Section 195 of the Income tax act empower the Central Board of Direct Taxes to capture information in respect of payments made to non-residents, whether payable to tax or not. CBDT has issued a press release dated 17.12.2015 stating that section 195 of the Income tax Act empowers the CBDT to capture information in respect of payments made to non residents, whether taxable or not.
CBDT Loosen up the Rules
Rule 37BB of the Income-tax Rules has been amended to strike a balance among reducing the burden of compliance and collection of data under section 195 of the Act. The amended Rules will turn out to be applicable from 01.04.2016.
The significant changes under the amended Rules are:
- No Form 15CA and 15CB will be needed to be furnished by an individual for payment which does not requiring RBI approval under its LRS – Liberalised Remittance Scheme
- Further the catalogue of payments of specified nature mentioned in Rule 37 BB which do not require surrendering of Forms 15CA and 15CB has been extended from 28 to 33 including payments for imports.
- A CA certificate in Form No. 15CB will be necessary to be furnished only in respect of such payments made to non-residents which are on expenses to tax and the amount of payment during the year exceed Rupees 5 lakh.
- The instant clarification and the other recent announcements / notifications regarding revision of monetary limits for appeals, section 43B disallowance etc., are really welcome steps. It shows CBDT has been able to appreciate the practical difficulties / realities. Recently the CBDT has modified the These rules has provided clarification regarding the filing of aspect where payment is made in respect of any sum which is not payable under the provision of Income Tax Act 1961. Further, it has also relaxed the provision related to requirement of filing of Form 15CA & 15CB. The improvement in Rules will be applicable w.e.f. April 1, 2016. Gist of the changes made and filing needed in Form 15CA & Form 15CA can be described as under:
- Further, there was no provision for levying of penalty for non-submission or inaccurate submission of the needed information in respect of remittance to the non-resident. For ensuring submission of correct data in respect of remittance to a non-resident, a penal provision is included in Section 271-I by the Finance Act, 2015 whereby a penalty of INR 1, 00,000 would be levied for non-furnishing of data or furnishing of incorrect information under Section 195(6).