Section 195(6)
This query is : Resolved
01 July 2009
Dear Sir,
I have received several openion regarding applicability of Section 195(6) on following transaction :
(a) Forex payment on purchase of Raw Materail
(2) Payment made on import of Plant & Machinery.
Pls help me, Is section 195(6) applicable on above transaction?
Is it mandatory to file Form 15CA & 15CB of above Transaction?
waiting for valuable expert advise.
Regards,
Baljinder Singh
I have received several openion regarding applicability of Section 195(6) on following transaction :
(a) Forex payment on purchase of Raw Materail
(2) Payment made on import of Plant & Machinery.
Pls help me, Is section 195(6) applicable on above transaction?
Is it mandatory to file Form 15CA & 15CB of above Transaction?
waiting for valuable expert advise.
Regards,
Baljinder Singh
02 July 2009
Dear Mr. Balijder,
I have been facing the same problem. I have advised from various valuable sources, but no clarity about file the form 15CA & 15CB of above transactions.
Banks are also not aware about these provisions.
At the time of online filing of form 15CA , it required that nature of remittance with filtered options for selection of it. There are only the nature of payment like commission, royalty etc on which TDS is to be deducted. There is no selection of Import of RM or Plant machinery.
Without it we can't file Form 15CA.
As per above mentioned, it seems that form 15CA is not mandatory to file for import of machinery and raw material.
I have been facing the same problem. I have advised from various valuable sources, but no clarity about file the form 15CA & 15CB of above transactions.
Banks are also not aware about these provisions.
At the time of online filing of form 15CA , it required that nature of remittance with filtered options for selection of it. There are only the nature of payment like commission, royalty etc on which TDS is to be deducted. There is no selection of Import of RM or Plant machinery.
Without it we can't file Form 15CA.
As per above mentioned, it seems that form 15CA is not mandatory to file for import of machinery and raw material.
02 July 2009
Dear Mr. Bansal,
Thaks for your reply, but I have deeply gone through the FORM 15CA which is applicable for Import of Plant & Machinery and also other head ie Membership Fees, Software purchase, in which head tds is not applicable. Under the head Plant & Machinery mention as " Remittance is directly or Indirectly carried out on such activity of supply of articles or things".
So, pls advise me it is applicable of payment made to importer for raw material.
Regards,
Baljinder Singh
Thaks for your reply, but I have deeply gone through the FORM 15CA which is applicable for Import of Plant & Machinery and also other head ie Membership Fees, Software purchase, in which head tds is not applicable. Under the head Plant & Machinery mention as " Remittance is directly or Indirectly carried out on such activity of supply of articles or things".
So, pls advise me it is applicable of payment made to importer for raw material.
Regards,
Baljinder Singh
23 July 2025
The issue you're raising is regarding the applicability of Section 195(6) and the requirement to file Form 15CA and 15CB for payments related to the import of raw materials and plant & machinery.
Understanding Section 195(6):
Section 195(6) of the Income Tax Act, 1961 mandates that any person making a payment to a non-resident (including foreign companies) is required to furnish a statement in Form 15CA and Form 15CB (in certain cases).
The purpose is to ensure that the appropriate TDS (Tax Deducted at Source) is deducted from payments made to non-residents and to report such transactions to the Income Tax Department.
Now, let's break down the two transactions you're asking about:
1. Forex Payment on Purchase of Raw Material (Import):
TDS Applicability: Generally, payments for import of raw materials are not subject to TDS under Section 195 because:
Import of goods (raw material in this case) is a transaction for goods and does not typically fall under the categories for which TDS is levied (like royalty, fees for technical services, etc.).
TDS under Section 195 primarily applies to income arising in the form of interest, royalties, technical services, etc., paid to non-residents.
Form 15CA and 15CB Filing: Since TDS is not applicable on import payments, generally Form 15CA and 15CB are not required for such transactions. These forms are typically used when there is TDS liability. However, in practice, the banks might still require Form 15CA for remittances, even if no TDS is applicable, as part of the Foreign Remittance procedure.
For import of raw material, in most cases, the bank may allow the remittance without the need to submit Form 15CA and 15CB.
2. Payment Made for Import of Plant & Machinery:
TDS Applicability: Similar to the raw material, payments for the import of plant & machinery do not fall under the typical payments subject to TDS under Section 195 unless they fall under specific taxable services or income-generating activities (e.g., royalties, technical fees, etc.).
Form 15CA and 15CB Filing: Since there is no TDS on payments for plant & machinery imports, Form 15CA and 15CB are typically not required for this transaction either.
However, as with raw material payments, the bank might still ask for Form 15CA as part of the process for outward remittances, especially if they follow certain automated systems or compliance checks for international transactions.
What Should You Do?
For Import of Raw Material:
TDS is typically not applicable, so Form 15CA and 15CB are not mandatory.
If the bank insists on Form 15CA, you may need to choose a category such as "Payment for goods," but it's not explicitly covered in the standard list of remittance types.
For Import of Plant & Machinery:
TDS is typically not applicable on the import of plant and machinery unless there are other services included in the transaction.
Form 15CA might still be required by the bank, even though no TDS is applicable. In such cases, you may need to select the closest applicable category in the form (as you mentioned, “Remittance directly or indirectly carried out on such activity of supply of articles or things”).
Conclusion:
Section 195(6) mandates Form 15CA and 15CB for certain payments to non-residents where TDS is applicable, but for imports of raw material and plant & machinery, TDS is generally not applicable.
Form 15CA may still be required by banks due to their internal compliance systems, even though TDS is not applicable on these payments.
If the bank asks for Form 15CA, you can proceed by selecting the category most relevant, even though it's not a perfect match (e.g., "Supply of goods").
Understanding Section 195(6):
Section 195(6) of the Income Tax Act, 1961 mandates that any person making a payment to a non-resident (including foreign companies) is required to furnish a statement in Form 15CA and Form 15CB (in certain cases).
The purpose is to ensure that the appropriate TDS (Tax Deducted at Source) is deducted from payments made to non-residents and to report such transactions to the Income Tax Department.
Now, let's break down the two transactions you're asking about:
1. Forex Payment on Purchase of Raw Material (Import):
TDS Applicability: Generally, payments for import of raw materials are not subject to TDS under Section 195 because:
Import of goods (raw material in this case) is a transaction for goods and does not typically fall under the categories for which TDS is levied (like royalty, fees for technical services, etc.).
TDS under Section 195 primarily applies to income arising in the form of interest, royalties, technical services, etc., paid to non-residents.
Form 15CA and 15CB Filing: Since TDS is not applicable on import payments, generally Form 15CA and 15CB are not required for such transactions. These forms are typically used when there is TDS liability. However, in practice, the banks might still require Form 15CA for remittances, even if no TDS is applicable, as part of the Foreign Remittance procedure.
For import of raw material, in most cases, the bank may allow the remittance without the need to submit Form 15CA and 15CB.
2. Payment Made for Import of Plant & Machinery:
TDS Applicability: Similar to the raw material, payments for the import of plant & machinery do not fall under the typical payments subject to TDS under Section 195 unless they fall under specific taxable services or income-generating activities (e.g., royalties, technical fees, etc.).
Form 15CA and 15CB Filing: Since there is no TDS on payments for plant & machinery imports, Form 15CA and 15CB are typically not required for this transaction either.
However, as with raw material payments, the bank might still ask for Form 15CA as part of the process for outward remittances, especially if they follow certain automated systems or compliance checks for international transactions.
What Should You Do?
For Import of Raw Material:
TDS is typically not applicable, so Form 15CA and 15CB are not mandatory.
If the bank insists on Form 15CA, you may need to choose a category such as "Payment for goods," but it's not explicitly covered in the standard list of remittance types.
For Import of Plant & Machinery:
TDS is typically not applicable on the import of plant and machinery unless there are other services included in the transaction.
Form 15CA might still be required by the bank, even though no TDS is applicable. In such cases, you may need to select the closest applicable category in the form (as you mentioned, “Remittance directly or indirectly carried out on such activity of supply of articles or things”).
Conclusion:
Section 195(6) mandates Form 15CA and 15CB for certain payments to non-residents where TDS is applicable, but for imports of raw material and plant & machinery, TDS is generally not applicable.
Form 15CA may still be required by banks due to their internal compliance systems, even though TDS is not applicable on these payments.
If the bank asks for Form 15CA, you can proceed by selecting the category most relevant, even though it's not a perfect match (e.g., "Supply of goods").
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