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Introduction of Form 15CA & 15CB

August 17, 2017
  • Finance Bill 2008 introduced the process of e-filing of information pertaining to payment to non-resident via certificate and undertaking.

 

  • Earlier, the person making a remittance to NR was required to furnish certificate in a specified format circulated by RBI.

 

  • Basic purpose was to collect taxes at a stage when the remittance is made as it may not be possible to collect tax from the NR at a later stage.

 

  • There was a substantial increase in foreign remittance making the manual handling and specially tracking of such payments difficult.

 

  • Thus to monitor and track transactions in an efficient manner, it was proposed to introduce e-filing of information in the certificates and undertaking.

 

  • New formats - Form 15CA/15CB prescribed vide amendment in Rule 37BB through Notification No. 67 dated 02/09/2013 w.e.f. 1st October, 2013.

 

  • Payments including interest or salary or any other sum now covered within the ambit of Form 15CA/15CB.

 

  • Form 15CA is to be furnished electronically on www.incometaxindiaefiling.gov.in after client login.

 

  • A printout of the form with system generated acknowledgement should accompany request for remittance along with form A-2/ 15CB (in duplicate).

 

  • The income-tax authority has power to require AD to furnish signed printouts for the purpose of any proceedings under the act.

 

 

Amendment to Rule 37 BB (Form 15 CA)

Part A: - For remittances not exceeding Rs. 50,000 per transaction and the aggregate of such payments during the financial year not exceeding                Rs. 2,50,000/-. Form 15CB is not mandatory.

Issues

 

  1. What if subsequently total remittances exceeds INR 2,50,000 during the year?

 

  1. Limit of INR 50,000 & INR 2,50,000, whether is per remitter or per beneficiary or for both ?

 

Part B: - To be filled in for remittance other than specified in Part A & to be accompanied with Form 15CB

 

Exemption from filing Form15CA/15CB : - Amount not chargeable to tax. Onus is on the assessee. This is in contradiction to Sec 195(6) substituted by Finance Act, 2015 w.e.f.1.06.2015. Clarification/ New rules necessary 28 categories of remittance covered by the specified list – Explanation (2) to Rule 37BB.

 

 

Examples

 

Reimbursement of Expenses – No TDS

 

No tax has been deducted from Reimbursement of ________ as the said payment is reimbursement of ________ without any mark-up and is supported by documentary evidences and does not constitute income in the hands of the recipient beneficiary.

 

Subscription Charges – No TDS – Singapore DTAA

 

The payment of Subscription Charges for ________, is in the nature of “Business Profits” under Article 7 of the DTAA between India - Singapore dated 24/01/1994.

 

The beneficiary has represented that they do not have a Permanent Establishment in India as defined in Article 5 of India-Singapore DTAA, and therefore said remittance is not taxable in India and accordingly, no tax is deductible from the remittance.

 

 

 

 

 

Export Commission

 

  • No part of the service was rendered by the Non resident agent within the taxable territory of India as they acted as selling agents outside India.

 

  • Since no operations are carried out in the taxable territory of India, it follows that the income accruing or arising abroad through or from any business connection in India cannot be deemed to accrue or arise in India.

 

  • Therefore no income is deemed to accrue in India under provisions of the Income-tax Act,1961

 

Documentation

 

 

  1. Obtain supporting documents to ascertain/ authenticate:-

 

•Legal status of the payee.

•Details of the beneficial ownership, if other than the recipient.

•Nature of income & its categorization e.g. Royalty, FTS, Business Income, etc.

•Residential Status – Both under the Act & DTAA.

•Existence of Business Connection (BC)/ Permanent Establishment (PE).

•Taxability & rate of withholding – Both under the Act & DTAA.

•Exchange rate – as provided under rules 115/115A.

 

2) Judicial precedents supporting a particular position (including in own case).

 

3) Copy of Invoice, Agreement, if any, Correspondence or any other document which is helpful in determining true character of the remittance.

 

4) No Business Connection/Permanent Establishment declaration.

 

5) Tax Residency Certificate (TRC) – if DTAA benefits are claimed.

 

6) Declaration that the non-resident taxpayer is the beneficial owner of income.

 

7) Extracts of accounting entry showing actual deduction of tax.

 

8) Copy of challan of payment of tax. 

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