My client, a UK trading company with no presence or permanent establishment in India, has received royalties from India for many years, with a withholding tax rate of around 10.8% which we are able to claim as foreign tax credit in the UK.

We are now being told that the withholding tax will be increased to just over 20% unless we produce a certificate of residency and register in India. Do we need to do this and what will be the effect?

Yes, you will need to provide a certificate of residency, plus any other forms and compliance requested by the Indian authorities in order to be taxed at the rate of withholding tax agreed in the UK-India double tax treaty, which is currently 15%.