Currently, remittances to non-residents are allowed by banks if the person making the remittance furnishes an undertaking, accompanied by a certificate from a Chartered Accountant (“CA”) certifying the rate for withholding tax as per section 195 of the Act. The banks then forward the certificates to the Reserve Bank of India (“RBI”), which in-turn forwards it to the Income tax department.
Finance Act, 2008 inserted a new sub section (6) to section 195 effective from April 1, 2008, which requires the person responsible for making payment to a non-resident to furnish information relating to such payments in forms to be prescribed. The Central Board of Direct Taxes (“CBDT”) has now, by notification No 30/2009 dated March 25, 2009, prescribed a new rule 37BB in the Income Tax Rules, 1962 (“the rules”) prescribing Form 15CA and Form 15CB to be filed in relation to remittances to non-residents under section 195(6) of the Income Tax Act, 1961 (“the Act”). This new rule is effective from July 1, 2009 and shall apply to all remittances being made after July 1, 2009. The process that will have to be followed, before any remittance can be made, is as under—
Step 1 : Obtain a certificate from a Chartered Accountant in Form No 15CB
Step 2:Furnish the information in Form No15CA
Step 3:Electronically upload Form 15CA on the designated website
Step 4:Take Print out of Form 15CA and file a signed copy
Step 5:Remit money to the Non Resident
Please note that all the above steps have to be undertaken before remittance of money to the non-resident.
Notification no. 30/2009 is as below:-
In exercise of the powers conferred by section 295 read with sub-section (6) of section 195 of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income-tax (Seventh Amendment) Rules, 2009.
(2) They shall come into force with effect from 1st July, 2009.
2. In the Income-tax Rules, 1962, after rule 37BA, the following rule shall be inserted, namely:-
“Furnishing of information under sub-section (6) of section 195.
37BB. (1) The information under sub-section (6) of section 195 shall be furnished by the person responsible for making the payment to a non-resident, not being a company, or to a foreign company, after obtaining a certificate from an accountant as defined in the Explanation to section 288 of the Income-tax Act, 1961.
(2) The information to be furnished under sub-section (6) of section 195 shall be in Form No. 15CA and shall be verified in the manner indicated therein and the certificate from an accountant referred to in sub-rule (1) shall be obtained in Form No. 15CB.
(3) The information in Form No. 15CA shall be furnished electronically to the website designated by the Income-tax Department and thereafter signed printout of the said form shall be submitted prior to remitting the payment.
(4) The Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture, transmission of data and shall also be responsible for the day-to-day administration in relation to furnishing the information in the manner specified.
For all remittances abroad including TRADE payments. RBI has already issued clarification to the ADs informing them of CBDT requirements. There is no difference in the EEFC account and your normal rupee accounts. The money in EEFC account is held in India itself but denominated in USD. The risk or benefit of fluctuation for non conersion to Rupee is yours. However, for all practical purposes this is a resident Account and for any payment made to non residents, TDS provisions u/s 195 applies. If you are paying to someone resident in India the USD (or foreign currency) from this account then you have to apply the regular provisions of Sections 192 and the 194( A-J) and deposit tax at TT Selling Rate of SBI on date of payment or Credit, whichever earlier.
To sum up, you need to submit Form 15CA and 15CB with your application for all remittances, including imports, from this account. If you are holding a non resident account in the other country for which the operation is done by the resident in India, then you have to apply TDS as per provisions of Income Tax Act if income is deemed to accrue in India to the payee. However, the foreign Bank holding your NR Account in their country is not bound by our Income Tax Rules and RBI Rules. They will follow laws of their land only. They will not ask you for Form 15CA and 15CB. Only our local banks are bound by this rule. However, I am assuming you have permission of RBI (subject to certain conditions, the powers to give you permission to open NR account in other country is vested on your AD by the RBI) to open such an account. You are bound to follow our Act and take Form 15CB and generate 15CA. That is more like an NOC and verification and you give it to the AD through which you have permission to open NR account elsewhere. They will comply on your behalf by submitting your undertaking to the IT AO. Remember that even if you open account outside with permission of RBI, you are bound to follow the rules of India. The 15CA should be generated before you pay the money from your NR account.
The subscripttion to a foreign magazine is business income accruing to the publisher of the magazine abroad. The treatment will be same as what it is for similar payments to resident in India. If you have to deduct for any Indian Magazine for Fees for Technical Services and Royalty, then you will have to deduct for the same for the magazine. However, if for local magazine there is no TDS under 194J, then this is a business income of the foreign publisher and accordingly cannot be taxed in India unless the business is done through a Branch or Agent in India. I have never subscribed to magazines worth 20000 in India. Therefore I am not aware of what the subscripttion is treated as for TDS purpose.