Prior to the amendments made vide Finance Act, 2015, Section 195(6) required that a person responsible for paying any sum chargeable to tax under the Income Tax Act, 1961, to a non-resident should furnish the information relating to such payment vide form 15CA and 15CB to the Central Board of Direct Taxes.
After the amendment made vide the Finance Act, 2015, with effect from 1st June, 2015, “a person responsible for paying to a non-resident, any sum, whether or not chargeable under the provisions of this Act, shall furnish the information ….”.
Thus, with effect from 1st June, 2015, every payment to a non-resident, including items such as a simple import of a commodity, will be required to be supported by Form 15CA and 15CB.
Further, simultaneously with the amendment to Section 195(6), a new Section 271-I has been inserted, providing for penalty of Rs. 1 lakh for failure to furnish such information or furnishing inaccurate information.
These amendments will considerably increase the number of certificates that would be required to be issued across the country many fold. A large number of such certificates would not result in any additional tax / revenue generation.
Professionals and accountants across the country would get engaged in unproductive work of repetitive nature, and resources of companies in terms of time and money would get deployed in such unproductive work, thereby draining valuable resources of the nation. This would certainly act as a deterrent to the “Make in India” concept, as well as to the ease of doing business.
The penalty prescribed causes further hardship and compulsion on the assessee.
On behalf of the thousands of affected persons across the country, and on behalf of our members who represent and advise such affected persons, we request that the following remittances be excluded from the purview of the amended requirements. For this purpose, a suitable amendment may be made to Rule 37BB, by adding the following items to the list of exclusions contained in explanation 2 to rule 37BB:
- Payments for import of goods or machinery
- Payments under Liberalised Remittance Scheme (LRS)
- Payments by residents for maintenance of relatives abroad
- Remittance of balances in NRE & FCNR(B) Accounts
- Payments by residents for education expenses of their relatives
- Payments for participating in exhibitions, fairs & events overseas [since such income is in any case exempt under domestic tax law under explanation 2 to section 9(1)(i)]
- Repayment of principal of loans from overseas
- Payments by credit card by individuals for personal purposes
- Remittances to self outside India
Since the amended provisions come into effect from 1st June, 2015, considering the urgency of the matter, we request you to bring about the abovementioned amendments immediately so that genuine personal and business transactions which do not give rise to income chargeable to tax in India, are not adversely impacted.
Thanking you.
For Bombay Chartered Accountants’ Society
