Sec 195(6) Read with New Rule 37BB

This query is : Resolved

GIRISH SHARMA (Querist)
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17 April 2009 Dear Sir,

As per New Rule 37BB, information on payments to Non-Residents & Foreign Companies has to be provided in Form 15CA & Form 15CB.

Which payments are covered ?

1. Are payments to Foreign Companies for import of Raw Materials etc are covered ?

2. Are payments for import of Capital Goods covered ?

3. Is Commission paid to Foreign Agents covered ?

Note: These Foreign Companies/Agents donot have any PE (Permanent Establishment) in India.

Earliest response is anticipated.

Regards
G. Sharma

GIRISH SHARMA

GIRISH SHARMA (Querist)
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20 May 2009 Dear Sir,

As per New Rule 37BB, information on payments to Non-Residents & Foreign Companies has to be provided in Form 15CA & Form 15CB.

Which payments are covered ?

1. Are payments to Foreign Companies for import of Raw Materials etc are covered ?

2. Are payments for import of Capital Goods covered ?

3. Is Commission paid to Foreign Agents covered ?

Note: These Foreign Companies/Agents donot have any PE (Permanent Establishment) in India.

Earliest response is anticipated.

Regards
G. Sharma

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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23 July 2025 Dear Mr. Girish Sharma,

Thank you for your detailed query. You're right in referring to **Section 195(6)** read with **Rule 37BB**, which governs the requirement of **Form 15CA / 15CB** for **remittances to non-residents**.

Let me clarify your questions point by point as of the latest applicable provisions.

---

## ✅ **Section 195(6) and Rule 37BB: Summary**

* Any person responsible for making a payment to a **non-resident or foreign company** (whether taxable or not) must **furnish information in Form 15CA**.
* In **certain cases**, a **CA certificate in Form 15CB** is also required.
* **Rule 37BB** lists **33 categories of payments** that are **exempt** from Form 15CA/15CB compliance.

---

## ✅ Your Specific Questions:

### 1. **Are payments to Foreign Companies for import of raw materials covered?**

❌ **No**, these are **excluded** from Form 15CA / 15CB as per Rule 37BB.

> **Rule 37BB(3), item 3**:
>
> > "Payment for imports" — specifically **imports of goods, including raw materials** — is **exempt** from Form 15CA/CB.

✅ No Form 15CA or 15CB is required.

---

### 2. **Are payments for import of capital goods covered?**

❌ **No**, similar to raw materials, **capital goods** also fall under **“imports”**, hence:

> Also covered under **Rule 37BB(3), item 3** — **exempt** from 15CA/15CB.

✅ No Form 15CA or 15CB is required.

---

### 3. **Is commission paid to foreign agents covered?**

✅ **Yes**, this is **covered**.

* Commission to foreign agents is **not excluded** under Rule 37BB.
* Since it’s a **remittance to non-resident for services**, **Form 15CA is mandatory**, and **Form 15CB** is required **if the remittance exceeds ₹5,00,000** in a financial year.

> Even though the foreign agent has **no Permanent Establishment (PE)** in India and income may not be taxable under **DTAA**, you **still need to file Form 15CA (Part D)** along with **Form 10F, TRC, and a declaration**.

---

## ✅ Summary Table:

| Nature of Payment | Form 15CA/CB Required? | Reason |
| ------------------------------------ | ---------------------- | --------------------------------------------------------------------------------- |
| Import of raw materials | ❌ No | Covered under Rule 37BB (exempt category) |
| Import of capital goods | ❌ No | Also covered under Rule 37BB (exempt category) |
| Commission to foreign agents (no PE) | ✅ Yes | Not exempt; income may not be taxable, but declaration and Form 15CA still needed |

---

## 📌 Compliance Tip:

If the commission is **not taxable in India** due to **DTAA + no PE**, and proper documents are maintained:

* You can file **Form 15CA – Part D** (for amounts not chargeable to tax)
* **Form 15CB** is **not required** in that case

---

## 📂 Documents Recommended for Foreign Commission Remittance:

* **TRC (Tax Residency Certificate)** from foreign agent
* **Form 10F**
* **Declaration** that agent has **no PE in India**
* **Copy of agency agreement or invoice**

---

Let me know if you’d like:

* A sample declaration from the foreign agent
* A draft of Form 15CA (Part D)
* A list of all 33 exempt categories under Rule 37BB

Happy to help!

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