Payments made to Non-Residents from their Indian Bank Accounts & requirement to furnish Form 15CA/15CB

As per Section 195 of the Income Tax Act, 1961, tax is required to be deducted for any sum which is taxable under the Income Tax Regime. So, when a person desires to make any payment or remit any money to a non-resident (including foreign companies), the bank will check whether the tax was paid or not.

For that purpose, the remitter making payment to non-resident furnishes an undertaking in Form 15CA containing the information relating to payment of such sum along with certificate of a Chartered Accountant in Form 15CB, wherever required. In some cases, a Certificate from Chartered Accountant in form 15CB is required for uploading the Form 15CA online.

Requirement for Form 15CA / 15CB arises from section 195(6)

Requirement for Form 15CA / 15CB arises from section 195(6) of the Income Tax Act, 1961 which reads as under :

(6) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall furnish the information relating to payment of such sum, in such form and manner, as may be prescribed.

 

Determination of ‘Any sums chargeable to tax’

Nature of Income	Basis of Tax	Income-tax Act	Treaty/DTAA
Salary Income (Excluded)	Taxable if services are rendered in India	Section 9(1)(ii)	Article 15
Business/Profession	Taxable if Business Connection in India or property or asset or source of income in India or transfer of a capital asset is situated in India	Section 9(1)(i): Concept of Business Connection	Article 5; 7; 14: Concept of PE or Fixed Base
Dividend Income (if not covered under section 115-O)	Taxable if paid by an Indian company	Section 9(1)(iv) and section 115A	Article 10
Interest Income	Taxable if sourced in India with certain exceptions	Section 9(1)(v) and section 115A	Article 11
Royalties		Section 9(1)(vi) and section 115A	Article 12
Fees for Technical Services (FTS)		Section 9(1)(vii) and section 115A	Article 12
Capital Gains	Taxable if situs of shares/ property is in India	Section 9(1)(i) and section 45	Article 13

 

What is Form 15CA

Form 15CA is a declaration of remitter and is used as a tool for collecting information in respect of payments which are chargeable to tax in the hands of recipient non-resident. This form helps Income Tax Department in tracking foreign remittances and their taxability.

Form 15CA is an undertaking filed electronically by person making remittances to non-resident containing the details of remittances, remittee and remitter. As per rule 37BB, it is a duty of authorized dealers/banks to ensure that such forms are received by them from the remitter. A person responsible for making such remittance (payment) has to submit the form 15CA, before remitting the payment.

 

Who is required to file Form 15CA

·        As per Section 195/rule 37BB, every person making a payment to Non-Residents (not being a Company), or to a Foreign Company shall deduct TDS if such sum is chargeable to Income Tax and the details are required to be furnished in Form 15CA.

·        In case the payment or the aggregate of such payments made during the financial year does not exceed Rs. 5,00,000, such information is to be furnished in Part A of Form No. 15CA.

·        In case the payment exceeds Rs. 5,00,000/-, such information is required to be furnished in Part B of Form No. 15CA after obtaining a certificate from the Assessing Officer under section 197; or an order from the Assessing Officer under sub-section (2) or sub-section (3) of section 195.

·        In case the payment exceeds Rs. 5,00,000, such information is required to be furnished in Part C of Form 15CA after obtaining certificate in Form No. 15CB from an accountant as defined in the Explanation to sub-section (2) of section 288.

·        In case the payment other than the payment referred in sub-rule (3) of rule 37BB which is not chargeable to tax under the provisions of Income-tax Act,1961, such information is required to be furnished in Part D of Form No. 15CA.

 

Information on remittance of amount to be furnished by the payer in Form 15CA

·        Form 15CA comprises details such as Name of Remitter, Name of Beneficiary, Nature of Remittance etc. and contains four parts

·        Procedure prescribed in Rule 37BB of the Income Tax Rules

·        Examination of Permanent Establishment (PE) and attribution of profit to PE

·        Beneficial ownership/Tax residency, [Tax Residence Certificate (TRC) is sufficient evidence to claim Tax Treaty Benefits]

·        Classification of Income : Royalty, Fees for Technical Services (FTS), etc.

·        Certificate from Chartered Accountant may be obtained in Form 15CB

Which part of Form 15CA need to fill

The furnishing of information for payment to Non-Residents not being a Company, or to a Foreign Company in Form 15CA has been classified into 4 parts. Depending upon the case, you will need to fill the relevant part.

PART A: Where the remittance or the aggregate of such remittance does not exceed Rs. 5,00,000/- during the financial year

PART B: Where remittance or the aggregate of such remittances exceed Rs. 5,00,000/- during the financial year and an order / certificate under section 195(2) / 195(3) /197 of the Act has been obtained from the Assessing Officer.

PART C: Where the remittance or the aggregate of such remittance exceed Rs. 5,00,000/- during the Financial year and a certificate in Form No 15CB from an accountant has been obtained.

PART D: Where the remittance is not chargeable to tax under the Income Tax Act, 1961.

 

Rule 37BB defines the manner to furnish information in Form 15CB and making declaration in Form 15CA

Rule 37BB of the Income-tax Rules, 1962 (the Rules) prescribes the information required to be furnished by a remitter while making a payment to a nonresident recipient. Section 195(6) of the Act, read with rule 37BB, provides that the remitter paying any sum, whether or not chargeable under the provisions of the Act, shall furnish the information relating to the payment in a form and manner as prescribed by the Central Board of Direct Taxes (CBDT).

Text of Rule 37BB

Furnishing of information for payment to a non-resident, not being a company, or to a foreign company.

37BB . (1) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum chargeable under the provisions of the Act, shall furnish the following, namely: -

(i)    the information in Part A of Form No.15CA, if the amount of payment or the aggregate of such payments, as the case may be, made during the financial year does not exceed five lakh rupees;

(ii)   for payments other than the payments referred in clause (i), the information, -

(a)   in Part B of Form No.15CA after obtaining, -

(I)    a certificate from the Assessing Officer under section 197; or

(II)  an order from the Assessing Officer under sub-section (2) or sub-section (3) of section 195;

(b)   in Part C of Form No.15CA after obtaining a certificate in Form No. 15CB from an accountant as defined in the Explanation below sub-section (2) of section 288.

(2)   The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum which is not chargeable under the provisions of the Act, shall furnish the information in Part D of Form No.15CA.

(3)  Notwithstanding anything contained in sub-rule (2), no information is required to be furnished for any sum which is not chargeable under the provisions of the Act, if,—

(i)      the remittance is made by an individual and it does not require prior approval of Reserve Bank of India as per the provisions of section 5 of the Foreign Exchange Management Act, 1999 (42 of 1999) read with Schedule III to the Foreign Exchange (Current Account Transaction) Rules, 2000; or

(ii)     the remittance is of the nature specified in column (3) of the specified list below:

 

S. No.	Purpose code as per RBI	Nature of payment
1.	S0001	Indian investment abroad - in equity capital (shares)
2.	S0002	Indian investment abroad - in debt securities
3.	S0003	Indian investment abroad - in branches and wholly owned subsidiaries
4.	S0004	Indian investment abroad - in subsidiaries and associates
5.	S0005	Indian investment abroad - in real estate
6.	S0011	Loans extended to Non-Residents
7.	S0101	Advance payment against imports
8.	S0102	Payment towards imports - settlement of invoice
9.	S0103	Imports by diplomatic missions
10.	S0104	Intermediary trade
11.	S0190	Imports below Rs. 5,00,000 - (For use by ECD offices)
12.	SO202	Payment for operating expenses of Indian shipping companies operating abroad
13.	SO208	Operating expenses of Indian Airlines companies operating abroad
14.	S0212	Booking of passages abroad - Airlines companies
15.	S0301	Remittance towards business travel
16.	S0302	Travel under basic travel quota (BTQ)
17.	S0303	Travel for pilgrimage
18.	S0304	Travel for medical treatment
19.	S0305	Travel for education (including fees
20.	S0401	Postal services
21.	S0501	Construction of projects abroad by Indian companies including import of goods at project site
22.	S0602	Freight insurance - relating to import and export of goods
23.	S1011	Payments for maintenance of offices abroad
24.	S1201	Maintenance of Indian embassies abroad
25.	S1202	Remittances by foreign embassies in India
26.	S1301	Remittance by non-residents towards family maintenance and savings
27.	S1302	Remittance towards personal gifts and donations
28.	S1303	Remittance towards donations to religious and charitable institutions abroad
29.	S1304	Remittance towards grants and donations to other Governments and charitable institutions established by the Governments
30.	S1305	Contributions or donations by the Government to international institutions
31.	S1306	Remittance towards payment or refund of taxes
32.	S1501	Refunds or rebates or reduction in invoice value on account of exports
33.	S1503	Payments by residents for international bidding

(4)  The information in Form No. 15CA shall be furnished, -

(i)    electronically under digital signature in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8) and thereafter printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment; or

(ii)   electronically in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8) and thereafter signed printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment.

(5)  An income-tax authority may require the authorised dealer to furnish the signed printout of Form No.15CA referred to in clause (ii) of sub-rule (4) for the purposes of any proceedings under the Act.

(6)  The certificate in Form No. 15CB shall be furnished and verified electronically in accordance with the procedures, formats and standards specified by the Principal Director-General of Income-tax (Systems) under sub-rule (8).

(7)  The authorised dealer shall furnish a quarterly statement for each quarter of the financial year in Form No.15CC to the Principal Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) electronically under digital signature within fifteen days from the end of the quarter of the financial year to which such statement relates in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8).

(8)  The Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of Form 15CA, Form 15CB and Form 15CC and shall be responsible for the day-to-day administration in relation to the furnishing and verification of information, certificate and quarterly statement in accordance with the provisions of sub-rules (4), (6) and (7).

Explanation. - For the purposes of this rule ‘authorised dealer’ means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999).]

When Form 15CA is not required to be furnished

In accordance with rule 37BB(3), Form 15CA and Form 15CB are not required to be furnished in case of following transactions:—

·        Remittance is made by an individual and it does not require prior approval of the Reserve Bank of India as per the provisions of section 5 of the Foreign Exchange Management Act, 1999 (42 of 1999), read with Schedule III to the Foreign Exchange (Current Account Transaction) Rules, 2000; or

·        Remittance is of the nature specified in rule 37BB(3).

 

NOTE

·        It is to be submitted electronically using digital signatures but may also be submitted without DSC as per procedures.

·        Submission of Form 15CA is mandatory before the remittance is made.

·        Signed Printouts are required to be submitted with the Authorised Dealer.

·        No forms 15CA & 15CB will be required to be furnished by an individual for remittance which does not require RBI approval under Liberalised Remittance Scheme.

 

What is Form 15CB and when it is required?

§   Form 15CB is a Chartered Accountant’s certificate required for payment to be made to a Non-Resident (not being a Company) or to a Foreign Company, which is taxable and if the payment / aggregate of such payments exceed Rs. 5,00,000 in the financial year.

§   Form 15CB is an event-based form and is required for each remittance that satisfies the condition laid. In form 15CB, a CA certifies the details of the payment, TDS rate, TDS deduction and other details of nature and purpose of remittance. In other words, Form 15CB is the Tax Determination Certificate in which the CA examines a remittance with regard to chargeability provisions. This form can be submitted both in online and offline mode and no time limit is prescribed for filing the Form. 

§   This is kind of certification regarding the tax amount or rates with reference to Income Tax Act, 1961 or Double Taxation Avoidance Agreement (DTAA).

§   Double Taxation Avoidance Agreement Double taxation is the imposition of two or more taxes on the same income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction.

§   It refers to two distinct situations: INTERNATIONAL DOUBLE TAXATION AGREEMENT

§   It is not unusual for a business or individual who is a resident in one country to make a taxable gain in another. In this Certificate, Chartered Accountant certify the nature of payment made to non-resident, rate of TDS as per section 195 of Income Tax Act,1961, and also whether DTAA is applicable or not.

§   Form 15CB is required only as an attachment along with Part C of 15CA.

 

Who is authorized to issue 15CB under the Income Tax Act, 1961?

A Chartered Accountant holding valid Certificate of Practice is authorized to issue 15CB under the Income Tax Act, 1961

Purpose of Form 15CB

·        It is a Channel of obtaining tax clearance apart from certificate from Assessing Officer.

·        There is no condition to obtain such certificate when the remittance is not chargeable to tax. This is the Tax Determination Certificate where the Issuer Chartered Accountant examines the remittance having regard to chargeability provisions under sections 5 and 9 of Income Tax Act along with provisions of Double Tax Avoidance Agreements (DTAA) with the Recipient’s Residence Country.

 

How to Access and Submit

You can fill and submit Form 15CB through the following methods:

·      Online Mode - through e-Filing Portal

·      Offline Mode - through offline utility

Both forms 15CA and 15CB are to be filed online

§  Form 15CA and 15CB (i.e certificate by a Chartered Accountant can only be through digital form in Income Tax Return Website through digital form in Income Tax Return Website

§  Only through digital form in Income Tax Return Website. A copy has to be submitted to Authorized Dealer before remittance.

Steps for remittance

STEP – 1	Obtain Form 15CB if: (i) remittance is taxable; and (ii) aggregate remittances exceed Rs. 5,00,000/- during the financial year
STEP – 2	Upload the remittance details in Form 15CA through the income-tax e-filing portal
STEP – 3	Submit signed print-out of Form 15CA along with copy of Form 15CB with the bankers for remittance

Situations where no Forms 15CB will be required

(i)   Form 15CB will not be required till the aggregate of remittances during the financial year does not exceed Rs. 5,00,000.

(ii)  Form 15CB will also not be required where order/certificate of lower/ no deduction is taken from the Jurisdictional Assessing Officer under sections 195(2), 195(3), 197 of the Income-tax Act, 1961.

(iii) Form 15CB is also not required where the remittance is not chargeable to tax.

 

When different parts of 15CA and 15CB are applicable?

Ans. Part A, B, C of 15CA is required only if the Income sought of be remitted is chargeable to tax in India in the hands of the non-resident recipient.

Part A: Part A of Form 15CA to be filled up if the remittance is chargeable to tax under the provisions of the Income-Tax Act 1961 and the remittance or the aggregate of such remittances, as the case may be, does not exceed Rs. 5,00,000/- during the Financial Year.

Part D : Part D of Form 15CA is required only when such income is not chargeable to tax in the hands of the non-recipient.

Even in the case of Part D, this part is not required to be submitted if the amount sought to be remitted are of the nature referred to in Part III of Foreign Exchange Management (Current Account Transactions) Rules, 2000 or referred to in Rule 37BB(3) of Income Tax Rules 1962.

When payment made exceeds Rs 5 lakh

Following documents is required to be submitted:

§  Part B of Form 15CA has to be provided

§  Certificate in Form 15CB from a Chartered Accountant

§  Part C of Form 15CA

 

Instructions for Filing Form 15CA & 15CB

Steps (15CA Offline/Bulk Mode)

Filing of Form 15CA

Step	Action by	Action Description
Step 1	Taxpayer	Login to e-Filing portal. Navigate to “e-File” menu and select File Form 15CA under File Forms sub-menu.
Step 2	Taxpayer	On selection of Form 15CA, PAN/TAN of Assessee is auto populated. Provide Financial Year, Filing Type and Submission Mode “Offline/Bulk”.
Step 3	Taxpayer	Download the Form 15CA Offline Utility. Alternatively, the utility can also be downloaded from “Downloads” section of the Homepage under Income Tax Forms page.
Step 4	Taxpayer	Prepare individual XML’s for Remitter, Remittee and CA (only for Part-C) combination. Zip single/multiple XML’s. In case of Part-C, the taxpayer has to import XML of Form 15CB submitted by the CA. The submitted Form 15CB XML can be downloaded from View e-Filed Forms functionality post login.
Step 5	Taxpayer	Upload the zip file and submit using prescribed modes of e-verification. A Token Number is generated.
Step 6	Taxpayer	Login to e-Filing portal. Navigate to “e-File” menu and select View Form 15CA Offline/Bulk menu under View Income Tax Forms sub-menu.
Step 7	Taxpayer	The status of each individual XML under the Token Number will be shown as a Success or Failure once the processing is completed. In case an XML is a Success, an Acknowledgement Number is generated for each Form 15CA. Downloadable PDF of Form 15CA will be made available in view filed forms. A valid acknowledgement is also generated for submission of 15CA/CB.
Step 8	Taxpayer	In case of a Failure, no Acknowledgement Number will be generated and reasons for failure will be shown. Re-upload corrected XML file with corrected validations/data after considering reasons for failure. In this case the failed XML can be again zipped and uploaded. Taxpayers are also provided an export option to download the ARN number, processing status, XML file name to identify any failed XML’s.

Note: Only one Form 15CB Acknowledgement Receipt Number (ARN) can be used for filing one Form 15CA Part-C.

 

Steps (15CB Offline/Bulk Mode)

Appointment of CA

Step	Action by	Action Description
Step 1	Taxpayer	Login to e-Filing Portal. Navigate to “My Chartered Accountant(s)” functionality under Authorised Partners menu. Add CA by providing the Membership Number. Assign Form by selecting Form 15CB, Financial Year and click ‘Add’. This is a one-time appointment to be made every Financial Year.
Filing of Form 15CB
Step 2	CA	Login to e-Filing portal. Navigate to “e-File” menu and select File Form 15CB under File Forms sub-menu.
Step 3	CA	On selection of Form 15CB, User ID and PAN of CA is auto populated. Provide Filing Type, Submission Mode “Offline/Bulk” and Financial year.
Step 4	CA	Download the Form 15CB Offline Utility. Alternatively, the utility can also be downloaded from “Downloads” section of the Homepage under Income Tax Forms page.
Step 5	CA	Prepare individual XML’s for Remitter, Remittee and CA combination. A zip file containing one XML or multiple XML’s of different taxpayer can be uploaded in the system. There is no limit specified and taxpayer can submit any number of XML’s in a Single Zip File.
Step 6	CA	Login to e-filing Portal. Upload the zip file and submit under Digital Signature Certificate (DSC). A Token Number is generated.
Step 7	CA	Navigate to “e-File” menu and select View Form 15CB Offline/Bulk menu under View Income Tax Forms sub-menu.
Step 8	CA	The status of each individual XML under the Token Number will be shown as a Success or Failure once the processing is completed. In case an XML is a Success, an Acknowledgement Number is generated for each Form 15CB
Step 9	CA	In case of a Failure, no Acknowledgement Number will be generated and reasons for failure will be shown. Re-upload corrected XML file with corrected validations/data after considering reasons for failure. In this case the failed XML can be again zipped and uploaded. Downloadable PDF of Form 15CB in all successful cases will be made available in view filed forms. Taxpayers are also provided an export option to download the ARN number, processing status, XML file name to identify any failed XML’s and enable easy mapping of ARN number to a corresponding 15CA XML.

Note : Only one Form 15CB Acknowledgement Receipt Number (ARN) can be used for filing one Form 15CA Part-C.

Steps (15CA Part-C and 15CB Online Mode)

Appointment of CA

Step	Action by	Action Description
Step 1	Taxpayer	Login to e-Filing Portal. Navigate to “My Chartered Accountant(s)” functionality under Authorised Partners menu. Add CA by providing the Membership Number. Assign Form by selecting Form 15CB, Financial Year and click ‘Add’. This is a one-time appointment to be made every Financial Year
Filing of Form 15CB
Step 2	CA	Login to e-Filing portal. Navigate to “e-File” menu and select File Forms sub-menu.
Step 3	CA	Select Form 15CB appearing under File Forms sub-menu.
Step 4	CA	On selection of Form 15CB, User ID and PAN of CA is auto populated. Provide PAN/TAN of the assessee to whom certificate in Form 15CB is required to be issued, Filing Type, Submission Mode “Online” and Financial year.
Step 5	CA	Click Continue. Navigate to Form 15CB Instructions Screen. Prepare Form 15CB and generate Preview. Proceed to e-Verify and submit under Digital Signature Certificate (DSC) of CA. An Acknowledgement Number is generated for Form 15CB. Downloadable PDF of Form 15CB will be made available in view filed forms. No acknowledgement will be generated till taxpayer files a valid 15CA quoting the acknowledgement number of 15CB.
Filing of Form 15CA Part-C
Step 6	Taxpayer	Taxpayer Login to e-Filing portal. Navigate to “e-File” menu and select File Forms sub-menu.
Step 7	Taxpayer	Taxpayer Select Form 15CA appearing under File Forms sub-menu.
Step 8	Taxpayer	Taxpayer On selection of Form 15CA, PAN/TAN of Assessee is auto populated. Provide Financial Year, Filing Type and Submission Mode “Online”. Form 15CA with all Parts is displayed. Select Part-C radio button. Click Proceed. A pop up appears wherein taxpayer is expected to provide ARN of Form 15CB generated by CA.
Step 9	Taxpayer	Taxpayer Once Form 15CB ARN is validated, Part-C of Form 15CA is prefilled from Form 15CB.
Step 10	Taxpayer	Complete balance fields of Form 15CA Part-C and submit the Form using prescribed modes of e-verification. Downloadable PDF of Form 15CA will be made available in view filed forms. A valid acknowledgement is also generated for submission of 15CA/CB.

Note : Only one Form 15CB Acknowledgement Receipt Number (ARN) can be used for filing one Form 15CA Part-C.

Withdrawal functionality of 15CB forms at e-filing portal

Withdrawal facility has been enabled on the e-filing portal facilitating the Chartered Accountant to withdraw the 15CB forms by recording appropriate reasons, therein within 7 days of its filing.

Penalty of Rs. 1,00,000 for failure to furnish information or furnishing inaccurate information for each default of non-filing for Forms 15CA/15CB [Section 271-I]

As per section 195(6) of the Act, any person responsible for paying to a nonresident (not being a company) or to a foreign company, any sum (whether or not chargeable to tax), shall furnish the information relating to payment of such sum in Forms 15CA and 15CB.

As per section 271-I, if a person, who is required to furnish information under section 195(6), fails to furnish such information; or furnishes inaccurate information, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of one lakh rupees.

Remittance of Assets – Submission of Auditor’s certificate [RBI Circulars - RBI/2014-15/332

A.P. (DIR Series) Circular No. 43, Dated : 02.12.2014]

To

All Category - I Authorised Dealer Banks

Madam / Sir,

Subject : Remittance of Assets – Submission of Auditor’s certificate

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to the Foreign Exchange Management (Remittance of Assets) Regulations, 2000, notified vide Notification No. FEMA 13/2000-RB dated May 3, 2000, as amended from time to time, which required submission of certificates in the formats prescribed by Central Board of Direct Taxes, Ministry of Finance, Government of India specified in their circular No. 10/2002 dated October 9, 2002.

2. The instructions by Central Board of Direct Taxes (CBDT) regarding submission of certificates have undergone significant changes over the years. Also it is pertinent to note that CBDT vide its notification dated September 2, 2013 has revised the instructions regarding furnishing of tax declarations and submission of Form 15CA and 15 CB.

 

3. Accordingly, Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Remittance of Assets) (Amendment) Regulations, 2014 notified vide Notification No. FEMA. 324/2014-RB dated October 31, 2014, c.f. G.S.R. No. 803 (E) dated November 14, 2014, with respect to submitting certificates on tax payments.

4. In this connection, Authorised Dealer banks may refer to the instructions contained in A.P (DIR Series) Circular No. 151 dated June 30, 2014. The conditions stipulated therein shall be complied with while making remittances.

5. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.

6. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

 

Yours faithfully

Sd/-

(C D Srinivasan)

Chief General Manager

 

CBDT Circular No. 04/2009, Dated 29.06.2009

Subject : CBDT on Remittance to Non-Residents under Section 195

         Section 195 of the Income-tax Act, 1961 mandates deduction of income tax from payments made or credit given to non-residents at the rates in force.  The Reserve Bank of India has also mandated that except in the case of certain personal remittances which have been specifically exempted, no remittance shall be made to a non-resident unless a no objection certificate has been obtained from the Income Tax Department.  This was modified to allow such remittances without insisting on a no objection certificate from the Income Tax Department, if the person making the remittance furnishes an undertaking (addressed to the Assessing Officer) accompanied by a certificate from an Accountant in a specified format.  The certificate and undertaking are to be submitted (in duplicate) to the Reserve Bank of India / authorised dealers who in turn are required to forward a copy to the Assessing Officer concerned.   The purpose of the undertaking and the certificate is to collect taxes at the stage when the remittance is made as it may not be possible to recover the tax at a later stage from non-residents.

2.         There has been a substantial increase in foreign remittances, making the manual handling and tracking of certificates difficult.  To monitor and track transactions in a timely manner, section 195 was amended vide Finance Act, 2008 to allow CBDT to prescribe rules for electronic filing of the undertaking.  The format of the undertaking (Form 15CA) which is to be filed electronically and the format of the certificate of the Accountant (Form 15CB) have been notified vide Rule 37BB of the Income-tax Rules, 1962.

3.        The revised procedure for furnishing information regarding remittances being made to non-residents w.e.f. 1st July, 2009 is as follows:-

 

(i)      The person making the payment (remitter) will obtain a certificate from an accountant* (other than employee) in Form 15CB.

 

(ii)     The remitter will then access the website to electronically upload the remittance details to the Department in Form 15CA (undertaking).  The information to be furnished in Form 15CA is to be filled using the information contained in Form 15CB (certificate).

 

(iii)    The remitter will then take a print out of this filled up Form 15CA (which will bear an acknowledgement number generated by the system) and sign it. Form 15CA (undertaking) can be signed by the person authorised to sign the return of income of the remitter or a person so authorised by him in writing.

 

(iv)    The duly signed Form 15CA (undertaking) and Form 15CB (certificate), will be submitted in duplicate to the Reserve Bank of India / authorized dealer.  The Reserve Bank of India / authorized dealer will in turn forward a copy the certificate and undertaking to the Assessing Officer concerned.

 

(v)     A remitter who has obtained a certificate from the Assessing Officer regarding the rate at or amount on which the tax is to be deducted is not required to obtain a certificate from the Accountant in Form 15CB.  However, he is required to furnish information in Form 15CA (undertaking) and submit it along with a copy of the certificate from the Assessing Officer as per the procedure mentioned from S. No.(i) to (iv) above.

 

(vi)      A flow chart regarding filing of Form 15CA and Form 15CB is enclosed at Annexure -A.

4.         The Directorate General of Income-tax (Systems) (www.incometaxindia.gov.in) shall specify the procedures, formats and standards for running of the scheme as well as instructions for filling up Forms 15CA and 15CB. These forms shall be available for upload and printout at www.tin-nsdl.com.

5.         The Reserve Bank of India is being requested to circulate the revised procedure among all authorised dealers.

                                                                 Annexure - A

Flow chart of filing undertaking form under section 195 of Income Tax Act 1961

Remitter

§  Obtains certificate of Accountant (Form 15CB). This form is available at the website

www.tin-nsdl.com

§  RBI/Authorized dealer remits the Amount

§  Submits the signed paper undertaking form to the RBI/Authorized dealer along with certificate of an Accountant in duplicate.

§  Printout of the undertaking form (15CA) is signed

§  Electronically uploads the remittance details in Form 15CA

§  Takes printout of filled undertaking form (15CA) with system generated acknowledgement number.

§  A copy of undertaking (Form 15CA) & certificate of Accountant (Form 15CB) forwarded to Assessing Officer

§  Accesses the above website

      Assessee eligible for treaty benefits, not liable for TDS due to erroneous remittance details in Form 15CA/15CB

Surat ITAT upholds CIT(A) order allowing treaty benefits under India-US DTAA on payments made by diamond exporter in Hong Kong Bank Account of GIA Inc., USA; Holds, Assessee not liable for TDS since payments not taxable as FTS where make available clause not satisfied; Assessee-Firm, engaged in the export and business of cutting and polishing of diamond, file in Form No. 15CA /15CB furnishing the details of remittances made to GIA Hong Kong for diamonds testing and certification services; Revenue held that such remittance for diamond testing certification charges to be in the nature of FTS and held that in absence of DTAA between India and Hong Kong, Section 9(1)(vii) would apply; Revenue concluded that the Assessee was required to deduct tax and having failed in its obligation, Assessee was in default under Section 201; CIT(A) set aside the order under Section 201 and held that the Assessee was entitled to the benefits of India-USA DTAA because the Assessee made payment to GIA Inc., USA in its offshore bank account in Hong Kong and not to GIA Hong Kong and erroneously specified GIA Hong Kong Laboratory as beneficiary while filing Form 15CA/ 15CB; CIT(A) noted that Assessee furnished tax residency certificate and PE certificate showing GIA Inc. as US resident; CIT(A) further noted that the Assessee had also submitted sample invoices raised by GIA Inc., USA and that the payment received in offshore bank account in Hong Kong was as per the instructions of GIA Inc. USA duly substantiated by the certificate issued by HSBC Bank;  ITAT, thus, upholds CIT(A) order allowing treaty benefits under India-US DTAA and further observes that the grading report does not satisfy make available clause since the Assessee utilising the services will not be able to make use of technical knowledge by itself without recourse to GIA Inc., USA in future; Relies on Delhi ITAT bench ruling in case of GE Energy Management Services Inc. v. ADIT (2022) 135 taxmann.com 173 (ITAT Delhi) and on the Karnataka High Court ruling CIT v. De Beers India Minerals (P) Ltd. (2012) 21 taxmann.com 214 (Karn.) wherein it was held that if the technical knowledge or skills could not be applied at a later stage by the utiliser of the service on its own  then the services provided cannot be said to be made available to qualify as FTS; Thus, finds no infirmity or illegality in the order passed by CIT(A). [In favour of assessee] (Related Assessment year : 2015-16) – [ITO (International Taxation), Surat v. Star Rays, Surat - Date of Judgement : 28.02.2022 (ITAT Surat)]