FOREIGN REMITTANCES & SUBMISSION OF FORM NO. 15CA/ 15CB

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FOREIGN REMITTANCES & SUBMISSION OF FORM NO. 15CA/ 15CB

FORM 15CA/ 15CB

Query 1]

Please clarify for F.Y. 2009-10:

  1. Whether standard deduction benefit is available for pension received by the employee from PSU. I am getting Rs. 17,000/- as pension/year. How much deduction is available? Please indicate section.
  2. Whether indexation benefit is available to Debt Mutual Fund where no STT is deducted?[dhanyakumar1936@gmail.com]

Opinion:

  1. Pension received by the employee is taxable under the head “Income from Salary”. No standard deduction benefit is available on the pension received by the employee from PSU as section 16(i) has been omitted by the Finance Act-2005.
  2. Indexation benefit is available to the Debt Mutual Funds if it fulfills the conditions of being the Long Term Capital Assets.

 

Query 2]

Sir, I am working with a Nationalized Bank as a Specialist officer & handling corporate taxation of the Bank. I am having few doubts with reference to the Tax Talk dated 26th April 2010 in the Hitavada regarding obtaining of PAN by the non residents. Our customers are facing some problems in obtaining Form No. 15CA & 15CB in case of Forex remittances. I want to know whether such forms are required to be obtained in case of Imports also or only in the cases where Tax (TDS) is required to be deducted?  I also want to know what should be the accounting treatment for the withholding tax. Whether it should be debited to P& L A/c? Is there any return to be filed for that purpose? [ps@mahabank.co.in]

Opinion:

  1. Section 195(1) of the Income Tax Act-1961 reads as under:
    ”Any person responsible for paying to a non-residents, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries”) shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheques or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate in force: ….”
  2. Legally & technically speaking, any sum paid/payable to Non Residents & not chargeable to tax in India under the Income Tax Act-1961 should not attract T.D.S u/s 195. Generally, payments towards imports of goods/ personal remittances are outside the purview of deduction under section 195.
  3. RBI had earlier mandated that no remittances (except certain personal remittances) shall be made to non-residents unless a remitter obtains a No Objection Certificate from the Income Tax Department. Later on the procedure of obtaining NOC from the department was done away with the new procedure of furnishing the undertaking in Form No. 15CA by the remitter coupled with submission of certificate in Form No. 15CB from the Chartered Accountant. Effectively, by virtue of RBI instructions, remittance requires furnishing of the said undertaking/ certificate. The purpose is obvious i.e., to collect the taxes at the stage when the remittance is made as it may not be possible to recover the tax a later stage from non residents.
  4. Deductor as a mediator between the deductee and the Government. There is no question of debiting the tax withheld to the P & L A/c. Till the tax is withheld, it is to be shown as liability only in the books of Deductor. No return is required to be filed for the tax withheld.

 

Query 3]

  1. The due date of payment of TDS deducted on 31st March has been extended to 30th September but the due date for filing of e-TDS return is 15th So we are facing the problem in making the e TDS return as most of the TDS deducted is yet to be paid and the customers whose tax is deducted by us are demanding form No. 16A which can not be issued till e-TDS return is filed and acknowledgment number is received. What will be the treatment of the TDS if it is paid after filing of the return?
  2. As per the notification issued by the CBDT, PAN is compulsory for all the deductees otherwise TDS is required to be deducted @20%. We are following the rule and deducting tax @ 20%. But while filing e TDS return, PAN of 90% of the deductees are compulsory otherwise return is rejected. So what should be done in such cases? [priyamvada]

Opinion:

  1. It has been provided that no disallowances of expenditure u/s 40(a)(ia) shall be there if the tax is paid on or before the due date of filing the return of income. The due date of the payment of Tax deducted at Source (TDS) is not extended as mentioned. As far as tax deducted within due date & issuance of Form No. 16A thereof is concerned, you can immediately file the e-TDS return mentioning the deductees details as well as challan paid thereof. Subsequently, you can file correction return adding in it the details of the new TDS Payment Challan as well as new deductees details. This can serve all your purposes. The prescribed file format of the correction return is available at tin-nsdl.com.
  2. You have to compulsorily quote the PAN of
    a) 95% deductees in case of e-TDS return for salaried deductees (Form No. 24Q) &
    b) 85% deductees in case of e-TDS return for non-salaried deductees (Form No. 26Q)
    The rule has not yet been amended so as to give the new provision where tax is deducted @ 20% in accordance with the new provision. However, you can file the e-TDS return with details of the deductees having valid PAN without incorporating the details of the deductees without PAN & in whose case tax is deducted @ 20%. It is not necessary that the Challan payment should always tally with the aggregate of Deductees tax deduction figure. Till your challan exceeds the aggregate of Deductees tax, return will be accepted.
    For ease of understanding, refer below example:
    a) Suppose a challan payment of Rs.1,00,000/- has been made for non-salary TDS against 100 deductees each with TDS of Rs.1,000/-. Under the existing procedure the deductor will have to quote at least 85% PAN failing which his return will be rejected.
    b) If there are only 50 deductees whose PAN is available and the deductor attempts to file a return with details of 100 deductees with PAN of only 50 deductees, the return will automatically be rejected at present.
    c) However, if the deductor files a return with challan amount of Rs. 1,00,000/- and with details of 50 deductees with PAN (with deductee total of Rs.50,000/-), the return will be accepted. It means the deductor can furnish the details relating to such deductees whose PANs are available.
    d) The deductor can later file correction returns with other details of remaining deductees with the same challan details, i.e., the challan amount should be the amount deposited (in this case Rs. 1,00,000/-).
    e) The return will be accepted so long as the TDS total of incremental deductees is less than or equal to the balance of Rs.50, 000/-.

FORM 15CA/ 15CB


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