• Oct
  • 24
  • 2013

Applicability of Form 15CB for payment towards Import Purchases?

International Tax – Foreign Remittance Certificate 15CB on payment for Import Purchases

Import Purchases constitute a major part of Indian Economy and payments to overseas supplier are a regular phenomenon in International Banking and remittances are being easily made in the Globalised Banking System. Normally Banks did not demand any CA certificate for making remittances for Import Purchases of goods, however with the recent change in Income tax Rules vide Notification No. 67 of 2013, dated 2 September 2013, with regard to Remittances Banks started insisting on CA Certificate.

 Foreign Exchange Management Act prescribes for a No Objection Certificate from Income tax Authorities before making any foreign remittance. However considering the voluminous transactions and limited resources with the Income tax Department an alternate facility is provided wherein a Chartered Accountant’s Certificate (i.e. Form 15CB) along with Assessee’s undertaking (Form 15CA) submitted to Authorised dealer shall substitute NOC from Department.

CA certificate in Form 15CB is determination of tax, if any on subject income. Payments made against Import Purchases constitutes Business Income of the Overseas Supplier and is taxable in India only if it is attributable to a Business connection/Permanent Establishment in India as per Section 9(1)(i) and respective Double Tax Avoidance Agreement. It is settled law that in absence of any income chargeable to tax in India there cannot be any application of Section 195 (See GE India’s case in 327 ITR 456 SC)

To examine the taxability of income accruing on such overseas payments in view of above principles, requirement of such CA certificate has always been there.

It has been seen that since payment against Import Purchase of goods are not taxable in India, so neither Banks nor Authorised Dealers insisted for such certificate and confusion prevailed on requirement of CA certificate for Import payments. To clarify this position RBI had issued Circular No. 3 on 19.07.2007 providing that CA certificate in respect of TDS is required even in respect of remittances which are in nature of trade transactions such as import payments. Even after this Circular there were very few Banks insisting on such certificate.

Recently CBDT has revised the Form 15CB and Form 15CA with effect from October 1, 2013 and also exempted certain class of payments from requirement of obtaining such Certificate. Notably Trade payments including Import Purchases do not find place in this list which has stirred the Banks to demand for CA certificate in New Form 15CB.

With time, awareness on this issue will increase and there will be overwhelming demand for CA Certificate on Import purchases which will significantly increase opportunity for CA’s practicing and having knowledge of International tax.

Authors :-

CA.Pankaj Shah

pankajgshah@gmail.com

CA Priyanka JainCA Priyanka R. Jain

priyanka.rj@gmail.com


13 Responses to “Applicability of Form 15CB for payment towards Import Purchases?”

  1. harish chugh says:

    reply of CA. Jigishu Bheda, is convincing.But still some banks such as PNB and Canara Bank are insisting for Form 15CA and 15CB for payment of import invoices.
    Is there any clarification received from Income Tax authorities as not to file such forms for import payments so that banks can be convinced.
    rgds

  2. sangram says:

    I want to purchase a machinery from Taiwan (china). For remittance of payment to supplier, bank required 15CB certificate attested by Chartered Accountant. when i go to my CA he said that ” i have to pay 10% of remittance amount as Tax (Tds). Is that true to pay before purchase of machinery .Can u suggest. please reply….
    i need machinery for my new setup of business….

  3. Rajeev Agrawal says:

    Since the notification no. 67 does not contain the remittance of import of goods I feel now the form 15CB is required from CA for remittance ag. import of goods , what are the points to be taken into account before issuing the certificate.

  4. GSingh says:

    I AM AN IMPORTER (having a firm) of software (non-packaged and getting the license/code through email— software is mostly downloaded by customer from product’s website) AND MAKING PAYMENT AGAINST FINAL INVOICE TO a Software OVERSEAS Distributor(please note – my import is not regular and just started happening once or twice a year)ON DUE DATE by DIRECT PAYMENT.

    This is just for the first time that payment exceeded Rs. 2 lac fifty thousand mark.

    I am a regular tax payer and charge SERVICE TAX and VAT on the imported software and deposit it with the concerned departments.

    DOES IT REQ 15CA/15CB to be furnised or TDS to be deducted.

  5. ATUL KIKANI says:

    IAM IMPORTER AND MAKING ADVANCE PAYMENT AGAINST PROFORMA AND CONTRACT AND ALSO PAYING BALANCE PAYMENT TO OVERSEALS BYUERS ON DUE DATE BY LC OR DIRECT PAYMENT
    DOES IT REQ 15CA

  6. Sagar Mehta says:

    Dear sir Jigishu Bheda

    without knowing about permanent establishment or Business Connection, hw you will be able to know that, whether income chargeable to tax in india or not.

    and for that purpose 15CB required in all transaction including imports.

    And also note sir department has excluded the import payment in Sept 13 circular which was mentioned in Aug 13 circular, because if permanent establisment or Business Connection condition fulfill then income is chargeable in india and TDS will be applicable.

  7. shivanand says:

    Sir/madam -Thanks for sharing

  8. AMAR V M says:

    In my opinion, the import purchases will fall under any one of the below categories listed in the Specified List:

    7.S0101 Advance payment against Import
    8.S0102 Payment towards imports – Settelment of Invoice.

    Pls let us know if our understanding is correct.

    Warm regards,

  9. Manish says:

    The import payments are covered under entry 0102 no need to have certificate 15CB

  10. Sunil says:

    I think import purchase payments are very much covered in the specified list in the notification under S0101 and S0202 for advance payment against imports and payment towards imports – settlement of invoice respectively.

  11. BALBIL SINGH says:

    IT IS NECESSARY TO GET TRC

    IF TRC NOT AVAILABLE WHAT OPTIONS ARE AVAILABLE TO ISSUE 15CB

  12. CA. Jigishu Bheda says:

    It is ridiculous that CAs like you misguide people without proper reading the notification & sites like taxguru also publish this without varifying it’s santity.

    You MUST HAVE OBSERVED earlier form 15CA/CB were revised in Aug-13 which were superceded by notification 67 of Sep-13. One of the substantial change in new notification is CHANGE IN SCOPE OF RULE 37BB, where starting line of the rule itself were changed to “INCOME CHARGEBLE TO TAX IN INDIA” which itself means that when income is not chargeable to tax in india, 15CA & 15CB are not required to be filled.

    SPECIFIC EXCLUSION LIST of payments mentioned in that notification are mainly of FUND TRANSFER nature, whereas, income nature transaction are excluded from rule itself by changing scope of the rule….

    Banks are insisting because they have binding RBI circular, however, the same is not enforceable by tax authorities…

  13. anubhav jain says:

    Is there any threshold limit for furnishing 15 CA , CB .

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