Rule 214 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 214 of the Income-tax Rules, 2026 lets the payer apply in Form No. 129 for a certificate determining the appropriate proportion of a sum payable to a non-resident that is chargeable to tax, the Assessing Officer testing chargeability under the Act read with the treaty.
The payer's application
Sub-rule (1) of rule 214: an application by a person for determination of the appropriate proportion of a sum chargeable in the case of a non-resident recipient under section 395(2) or section 400(3) shall be made in Form No. 129. The 1962 parallel is rule 29BA.
Most relief from deduction is sought by the recipient — the lower-deduction certificate under rule 213, the no-deduction declaration under rule 211, the branch certificate under rule 209. Rule 214 is the mirror image: the payer applies, because it is the payer who bears the risk of under-deduction on a cross-border payment. The heading is explicit that the sum is one payable to a non-resident and is other than salary.
What the Assessing Officer decides
Sub-rule (2) frames a single question and two possible answers. The officer examines whether the sum being paid or credited to the non-resident is chargeable to tax under the provisions of the Act read with the relevant Double Taxation Avoidance Agreement, if any — and:
| Clause | Action under rule 214(2) |
|---|---|
| (a) | Where the whole of such sum would not be the income chargeable in the case of the non-resident recipient, he shall proceed to determine the appropriate proportion of the sum chargeable to tax |
| (b) | Issue a certificate thereof for tax deduction under section 393(2) |
The treaty is written into the test, not left to argument. Rule 214 requires the Act to be read with the relevant Double Taxation Avoidance Agreement, if any — so a payer relying on a treaty article to reduce or eliminate chargeability is asking the officer to apply the rule as drafted, not to make a concession.
The four factors
Sub-rule (3): the certificate is issued after taking into consideration the following in relation to the recipient:
| Clause | Factor |
|---|---|
| (a) | Tax payable on the estimated income of the relevant tax year |
| (b) | Tax payable on the assessed or returned or estimated income, as the case may be, of the preceding four tax years |
| (c) | Existing liability under the Act and under the Income-tax Act, 1961 as it existed prior to its repeal |
| (d) | Advance tax payment, tax deducted at source and tax collected at source for the relevant tax year, till the date of making the application or till the date of issuance of the certificate |
Every factor in sub-rule (3) of rule 214 is measured "in relation to the recipient" — his estimated income, his last four years, his outstanding demands, his prepaid taxes. The payer files the form but cannot answer it from his own records. Practically, the application must be assembled with the non-resident's cooperation, and a payer who files Form No. 129 without the recipient's tax history will be asked for it. Clause (c) is the one most often overlooked: an old demand under the repealed Income-tax Act, 1961 is expressly within the officer's view.
Validity, cancellation and renewal
| Matter | Provision in rule 214 |
|---|---|
| Scope | Valid only for the payment to the non-resident named in it — sub-rule (4) |
| Period | Such period of the tax year as may be specified in the certificate |
| Cancellation | By the Assessing Officer at any time before the expiry of the specified period |
| Fresh application | After expiry of validity, or within three months before it — sub-rule (5) |
Two limits sit inside sub-rule (4) of rule 214 and both are narrow. The certificate is tied to a named non-resident, so a payer with several foreign vendors needs several certificates. And the period is a part of a tax year, not necessarily the whole of it — the officer specifies it, and deduction reverts to the full rate the moment it lapses.
Note the renewal window matches rule 209's: three months before expiry, and no earlier.
Worked example
| Facts | Position under rule 214 |
|---|---|
| Indian company pays a composite sum to a foreign supplier, part of it equipment cost | Apply in Form No. 129 for the appropriate proportion chargeable |
| Treaty article limits taxability of the service element | Officer reads the Act with the treaty under sub-rule (2) |
| Whole sum is chargeable | No proportion to determine — clause (a) does not arise |
| Payer files without the recipient's last four years' figures | Application is incomplete — sub-rule (3)(b) requires them |
| Recipient has an unpaid demand under the 1961 Act | Within clause (c) and weighs against the certificate |
| Recipient has substantial TDS credit for the year already | Relevant under clause (d) |
| Payer has three foreign vendors | Three certificates — each names one non-resident |
| Certificate specified for April to September | Full-rate deduction resumes from October |
| Circumstances change mid-period | Officer may cancel before expiry |
| Certificate expires 31 March; fresh application on 20 December | Premature — the window opens three months before expiry |
Compliance checklist
- Establish that the sum is payable to a non-resident and is other than salary.
- File in Form No. 129 under section 395(2) or section 400(3), as applicable.
- Identify the treaty article relied on and set it out in the application.
- Obtain the recipient's estimated income for the year and the preceding four years' position.
- Check for any existing liability, including under the repealed 1961 Act.
- Compile advance tax, TDS and TCS for the recipient up to the application date.
- Obtain a separate certificate for each non-resident payee.
- Note the specified period and diarise the three-month renewal window.
Common mistakes
- Assuming the recipient must apply — rule 214 is the payer's route.
- Filing without the non-resident's tax history, which every factor in sub-rule (3) turns on.
- Ignoring an old demand under the 1961 Act.
- Using one certificate for several foreign payees.
- Treating the certificate as covering the whole tax year when only a period is specified.
- Deducting at the certificate rate after cancellation or expiry.
Which year this governs
The Income-tax Rules, 2026 are made under the Income-tax Act, 2025. The 1962 parallel to rule 214 is rule 29BA, given for tracing only. Section references are to the Income-tax Act, 2025 except where the repealed 1961 Act is named. Verify the current text before filing.