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October 4, 2013

All About Form 15CB

As per Section 195 of the Income Tax Act 1961, every person liable for making a payment to non-residents shall deduct TDS from the payments made or credits given to non-residents at the rates in force.  The Reserve Bank of India also mandates that except in cases of certain personal remittances which have been specifically exempted, no remittance should be made to a non-resident without furnishing an undertaking in Form 15CA accompanied by a certificate from an Accountant in Form 15CB
The purpose of this undertaking and certificate is to collect taxes at the stage when the remittance is madeas it may not be possible to recover the tax at a later stage from the non-residents. The format of the undertaking in Form 15CA which is to be filed electronically and the format of the certificate of the Accountant in Form 15CB have been notified vide Rule 37BB of the Income Tax Rules 1962
Procedure for furnishing Form 15CA
The Revised Procedure for furnishing information regarding remittances being made to non-residents wef 1stJuly 2009 is as follows:-
1.    The Person making the Payment (Remitter) shall obtain a certificate from an accountant(other than employee) in Form 15CB
2.    The Remitter shall then electronically upload the undertaking containing the remittance details to the department in Form 15CA on the following website
3.    The Information furnished in the Form 15CA is to be filed using the information contained in Form 15CB
4.    The Remitter shall take a print out of this filled up Form 15CA (which will bear an acknowledgement number generated by the system) and sign it. The Form 15CA shall be signed by the person  authorised to sign the return of income of the remitter or the person so authorised by him in writing
5.    The duly signed form Form 15CA and Form 15CB shall be submitted in duplicate to the Reserve Bank of India/ Authorised Dealer. The Reserve Bank of India/ Authorised Dealer will then forward a copy of the Certificate and undertaking to the assessing officer concerned
6.    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 and submit it along with a copy of the certificate from the Assessing Officer

Rule 37BB
Furnishing of information by the person responsible for making any payment including any interest or salary or any other sum chargeable to tax, to a non-resident, not being a company, or to a foreign company—(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or salary or any other sum chargeable to tax 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 does not exceed fifty thousand rupees and the aggregate of such payments made during the financial year does not exceed two lakh fifty thousand rupees;
(ii)        the information in Part B of Form No.15CA for payments other than the payments referred in clause (i) after obtaining—
(a)   a certificate in Form No. 15CB from an accountant as defined in the Explanation below sub-section (2) of section 288; or
(b)   a certificate from the Assessing Officer under section 197; or
(c)  an order from the Assessing Officer under sub-section (2) or sub-section (3) of section 195.

(2) The information in Form No. 15CA shall be furnished by the person electronically to the website designated by the Income-tax Department and thereafter signed printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment.

(3) An income-tax authority may require the authorised dealer to furnish the signed printout referred to in sub-rule (2) for the purposes of any proceedings under the Act.

(4) The Director General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture, transmission of data and shall also be responsible for the day-to-day administration in relation to furnishing the information in the manner specified.

Explanation 1.— 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).

Explanation 2.—For the removal of doubts, it is hereby clarified that for payments of the nature specified in column (3) of the specified list below, no information is required to be furnished under sub-rule (1).

Sl. No.
Purpose code as per RBI
Nature of payment
Indian investment abroad -in equity capital (shares)
Indian investment abroad -in debt securities
Indian investment abroad -in branches and wholly owned subsidiaries
Indian investment abroad -in subsidiaries and associates
Indian investment abroad -in real estate
Loans extended to Non-Residents
Payment for operating expenses of Indian shipping companies operating abroad.
Operating expenses of Indian Airlines companies operating abroad
Booking of passages abroad – Airlines companies
Remittance towards business travel.
Travel under basic travel quota (BTQ)
Travel for pilgrimage
Travel for medical treatment
Travel for education (including fees, hostel expenses etc.)
Postal services
Construction of projects abroad by Indian companies including import of goods at
project site
Freight insurance – relating to import and export of goods
Payments for maintenance of offices abroad
Maintenance of Indian embassies abroad
Remittances by foreign embassies in India
Remittance by non-residents towards family maintenance and savings
Remittance towards personal gifts and donations
Remittance towards donations to religious and charitable institutions abroad
Remittance towards grants and donations to other governments and charitable institutions established by the governments.
Contributions or donations by the Government to international institutions
Remittance towards payment or refund of taxes.
Refunds or rebates or reduction in invoice value on account of exports
Payments by residents for international bidding”.

If there is already a certificate u/s 197 obtained by payee from ITO, you do not have to issue 15CB as that certificate itself is the basis of filling Form 15CA.

Reason why government has put responsibility on CA is in addition to tax rates, it acts as a check for AMLA as there is an audit trail for a transaction. They do not wish that proceeds of crime move freely as trade remittances. Therefore they involve CA with assumption that CA would take responsibility only for a party known to him and not for just anyone who walks to his office for purpose of such a certificate.
CA must
Ø  Maintain KYC documents of the client for which the certificate has been issued.
Ø  Obtain self-declaration invariably from the remitter regarding the purpose remittance and that transaction in respect of which the payment is being made, is not directly or indirectly connected with the activities of its PE in India.
Ø  Read the contract under which remittance is being made to ensure that the payment is not taxable in India.
Ø  Check the payee's invoice and see what he is charging for.

Ascertain the correct classification of income: To do so, following details & documents are required-
a) Contract with the payee and other supporting documents, correspondence/emails, broachers etc.
b) Invoices and supporting vouchers.
c) In case of Reimbursement of Expenses, supporting invoices /voucher and other documentary proof
d) Any other document which may help in determining the nature of payment/ quantum of income

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