Filing Form 15CB/Form 15CA; Here is an Important Change to Note w.e.f. 16-July-2022
Foreign payments are an essential part of business nowadays and with Foreign, Payments come compliances.
As per Section 195, every person making a payment to Non-Residents (not being a Company), or to a Foreign Company shall deduct TDS if such sum is chargeable to Income Tax and the details are required to be furnished in Form 15CA.
Form 15CB is to be filled only when the remittance amount exceeds Rs. 5 lakh during a financial year and you are required to furnish a certificate from an accountant defined as per Section 288.
In case of a payment to a foreign vendor, we are required to obtain the documents mentioned below, to analyze the withholding obligation and withheld taxes before making the payment:
- Form 10F – A declaration given by Non-Residents stating that they are tax residents of a country other than India.
- No PE Declaration – A declaration given by Non-Residents stating that they do not have a permanent establishment in India.
- Tax Residency Certificate – A Certificate issued to the Non-resident by the Tax Authority of the Country in which it is a resident.
As per Notification no. 03/2022 dated 16-July-2022, Form 10F is required to be furnished electronically effective from the date of the notification.
The implication of the above notification is:
- Non-Residents are required to file Form 10F electronically on the Income tax portal.
- Non-residents must now provide e-filed Form 10F to their customers in India.
- Physically signed declarations in Form 10F are no longer valid.
Therefore, every Payer must mandatorily obtain the electronically filed Form 10F before proceeding to make any payments to their foreign vendors.