CBDT notifies Form no. 15E for making application to determine ‘sum chargeable to tax’ u/s 195

Notification No. 18/2021, dated 16-03-2021

Hitherto, no form has been prescribed by the Dept. for filing of an application under section 195(2) if the payer considers that whole of the sum would not be income chargeable in the case of the recipient.

Thus, the payer has to follow the manual process by approaching the Assessing Officer (AO) with an application to require him to issue an order under section 195(2).

To streamline the process and to enable tax administration in monitoring such payments, the Finance (No. 2) Act, 2019 amended the provisions of Section 195(2) to allow prescribing the form and manner of application to the AO.

 Later, the Central Board of Direct Taxes (CBDT), vide Office Memorandum F. No. 340142/24/2019-TPL, dated 31-12-2019, had released draft Rule 29BA and Draft Form no. 15E to give effect to amendments.

Now, the board has released the final rule 29BA and Form no. 15E to operationalise the provisions of section 195(2). Rule 29BA provides that Form no. 15E is to be filed electronically.

 After filing the application, AO shall examine whether the sum being paid or credited is chargeable to tax read with the relevant DTAA.

If the sum is chargeable to tax, AO shall proceed to determine the appropriate proportion of such sum chargeable to tax and issue a certificate.

The certificate issued by the AO shall be valid only for the payment to non-resident named therein and for such period as may be specified in the certificate. AO also has the power to cancel such certificate before the expiry of the specified period.