09/06/2015

Form 15CA / Form 15CB required in case of Import Payments

Section 195 (6) has been amended in the Finance Act 2015 and states that Form 15CA / CB needs to be necessarily filed for all remittances, whether chargeable to tax in India or not. All the assessees requested for submission of Form 15CA/CB for all outward cross border remittances including those against imports with effect from 1st June 2015.
In view of the impending timeline, would request to keep your records updated and arrange form 15CA/AB for all transactions from 1st June 2015. Relevant extracts from the act are shared below for ready reference.  
Currently, section 195(6) of the Act provides that any person responsible for making payments to a non-resident of any sum chargeable under the IT Act will provide such information as may be prescribed. Pursuant to such provision form 15CA and 15CB are required to be furnished by payers. 
Such reporting requirements are now proposed to be extended even in respect of payments, which in the opinion of the payer, are not chargeable to tax under the IT Act. Further, currently there is no penalty prescribed for non-furnishing of information or furnishing of incorrect information under section 195(6) of the IT Act (i.e. form 15CA and form 15CB). It is now proposed to provide a penalty of one lakh rupees in case of non-furnishing of information or furnishing of incorrect information under section 195(6) (i.e. form 15CA and form 15CB) of the Act. Such amendments are proposed to take effect from June 1, 2015

Read Also: Form 15CB in Excel Format


Further, please obtain declaration in the  following format on foreign beneficiary’s letter head or with any variation as may be agreed with foreign seller:

(On Remitter's Letter head)

TO WHOM IT MAY CONCERN
This is to confirm the following:
1.       That we are a Company / LLC / Partnership Firm registered at …………………. (country name) and are a tax resident of  …………………… (Country Name) . Our principal place of business is at  ……………………………… (country name) . A copy of our incorporation certificate is attached herewith (or any other proof of being foreign resident ,if shared by them)

2.       We are not having any Permanent Establishment or liasion office in India or any business connection in India.

3.       That the payment of …………………… $ being remitted to us against our invoice no …………………………… dated …………………. is towards sale of ……………………….. and as such is in the nature of business income taxable in the country of our residence i.e. ……………………. (country name) .  The said payment is not in the nature of fees for technical services.

4.       In view of the aforesaid, no income accrues or arise in India and payment against our invoice be released without deduction of withholding taxes.

For XYZ

Authorised Signatory



8 comments:

  1. Will it also be required to remit fees to US universities for students going abroad for studies?

    ReplyDelete
  2. Yes, Now Form 15CA / CB required for every remittance make outside India. In this case following treaty is applicable

    UK

    ARTICLE 21
    STUDENTS AND TRAINEES
    1. An individual who is a resident of a Contracting State or was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State for the primary purpose of :
    (a) studying at a University or other accredited or recognised educational institution in that other Contracting State ; or
    (b) securing training required to qualify him to practice a profession or a professional speciality ; or
    (c) studying or doing research as a recipient of a grant, allowance, or award from a governmental, religious, charitable, scientific, literary or educational organisation;
    shall not be subject to tax by that other Contracting State in respect of :
    (i) gifts from abroad for the purposes of his maintenance, education, study, research or training ;
    (ii) the grant, allowance or award ; and
    (iii) income, from personal services rendered in that other Contracting State (other than any rendered by an articled clerk or other person undergoing professional training to the person or partnership to whom he is articled or who is providing the training) not exceeding the sum of 750 pounds sterling or its equivalent in Indian currency during any fiscal year.
    2. The exemptions under paragraph 1 of this Article shall only extend for such period of time as may be reasonably or customarily required for the purpose of the visit, but in no event shall any individual have the benefit of paragraph 1 of this Article for more than 5 years.
    3. An individual who is a resident of a Contracting State or was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State for a period not exceeding 12 months as an employee of, or under contract with, a resident of the first-mentioned Contracting State, for the primary purpose of :
    (a) acquiring technical, professional or business experience from a person other than that resident of the first-mentioned Contracting State ; or
    (b) studying at a University or other accredited or recognised institution in that other Contracting State;
    shall not be subject to tax by that other Contracting State on his income from personal services performed in the other Contracting State for that period in an amount not exceeding 1,500 pounds sterling or its equivalent in Indian currency.
    4. An individual who is a resident of a Contracting State or was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State for a period not exceeding 12 months as a participant in a programme sponsored by the Government of the other Contracting State, for the primary purpose of training, research or study, shall not be subject to tax by that other Contracting State in respect of payments made by the Government of the first-mentioned Contracting State for the purposes of his maintenance, training, research, or study.

    ReplyDelete
  3. Please let me know if these Forms are required in case of gifts given to eligible relatives residing at California. Please note that as of now remittance of this nature is exempted as per Rule 37 BB.

    ReplyDelete
    Replies
    1. As per rule 33b you need to file Form 15CA/CB for payment made above Rs. 50000, but now as per recent finance amendment, you need to file form 15ca on all foreign remittance/ payment.

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    2. but bank is not accepting only 15CA. they are asking for 15CB also

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  4. Thank you for the article. But please let me know if we are making the payment for import of goods on CIF basis, then whether there is a need to TDS?

    ReplyDelete
    Replies
    1. There is too much complications on tds deducted on cif basis import payment. But If you have TRC or beneficiary have no PE in India then there is no criteria to deduct tds.

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    2. If you have TRC "AND" beneficiary has no PE in India then there is no criteria to deduct TDS in case of CIF imports. In my opinion, TRC is a must for claiming treaty benefits.

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