16 September 2009
Friends.... Can nyone tell me the relevant documents to be verified while issuing certificate in Form 15 CB u/s 195... Pls do clarify at th earliest.. Thanks in advance
The Contract if the payment is for commission or Royalty or Sales Promotion. You need to also see that there is any overiding of the Treaty on the Indian Income Tax Act. The Debit Note of the Party etc..
05 December 2009
Check the agreement and see exactly what the transaction is for. In case it is for commission against exports that as per Section 9 or per Aricle 7 of DTAA may not be taxable in India on account of no business operations as there is no PE, it would definitely be taxable if there is an element of Managerial Service and would be taxed as FTS irrespective of there being PE or not. Normally independent brokers and GCA would be a business income under article 7 or even Section 9. However, a dependent agent is normally construed as person doing sales management for the payer and therefore FTS. You will make out if you read the agreement. Agreement need not be on stamped paper. Per RBI even a confirmation on letterhead to the payee can be agreement in such cases. You have to read the agreement and determine the facts.
Check the payee's invoice and see what he is charging for. If your payer says that he is paying royalty for a book ensure that he mentions it as advance payment as the book or manuscript has not yet come. Reason why government has put responsibility on CA is in addition to tax rates, it acts as a check for AMLA as there is an audit trail for a transaction. They do not wish that proceeds of crime move freely as trade remittances. Therefore they involve CA with assumption that CA would take responsibility only for a party known to him and not for just anyone who walks to his office for purpose of such a certificate. In addition to this even the rate of TDS is identified.
Most of the other checks are on case to case basis. If it is a trade remittance for imports that is not subject to TDS, you must check if there is an element of Royalty or FTS in the deal so that TDS is deducted properly on these portions of the transaction irrespective of PE status. If remittance is for commission against exports whether it is no tax as business or whether it is tax as FTS, you must check that in addition to agreement, the amount is mentioned in GR or shipping bill and that payments are realised and amount remitted based on FOB value is as per agreement.
If there is no PAN, you have to see to it deduction is at 20% even though DTAA may be lower (not applicable if amount remitted is not taxable).
If there is already a certificate u/s 197 obtained by payee from ITO, you do not have to issue 15CB as that certificate itself is the basis of filling Form 15CA.
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