Making Form 15CB for Royalty/Fee for Technical Service Invoice:

Making Form 15CB for Royalty/Fee for Technical Service Invoice Form 15CB is a certificate submitted by a Chartered Accountant while making any payment/aggregate of payment more than Rs. 5 lakh in a financial year to a non-resident (other than a company) or a foreign company, and a certificate from the AO u/s 195/197 is not obtained. This form contains the details of the payment, TDS rate, and TDS Deduction, among other information.

Also Read

Mistakes in Form 15CA/15CB can lead to heavy penalties, tax disallowances

Required Documents

1. Invoice and Contract/ Agreement with a foreign vendor, and 2. Tax Documents:

• PAN of Non-Resident
• TRC (Tax Residency Certificate)
• No-PE Declaration
• Form 10-F (Online)

TDS Rate when all the Tax Documents are available

In case all the Tax Documents are available, we can give the DTAA benefit to the Non-Resident Remittee. Some benefits available in DTAA: Make Available Clause: If the make available clause is satisfied, TDS is not applicable on Fees for Technical services. Royalty: Understand the Difference between Copyright and Copyrighted Article transfer. TDS is not applicable in the case of a Copyrighted Article transfer. Lower TDS Rate: Even if the transaction falls in purview of FTS or Royalty, TDS Rates in DTAA are lower than Income Tax Act. (Generally range from 10%-15%)

Also Read

Key Compliance Requirements for Foreign Remittances: Overview of Forms 15CA and 15CB

TDS Rates for FTS or Royalty as per Income Tax Act TDS will be applicable as per the Income Tax 20.8% along with a surcharge depending on the remittance amount. Always opt for beneficial tax rates. Usually DTAA rates are lower, but some times Income Tax Act Rates may also be beneficial.

TDS Rate when the releavant Tax Documents are not available

TDS will be applicable as per the Income Tax 20.8% along with a surcharge depending on the remittance amount.

Concept of Grossing Up

When a Non-Resident is not ready for TDS Deduction, one can gross up the transaction. For example: We have taken FTS service from mr NR. He is not having relevant Tax documents, nor he is ready for Tax Deduction. Remittance to be made: 100 USD TDS Rate: 20.8%

• The Gross up would be: (100-20.8)% = 126.26 USD
• TDS = 26.26 USD
• Final remittance = 100 USD

Yearly Remittance Amount Limit

• If the yearly remittance amount is more than Rs 5 lakh, then you will need both Form 15CB and Form 15CA.
• If the yearly amount is less than Rs 5 lakh, then you only need Form 15CA.

Important Points About Form 15CB

• If there's a mistake in Form 15CB, you can withdraw it within 7 days.
• UDIN must be generated within 60 days of making Form 15CB. It can be revoked within 48 hours.