Form 15CA / Form 15CB required in case of Import Payments

Published On - June 9, 2015

admin Finance Act, Import Payments

Section 195 (6) has been amended in the Finance Act 2015 and states that Form 15CA / CB needs to be necessarily filed for all remittances, whether chargeable to tax in India or not. All the assessees requested for submission of Form 15CA/CB for all outward cross border remittances including those against imports with effect from 1st June 2015.

In view of the impending timeline, would request to keep your records updated and arrange form 15CA/AB for all transactions from 1st June 2015. Relevant extracts from the act are shared below for ready reference.

Currently, section 195(6) of the Act provides that any person responsible for making payments to a non-resident of any sum chargeable under the IT Act will provide such information as may be prescribed. Pursuant to such provision form 15CA and 15CB are required to be furnished by payers. 

Such reporting requirements are now proposed to be extended even in respect of payments, which in the opinion of the payer, are not chargeable to tax under the IT Act. Further, currently there is no penalty prescribed for non-furnishing of information or furnishing of incorrect information under section 195(6) of the IT Act (i.e. form 15CA and form 15CB). It is now proposed to provide a penalty of one lakh rupees in case of non-furnishing of information or furnishing of incorrect information under section 195(6) (i.e. form 15CA and form 15CB) of the Act. Such amendments are proposed to take effect from June 1, 2015

Further, please obtain declaration in the  following format on foreign beneficiary’s letter head or with any variation as may be agreed with foreign seller:

(On Remitter’s Letter head)

TO WHOM IT MAY CONCERN

This is to confirm the following:

  1. That we are a Company / LLC / Partnership Firm registered at …………………. (country name) and are a tax resident of  …………………… (Country Name) . Our principal place of business is at  ……………………………… (country name) . A copy of our incorporation certificate is attached herewith (or any other proof of being foreign resident ,if shared by them)
  1. We are not having any Permanent Establishment or liasion office in India or any business connection in India.
  1. That the payment of …………………… $ being remitted to us against our invoice no …………………………… dated …………………. is towards sale of ……………………….. and as such is in the nature of business income taxable in the country of our residence i.e. ……………………. (country name) .  The said payment is not in the nature of fees for technical services.
  1. In view of the aforesaid, no income accrues or arise in India and payment against our invoice be released without deduction of withholding taxes.

For XYZ

Authorised Signatory