Revised Procedure for Remittances to non-residents u/s. 195 of the Income Tax Act w.e.f. 1st July, 2009

Background

1. Presently remittances to non-residents are permitted if the person making the remittance furnishes an undertaking (addressed to the Assessing Officer) to the Reserve Bank of India/Authorized Dealer. This undertaking should be accompanied by a certificate from a Chartered Accountant.
2. The Finance Act 2008 had inserted a new provision whereby the person making payment to a non-resident was required to furnish information relating to the said payment in a prescribed format.
3. The new format (Forms) was notified by the Central Board of Direct Taxes (CBDT) vide Notification No. 30/2009 dated 25 March 2009 and effective from 1 July 2009.
4. The CBDT has now issued a circular no.4/2009 dated 29 June 2009 laying down the revised procedure for furnishing the information

Revised procedure

• The remitter has to obtain a certificate from a Chartered Accountant in Form No.15CB. The form is available for download from the website www.tin-nsdl.com.
• Thereafter, the remitter has to access the above website to electronically upload the remittance details in Form No. 15CA (undertaking). The information in Form No. 15CA (undertaking) is to be filled using the information contained in Form No.15CB (certificate).
• The remitter then needs to take a print of the Form No. 15CA (which will bear an acknowledgement number generated by the system) and sign it. This form can be signed by the person authorized to sign the return of income of the remitter or a person authorized by him in writing.
• The dully signed Form 15CA (undertaking) and Form 15CB (certificate) needs to be submitted in duplicate to the Reserve Bank of India (RBI)/Authorized dealer who in turn will forward a copy to the Assessing Officer concerned.
• 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 (undertaking) and submit it along with a  copy of the certificate from the Assessing Officer as per the procedure mentioned above.
• Information regarding the procedures, formats and standards for running of the scheme as well as instructions for filling up the forms is available at www.tin-nsdl.com. Further, the Form Nos.15CA and 15CB shall be available for upload and printout from this website.

The revised procedure is being depicted below:

Step 1:- Remitter obtains certificate of Accountant (Form 15CB)  [Form available at www.tin-nsdl.com]

Step 2:- Remitter accesses the above website and electronically uploads the remittance details in Form 15CA

Step 3:- Remitter takes a print of the filled undertaking (Form 15CA) with system generated acknowledgement number and signs it

Step 4:- The duly signed paper Form 15CA (undertaking) and Form 15CB (certificate) is then submitted in duplicate to the RBI / authorized dealer

Step 5:- RBI / authorized dealer remits the amount

Step 6:- A copy of undertaking (Form15CA) & certificate of Accountant (Form15CB) is forwarded by RBI / Authorized Dealer to the concerned Assessing Officer

Key Points

a) Electronic uploading of the Undertaking in Form No.15CA

b) System generated acknowledgement number to be quoted while filing the undertaking with the RBI/AD

c) Persons other than those authorized to sign the return of income can sign the undertaking only if authorized in writing by such person.

____________________________________________________________________

Circular  No.  04/2009,New Delhi, the 29^th June, 2009, F.No.142/19/2007-TPL

Government of India, Ministry of Finance, Department of Revenue, (Central Board of Direct Taxes)

Subject:-  Remittances  to  non-residents  under  section  195  of  the  Income-tax  Act  matters connected thereto –  reg.

1. Section 195 of the Income-tax Act, 1961 mandates deduction of income tax from payments made or credit given to non-residents at the rates in force.  The Reserve Bank of India has also mandated that except in the case of certain personal remittances which have been  specifically  exempted,  no  remittance  shall  be  made  to  a  non-resident  unless  a  no objection  certificate  has  been  obtained  from  the  Income  Tax  Department.    This  was modified to allow such remittances without insisting on a no objection certificate from the Income  Tax  Department,  if  the  person  making  the  remittance  furnishes  an  undertaking (addressed to the Assessing Officer) accompanied by a certificate from an Accountant in a specified format.  The certificate and undertaking are to be submitted (in duplicate) to the Reserve Bank of India / authorised dealers who in turn are required to forward a copy to the Assessing  Officer  concerned.      The  purpose  of  the  undertaking  and  the  certificate  is  to collect taxes at the stage when the remittance is made as it may not be possible to recover the tax at a later stage from non-residents.

2. There has been a substantial increase in foreign remittances, making the manual handling and tracking of certificates difficult.  To monitor and track transactions in a timely manner,  section  195  was  amended  vide  Finance  Act,  2008  to  allow  CBDT  to  prescribe rules for electronic filing of the undertaking.   The format of the undertaking (Form 15CA) which is to be filed electronically and the format of the certificate of the Accountant (Form 15CB) have been notified vide Rule 37BB of the Income-tax Rules, 1962.

3. The  revised  procedure  for  furnishing  information  regarding  remittances  being made to non-residents w.e.f. 1^st July, 2009 is as follows:-

i. The  person  making  the  payment  (remitter)  will  obtain  a  certificate  from  an accountant* (other than employee) in Form 15CB.

ii) The remitter will then access the website to electronically upload the remittance details to the Department in Form 15CA (undertaking).  The information to too be furnished in Form 15CA is to be filled using the information contained in Form 15CB (certificate).

(iii)        The  remitter  will  then  take  a  print  out  of  this  filled  up  Form  15CA  (which  will bear  an  acknowledgement  number  generated  by  the  system)  and  sign  it.  Form 15CA (undertaking) can be signed by the person authorised to sign the return of income of the remitter or a person so authorised by him in writing.

(iv) The duly signed Form 15CA (undertaking) and Form 15CB (certificate), will be submitted in duplicate to the Reserve Bank of India / authorized dealer.  The Reserve Bank of  India  / authorized  dealer  will in  turn forward a  copy  the  certificate and  undertaking  to the Assessing Officer concerned.

(v) 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  (undertaking)  and  submit  it  along  with  a  copy  of  the  certificate  from  the Assessing Officer as per the procedure mentioned from Sl.No.(i) to (iv) above.

(vi) A  flow  chart  regarding  filing  of  Form  15CA  and  Form  15CB  is  enclosed  at Annexure -A.

*  An  “accountant”  means  a  chartered accountant  within the  meaning  of  the  Chartered Accountants  Act,1949 (38 of 1949), and includes, in relation to any State, any person who by virtue of the provisions of sub-section  (2)  of  section 226 of  the  Companies  Act,  1956 (1 of  1956),  is  entitled to  be  appointed to act  as  an auditor of companies registered in that State.

4. The  Directorate  General  of  Income-tax  (Systems)  (www.incometaxindia.gov.in) shall  specify  the  procedures,  formats  and  standards  for  running  of  the  scheme  as  well  as instructions  for  filling  up  Forms  15CA  and  15CB.  These  forms  shall  be  available  for upload and printout at www.tin-nsdl.com.

5.The  Reserve  Bank  of  India  is  being  requested to  circulate  the  revised  procedure among all authorised dealers.

(Anand Kumar Kedia)

Secretary,

Central Board of Direct Taxes.

Annexure – A

Flow chart of filing undertaking form u/s 195 of I T Act 1961

Remitter 

Step-1 Obtains certificate of Accountant (Form 15CB). This form is available at the website www.tin-nsdl.com

Step-2 Accesses  the above website

Step-3 Electronically uploads the remittance details in Form 15CA

Step-4 Takes printout of filled undertaking form (15CA) with system generated acknowledgement number.

Step-5 Printout of the undertaking form (15CA) is signed.

Step-6 Submits     the       signed     paper undertaking       form       to       the RBI/Authorized  dealer  along  with certificate  of  an  Accountant  in duplicate.

Step-7 RBI/Authorized dealer remits the Amount

Step-8 A  copy  of  undertaking  (Form 15CA) &  certificate   of Accountant   (Form 15CB) forwarded to Assessing Officer