Representation regarding removal of difficulties in ITR-6 faced by Foreign Companies

1. Bank Account and IFSC Code
1.1 In Form ITR-6, in Part B – TTI – Computation of Tax liability on Total Income – Refund, it is mandatory to enter Bank Account no., IFSC Code & Type of account, in all cases, without which xml file cannot be generated and the ITR-6 cannot be uploaded.

1.2
While in case of residents, one can appreciate the introduction of
mandatory requirement to give aforesaid information, in case of many
foreign companies it is creating various practical difficulties.

1.3
As you are aware that under the relevant provisions of the Foreign
Direct Investment [FDI] Scheme of Foreign Exchange Management Act, 1999
[FEMA] and relevant regulations, a non-resident is required to bring in
funds in India through normal banking channels. There is no need or
requirement of any non-resident to have a bank account in India.
Dividends and other income on the FDI investment is directly paid in
foreign exchange to their bank accounts in the home countries. Even at
the time of disposal of the investments in the Indian companies, the
sale proceeds are directly repatriable to their bank accounts aboard.

1.4
Large number of foreign companies may not have regular operations in
India. Many of them may have hardly any operations in India. Such
foreign companies will not have bank account in India as commercially
and/or legally there is no need to have bank account in India. Such
foreign companies may also be required to furnish their Return of Income
in India u/s 139 of the Income-tax Act, 1961 [the Act] and in view of
the abovementioned procedural requirement of mandatorily mentioning the
bank account no. and IFSC Code in ITR-6, they are not in a position to
fulfil their statutory obligation of furnishing Return of Income, for
want of bank account in India.

1.5 T he same issue was also
faced last year and upon representation a solution was provided whereby
the Foreign Companies who do not have a bank account in India were
permitted to put 9 times 9 in the bank account field and NNNN0NNNNNN in
the IFSC code.

1.6 In view of above, you are requested to continue to provide the same solution for AY 2014-15 and going forward as well.

2. Surcharge and education cess on income chargeable to tax at Special Rates under the DTAA

2.1
I n cases where foreign companies offer any income to tax in India at
the rates specified under the relevant Double Taxation Avoidance
Agreement [DTAA], the position is reasonably settled that the surcharge
and education cess is not applicable in such cases. In fact, many DTAAs
specifically include surcharge in Article 2, which generally deals with
Taxes Covered. For example, India’s DTAA with USA, UK, Japan and
Singapore etc.

Further, the education cess, being additional
surcharge also has the same impact. Even if by any chance, the revenue
wants to take any contrary stand in this respect, the assessee cannot be
prevented from adopting the above position.

2.2 U nfortunately,
for AY 2014-15 in the ITR-6 utility, in para 2(d) and 2(e) of Part B –
TTI relating to Tax Payable on Total Income, surcharge and education
cess is automatically calculated on such income and these fields are not
editable. This is rectly tantamount to automatic enforcement of the
view contrary to the one which the foreign company holds in these
matters. If such a procedure in ITR-6 is allowed to continue, then in
every such case, the Return of Income would show unpaid balance tax
payable to the extent of the automatic levy of the surcharge and the
education cess, which the assessee claims as not leviable.

Therefore,
this would involve unnecessary and avoidable implication of non-payment
of selfassessment tax which is factually not payable as per the claim
of the assessee. Such an incorrect position should not be created
through the above procedure of ITR-6.

2.3 In view of the above,
we request you to kindly take necessary immediate action to remedy the
situation so as to enable such foreign companies to furnish their
returns of income before the expiry of due date and to discharge their
statutory obligation.

2.4 I t is, therefore, strongly suggested
that where income is taxable under DTAA , surcharge/education cess
should not be automatically calculated in ITR 6. Alternatively, such
filed should be made editable in the ITR 6 utility.

Your early
action in redressing above difficulties shall be highly appreciated and
will immensely help the foreign companies to smoothly file their returns
in time.

Thanking you.

Bombay Chartered Accountants ‘ Society

Nitin P. Shingala                            Kishor B. Karia                                          Sanjeev Pandit
President                                       Chairman                                                   Co-Chairman
                                                     Taxation Committee