Amended Forms 15CA and 15CB related to remittances to be made to non-residents -

Amended Forms 15CA and 15CB related to remittances to be made to non-residents:

The Central Board of Direct Taxes of India has recently amended Forms 15CA and 15CB related to remittances to be made to non-residents. The new rules come into effect from 1 October 2013 and could limit the compliance burden and cost in certain cases. However, at the same time, these amendments clearly aim at obtaining more extensive information from the payer.

Existing provisions of section 195(6) of the Income Tax Act, 1961 (the Act) mandate that for any payment to a non-resident chargeable to tax in India, the remitter is required to furnish Form 15CA along with the certificate from a Chartered Accountant in Form 15CB. However, Authorized Dealers have been insisting for Forms 15CB and 15CA for almost all types of payments, whether chargeable to tax or not.

Recently, the Central Board of Direct Taxes has notified new rules amending the existing provisions of Rule 37BB of the Income Tax Rules, 1962 for furnishing information in Forms 15CA and 15CB. According to the notification, Form 15CB is to be furnished in specific cases only, depending on the quantum of payment and the nature of remittance made to the non-resident.

The amended rules would be effective from 1 October 2013.

The information to be furnished in Form 15CA has been categorised as follows:

Part A

If the remittance does not exceed INR 50,000 and the aggregate of such amounts does not exceed INR 250,000 in a financial year, then information in Part A is required to be furnished.

Part B

If the remittance is not chargeable to tax in India and falls under the specified list of payments, then information in Part B would be required. The specified list inter alia includes the following:
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 towards import settlement of invoice Remittance towards business travel  Travel for medical treatment Travel for education (including fees, hostel expenses, etc.) Payments for life insurance premiums Payments for maintenance of offices abroad.

Part C

For all other remittances not covered in Part A and Part B, information specified in Part C is required to be furnished. Primarily, Part C of Form 15CA is similar to the earlier Form 15CA with the following key additions:

Independent of the applicability of the tax treaty, the details of taxability of remittance under the Act including the relevant section,basis for determining the taxability and tax liability are to be certified
The availability or otherwise of the tax residency certificate has to be mentioned  Details of remittance in the nature of capital gains are to be given