Under the provisions
of section 195(6) of the Income-tax Act, 1961 (“Act”), any person responsible
for making a remittance to a non-resident (“NR”) or a foreign company (“F Co”)
is required to furnish the specified information electronically (in Form 15CA)
to the Income-tax department and thereafter, submit a signed copy to the
authorized dealer prior to making the remittance.
The Central Board of
Direct Taxes (“CBDT”) has issued a notification[1] amending the Income-tax Rules, 1962
(“Rules”)[2] on August 5, 2013
related to the format and disclosures to be made in the Form 15CA. The
amendment will come into force from October 1, 2013.
Key amendments
made
As per the amended
Rule, the key changes in the prescribed forms, ie, Forms 15CA and 15CB are as
follows:
A.
New Form 15CA – Part
A, B and C
·
The old
Form 15CA (which was primarily divided into two parts ie A and B) has now been
replaced by a new Form 15CA which is segregated into three parts - Part A, Part
B and Part C, and the payer is required to furnish details in each part (as
applicable) depending upon the remittance made:
-
The
information in Part A has to be furnished where the remittance made to an NR or
F Co. does not exceed INR 50,000 per transaction and the aggregate of such
remittances made during the financial year does not exceed INR 250,000.
-
The
information in Part B has to be furnished where the remittance is not chargeable
to tax and covered in the specified list as provided in the notification. Click here for the
notification.
-
The
information in Part C has to be furnished where the remittances are other than
those specified in Part A and B. Such information has to be furnished after
obtaining a certificate from a Chartered Accountant (“CA”) in Form 15CB, or a
certificate from the Assessing Officer (“AO”) under section 197 of the Act (ie
the AO after being satisfied that income is liable to lower or nil deduction of
tax at source, grants a certificate to this effect), or an order from the AO
under section 195(2) or 195(3) of the Act (ie, under section 195(2), the AO
determines the portion of salary payment to a NR on which tax is required to be
withheld and issues an order to this effect, and under section 195(3), the AO
issues certificate stating nil withholding of tax on certain incomes received on
which tax is otherwise required to be withheld).
·
The
disclosures under each part in addition to the particulars mentioned under the
old form are listed below for ready reference:
-
Under
Part A, in addition to the details of remitter and remittee as stated under Part
A of the old form, disclosures regarding remittance made and tax deducted at
source (“TDS”) have to be also furnished. The details required to be disclosed
about the accountant as was required earlier has now been done away with in the
new form. In case tax is to be withheld on the remittance the Permanent Account
Number (“PAN”) of the remittee is also required to be furnished mandatorily,
else the provisions of section 206AA of the Act would apply requiring
withholding to be made at a higher rate. Also, if the remittance is not
chargeable to tax, the reasons need to be furnished.
-
Under
Part B, in addition to the details of the remiiter and remittee, disclosures
regarding nature of remittance specifying the relevant code from the specified
list given in the explanation to the amended Rule and country of residence of
the remittee (if available) has to be furnished. Most of the items covered in
the explanation are those that would normally be liable to tax in India and it
appears that the intention of specifically including such remittances is to
provide the Revenue with an ability to track and monitor such payments as well.
Some of the payments covered are:
-
Indian
investment abroad in equity/ debt/ branches of wholly owned subsidiaries and
associates/ real estate
-
Loans
extended to NRs’
-
Payment
for operating expenses and freight on imports, in case of shipping and airline
companies
-
Remittance towards
travel, including business travel, pilgrimage, medical treatment,
education
-
Payments
for life premium, freight insurance and other general
insurance
-
Remittances towards
personal gifts, donations, by NRs’ towards family maintenance and savings,
payment or refund of taxes
-
Refunds
or rebates or reduction in invoice value on account of
exports
-
Payments
by residents for international bidding
Another, noteworthy
aspect is that the other details required under Part B of the old form are now
mentioned under Part C of the new form.
-
Part C is
divided into two sections, ie, A and B, akin to Part A and Part B of the old
form. Under Part A, in addition to the details of the remitter, remittee and
accountant, the disclosure regarding obtaining certificate from AO has to be
furnished. The details of the remittance made have been done away with in the
new form. Further, it specifically prescribes mandatory application of
provisions of section 206AA of the Act, if PAN of the remittee is not available.
Under Part B, in
addition to the details required in Part B of the old form, certain disclosures
have been specified in respect to the nature of remittance, viz, liability to
tax under the Act, under the relevant Double Taxation Avoidance Agreement
(“DTAA”), details of tax residency certificate (“TRC”) (if relief is claimed
under DTAA), and remittance on account of capital gains bifurcated into
short-term, long-term and the basis of arriving at taxable income.
·
The form
would have to be filed electronically by the payer on the official website of
the Income-tax department and thereafter a printout of the form needs to be
submitted to the authorized dealer as specified under Foreign Exchange
Management Act, 1999. All this needs to be complied with before making the
remittance.
B.
New Form
15CB
·
Form 15CB
is not required to be furnished in case the remittance is covered under Part A
or Part B of the new Form 15CA.
·
In
addition to the particulars certified by a CA in the old form, following
particulars are now required to be certified:
-
Taxability of the
remittance under the Act (without considering the relief under
DTAA);
-
Particulars with
respect to obtaining TRC, where relief under DTAA has been
claimed;
-
Remittance on account
of capital gains has been bifurcated into short-term, long-term and the basis of
arriving at taxable income.
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