Section 195 for Certificate New Rule 29BA & Form 15E For Apply Certifiate

CBDT Notifies Rule 29BA And Form 15E To Apply for Certificate Under Section 195 W.E.F. April 1, 2021

Section 195 of the Act relates to levy of Tax Deduction at Source (TDS) on any sum chargeable to tax and which is paid to a non-resident, not being a company, or to a foreign company. Prior to the amendment, sub-section (2) of the said section provided that where the person responsible for paying such sum chargeable under the Act to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the Assessing Officer to determine, by general or special order, the appropriate of such sum so chargeable and upon such determination, tax shall be deducted only on that proportion of the sum which is so chargeable.

However, no format was prescribed for making the application under sub-section (2) of section 195. Therefore, the deductor has to write an application on plain paper and physically submit it to the Assessing Officer.

In order to overcome from these hardships, CBDT notifies vide Notification No. 18/2021-Income Tax dated 16.03.2021, insertion of Rule 29BA for making an application for grant of certificate determining appropriate proportion of sum chargeable to tax in case of payment made to non-residents under sub-section (2) and (7) of Sec. 195, w.e.f. April 1, 2021.

Also, notifies Form 15E [Application by a person for a certificate under section 195(2) and 195(7) of the Income-tax Act, 1961, for determination of appropriate proportion of sum (other than salary) payable to non-resident, chargeable to tax in case of the recipient] to be filed electronically to be examined by Assessing Officer after considering various factors.

While examining the application as filed as per sub rule (1) of Rule 29BA, following information of the recipient shall be taken into consideration by the Assessing Officer:

1. Tax payable on estimated income of the previous year relevant to the assessment year;

2. Tax payable on the assessed or returned or estimated income, as the case may be, of preceding four previous years;

3. Existing liability under the Income-tax Act, 1961(43 of 1961) and Wealth-tax Act, 1957(27 of 1957);

4. Advance tax payment, tax deducted at source and tax collected at source for the assessment year relevant to the previous year till the date of making application under sub-rule (1).

After being satisfied with above said information and other things, Assessing Officer issue the certificate determining appropriate proportion of such sum chargeable under the provision of this Act, for the purposes of tax deduction under sub-section (1) of section 195.

The certificate shall be valid only for the payment to non-resident named therein and for such period of the previous year as may be specified in the certificate, unless it is cancelled by the Assessing Officer at any time before the expiry of the specified period.

New inserted Rule 29BA of the Income Tax Rules and Format of Form 15E is reproduced as below:

“29BA. Application for grant of certificate for determination of appropriate proportion of sum (other than Salary), payable to non-resident, chargeable in case of the recipients. (1) An application by a person for determination of appropriate proportion of sum chargeable in the case of non-resident recipient under sub-section (2) or sub-section (7) of section 195 shall be made in Form 15E electronically,-

i) under digital signature; or

ii) through electronic verification code.

(2) The Assessing Officer, in order to satisfy himself, shall examine whether the sum being paid or credited is chargeable to tax under the provisions of the Act read with the relevant Double Taxation Avoidance Agreement, if any, and if the sum is chargeable to tax he shall proceed to determine the appropriate proportion of such sum chargeable to tax.

(3) The Assessing Officer shall examine the application and on being satisfied that the whole of such sum would not be the income chargeable in case of the recipient, may issue a certificate determining appropriate proportion of such sum chargeable under the provision of this Act, for the purposes of tax deduction under sub-section (1) of section 195.

(4) While examining the application, the Assessing Officer shall also take into consideration, following information in relation to the recipient:-

i) tax payable on estimated income of the previous year relevant to the assessment year;

ii) tax payable on the assessed or returned or estimated income, as the case may be, of preceding four previous years;

iii) existing liability under the Income-tax Act, 1961(43 of 1961) and Wealth-tax Act, 1957(27 of 1957);

iv) advance tax payment, tax deducted at source and tax collected at source for the assessment year relevant to the previous year till the date of making application under sub-rule (1).

(5) The certificate shall be valid only for the payment to non-resident named therein and for such period of the previous year as may be specified in the certificate, unless it is cancelled by the Assessing Officer at any time before the expiry of the specified period.

(6) An application for a fresh certificate may be made, if the assessee so desires, after the expiry of the period of validity of the earlier certificate or within three months before the expiry thereof.

(7) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall lay down procedures, formats and standards for ensuring secure capture and transmission of data and uploading of documents and the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the furnishing of Form No 15E and issuance of Certificate under sub-rule (3).”

FORM No. 15E [See rule 29BA]

Application by a person for a certificate under section 195(2) and 195(7) of the Income-tax Act, 1961, for determination of appropriate proportion of sum (other than salary) payable to non-resident, chargeable to tax in case of the recipient

To, The Assessing Officer, ……………………….

I ______________ being the person responsible for making payment to a non-resident or to a foreign company any sum (not being income chargeable under the head “Salaries”) do, hereby, request that a certificate may be issued to me after determining the appropriate proportion of such sum chargeable to tax in the case of the recipient (if any) and authorise me to deduct income-tax on such appropriate proportion (if any). The relevant particulars are as below:

1. Details of the payer:

(i) PAN or Aadhaar

(ii) Name

(iii) TAN (TAN is compulsory for application u/s 195)

(iv) Status (Individual/Firm/Company/AOP/BOI, as the case may be)

(v) Residential status

(vi) Address

(vii) E-mail ID

(viii) Mobile Number

2. Details of the recipient:

(i) PAN (if available)

(ii) Name

First name

Middle name

Last name

(iii) Status (Individual/Firm/Company/AOP/BOI, as the case may be)

(iv) Father’s name (in case of an individual)

First name

Middle name

Last name

(v) Date of birth (in case of individuals)

(vi) or date of incorporation, if Address in India (if applicable)

(vii) available Address of recipient in country of Residence outside India

(viii) Tax Identification Number of recipient in the country of Residence

(ix) Jurisdictional AO, if any

(x) E-mail ID

(xi) Mobile Number

(xii) Passport No. (in case of

individual)

3. Details of transaction

(i) Country to which payment is to be made

(ii) Amount payable In Foreign Currency In Indian Rs. (on estimated basis)

(iii) Proposed date of payment

in dd/mm/yyyy format

(iv) Relevant previous year for which Certificate is requested

(v) Nature of payment/ remittance as per agreement/document:

Royalty

Fees for technical services

Dividend

Interest

Business income

Capital gains

Any other (please mention)

(vi) In case the payment is net of taxes, whether tax payable, if any would be grossed up? (Tick) Yes No

(vii) Details of previous certificates obtained under section 195(2) for the same transaction Certificate Number

Certificate Number

DIN (if available

(viii) Tax payable on estimated income of the previous year of the recipient (if available)

(ix) Details of advance tax, TDS, TCS for the previous year of the recipient, if available Advance tax

TDS

TCS

(x) Details of existing liabilities of recipient under the Income-tax Act or Wealth Tax Act, if available

(xi) Whether the appropriate proportion of sum to be charged as income of the recipient is to be determined by applying a DTAA between India and the other country or without applying the DTAA?

(Note: in case of applicability of DTAA fill up section no 5. In case of non-applicability of DTAA fill up section no 4.)

With DTAA Without DTAA

4. Taxability under the provisions of the Income-tax Act (without considering DTAA)

(i) Is payment chargeable to tax in India as per the provisions of Income-tax Act (Tick) Yes No

(ii) If not taxable, reasons thereof

(iii) if taxable, the relevant section of the Act under which the payment is covered.

(iv) A. If the payment is on account of business income, please indicate:

(a) Description of the business connection.

(b) The amount of income chargeable to tax under this head.

(c) Tax liability on the chargeable sum under this head

(d) Justification of above tax liability.

(e) Based on above at what rate tax is required to be deducted

B. In case the payment is on account of capital gains,

please indicate: (a) Provide:

(I) Nature of asset and its location if any

(II) Amount of long-term capital gains

Date of sale of

Total sale considerat

Date of acquisition

Total cost of

(III) Amount of short-term capital gains

Date of sale of

Total sale considerat

Date of acquisition

Total cost of

(b) The amount of income chargeable to tax under this head.

(c) Tax liability on the chargeable sum under this head.

(d) Justification of above tax liability.

(e) Based on above at what rate tax is required to be deducted

C. In case the payment is on account of Royalty, please indicate

(a) Nature of Royalty payment

(b) The amount of income chargeable to tax under this head.

(c) Tax liability on the chargeable sum under this head.

(d) Justification of above tax liability.

(e) Based on above at what rate tax is required to be deducted

D. In case the payment is on account of Fee for technical services (FTS), please indicate

(a)Nature of Payment

(b) The amount of income chargeable to tax under this head.

(c) Tax liability on the chargeable sum under this head.

(d) Justification of above tax liability

(e) Based on above at what rate tax is required to be deducted

E. In case of Interest income

(a) Nature of interest income

(b) Please indicate

(i) Whether conditions of section 194LB are satisfied?

(Tick) Yes No (ii) Whether conditions of section 194LBA are satisfied?

(Tick) Yes No (iii) Whether conditions of section 194LC are satisfied?

(iv) Whether conditions of section 194LD are satisfied

v) Loan Registration Number (LRN) as given by Reserve Bank of India

(c) The amount of income chargeable to tax under this head.

(d) Tax liability on the chargeable sum under this head.

(e) Justification of above tax liability

f) Based on above at what rate tax is required to be deducted

F. In case of other payment not covered by items A to E, above

(a) Please specify the nature of payment

(b) The amount of income chargeable to tax under this head.

(c ) Tax Liability on the chargeable sum under this head

(d) Justification of above tax liability.

(e) Based on above at what rate tax is required to be deducted

5. Taxability under the Double Taxation Avoidance Agreement (DTAA)

(i) Please specify relevant applicable DTAA

(ii) Whether copy of Tax Residency Certificate and Form 10F enclosed

(Tick) Yes No

(iii) A. If the payment is on account of business income, please indicate:

(a) Whether such business income is liable to tax in India under the DTAA

(b) If no, the reasons for the same

(Tick) Yes No

(c) If yes, the nature of permanent establishment in India

(d) The amount of income chargeable to tax under this head

(e) Tax liability on the chargeable sum under this head

(f) justification of above tax liability

(g) Based on above at what rate tax is required to be deducted

B. In case the payment is on account of capital gains, please indicate:

(a) Whether such capital gains are liable to tax in India under the DTAA

(Tick) Yes No (b) If no, the reasons for the same

(I) Nature of asset and its location if any

(II) Amount of long-term capital gains

Date of sale of

Total sale considerat

Date of acquisition

Total cost of

(III) Amount of short-term capital gains

Date of sale of

Total sale considerat

Date of acquisition

Total cost of

(d) The amount of income chargeable to tax under this head.

(e) Tax liability on the chargeable sum under this head.

(f) Justification of above tax liability.

(g) Based on above at what rate tax is required to be deducted

C. In case the payment is on account of Royalty, please indicate

(a) Whether such royalty is liable to tax in India under the DTAA

(Tick) Yes No (b) if no, provide reasons for the same along with the nature of payment

(c) if yes, then state

(i) Nature of Royalty paid or to be paid

(ii) The amount of income chargeable to tax under this head.

(iii) Tax liability on the chargeable sum under this head

(iv) Justification of above tax liability

(v) Based on above at what rate tax is required to be deducted

D. In case the payment is on account of Fee for technical services (FTS), please indicate

(a) Whether such fee for technical service is liable to tax in India under the DTAA

(Tick) Yes No (b) if FTS is not taxable in India under the DTAA, then state

(i) nature of payment

(ii) whether there is “Make

Available” clause in the treaty

(Tick) Yes No (iii) if there is a claim for „Make Available‟ clause, whether such clause in FTS article is sought to be included in the DTAA through Most Favoured Nation Clause?

(Tick) Yes No

(iv) if answer to (iii) above is yes, whether notification regarding „Make Available‟ clause issued by Government of India

(Tick) Yes No (v) If there is make available clause explain how that requirement is not satisfied

(vi) If there is no make available clause explain how the payment is not FTS

(c) if FTS is taxable in India under the DTAA , then state

(i) Nature of FTS paid or to be paid

(ii) The amount of income chargeable to tax under this head.

(iii) Tax liability on the chargeable sum under this head

(iv) Justification of above tax liability

(v) Based on above at what rate tax is required to be deducted

E. In case of Interest income

(a) Whether such interest is liable to tax in India

(Tick) Yes No (b) if no, give reasons along with nature of interest payment

(c) if yes, then state,

(I) Nature of interest income paid or to be paid

(II) The amount of income chargeable to tax under this head.

(III) Tax liability on the chargeable sum under this head

(IV) Justification of above tax liability

(V) Based on above at what rate tax is required to be deducted

F. In case of other payment not covered by items A to E

(a) Please specify the nature of payment

(b) Whether taxable in India as per

DTAA (Tick) Yes No

(c) If yes, specify relevant Article of DTAA and the rate of TDS in terms of relevant Article of the applicable DTAA

(d) the amount of income chargeable to tax under this head.

(e) Tax liability on the chargeable sum under this head

(f) Justification of above tax liability

(g) Based on above at what rate tax is required to be deducted

(h) If not taxable, please furnish brief reasons thereof, specifying relevant article of DTAA

6. List of Documents to be uploaded:

( i) Relevant documents such as contract for sale of goods and/or provisions for services (if any), computation of capital gains, share purchase agreement, bank payment, details of cost of acquisition, contract note (if any), share certificate (if any), etc.

(ii) Details of assessed/returned/estimated income of payee of preceding four previous years, if available

(iii) Computation of estimated income chargeable to tax and Tax Liability of the previous year.

(iv) Copy of Tax Residency Certificate and Form 10F

(v) Documents in support of claim of applicability of sections 194LB/194LBA/194LC/194LD

(vi) Any other documents you wish to furnish in support of your claim.

VERIFICATION

Date:

Signature:

Place:

Address:

INCOME TAX