistency is critical — TDS rates and amounts must match across Form 16A, Forms 145, 146, 144 and 168 to avoid triggering scrutiny assessments