The CBDT inserts a new Form 15E under rule 29BA to operationalize the provisions of section 195.
Section 195 was amended by the Finance (No. 2) Act, 2019 to empower the board to prescribe the form and manner of filing the application to determine the appropriate proportion of such sum so chargeable and upon determination tax to be deducted as per section 195 on that proportion only.
Form 15E is an Application for a grant of certificate for determination of the appropriate proportion of sum (other than Salary), payable to a non-resident, chargeable in case of the recipients. The form will come into effect from 1st April 2021.
An application can file Form 15E electronically on the Income-tax portal using a Digital Signature Certificate (DSC) or Electronic verification code (EVC).
Assessing Officer shall examine the application and on being satisfied that the whole of such sum would not be the income chargeable in case of the recipient, may issue a certificate for the purpose of TDS determining the appropriate proportion of such sum chargeable under the provision of section 195 of the Act.
Amendment to Section 195
Section 195 of the Act was amended by Finance (No.2) Act 2019 “in order to streamline the process for making an application by the deductor and to reduce the human interface.”
The newly amended section empowers the CBDT to prescribe the form and manner of filing of an application under sub-section (2) to determine the appropriate proportion of such sum so chargeable and upon determination tax to be deducted as per sub-section (I) of section 195 on that proportion only.
“Further sub-section (7) of section 195 was amended to provide that the Government may specify a class of persons or cases, where the deductor who is responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall make an application to the Assessing Officer in such form and manner and Assessing officer to determine in such manner as may be prescribed the appropriate proportion of sum chargeable, and upon such determination, the tax shall be deducted under sub-section (I),” the Board said.
The Assessing Officer shall take the following information into consideration.
- tax payable on the estimated income of the previous year relevant to the assessment year;
- tax payable on the assessed or returned or estimated income, as the case may be, of preceding four previous years;
- existing liability under the Income-tax Act, 1961(43 of 1961) and Wealth-tax Act, 1957(27 of 1957);
- advance tax payment, tax deducted at source, and tax collected at source for the assessment year relevant to the previous year till the date of making an application under sub-rule (1).
The certificate issued under Rule 29BA shall be valid only for the payment to non-resident and for the period of the previous year specified in the certificate.
The assessing officer can also cancel the certificate any time before the expiry of the period mentioned in the Certificate.
Also, the Assessee can apply for the Fresh Application after the expiry of the period of validity of the earlier issued certificate or within 3 months before the expiry of the certificate.
