With effect form Jun1, 2015 it has beocme mendatory to issue form 15CA and 15CB for every payment made to a non-resident or foreign company.

Below is the changed texts in Income Tax Act section 195:

In section 195 of the Income-tax Act, for sub-section (6), the following sub-section shall be substituted with effect from the 1st day of June, 2015, namely:— “(6) The person 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 furnish the information relating to payment of such sum, in such form and manner, as may be prescribed.”.
* Details in relation to above Form is provided in rule 37BB and Form Nos. 15CA & 15CB

After section 271H of the Income-tax Act, the following section shall be inserted with effect from the 1st day of June, 2015, namely:— “271-I. If a person, who is required to furnish information under sub-section (6) of section 195, fails to furnish such information, or furnishes inaccurate information, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of one lakh rupees.

Now it is mendatory to obtain form 15CB for every foreign payment.

The rule seems to be a block in ease of doing business in India. E-Commerce and software services will be most affected.

Transactions such as Buying of Domains, Hostings, Online Ads etc. are paid online either through Paypal or directly using credit cards.

However the Hosting, Domain registrar companies are non-resident and as per rules these should be paid only after issuing 15CA and 15CB.

The cost of getting 15CB will be 10 times higher than cost of buying a Domain name. Even it is not possible to deduct TDS in case of online transactions.

Companies like Google gives you an option to pay TDS against reimbursements.

Certainly this rule has been framed keeping offline business activities but what about amount paid online and these are not big amounts but are covered under the rules.

Posted 2 years, 6 months ago by CA Pulkit Sharma

There is always confusion on payments made online using card or netbanking. What will happen to those paying to Google for Adword advertisements?

Google is accepting payment as a company registered out of India. Since it is a direct payment using cards, Banks do not ask for 15CA and 15CB. Do companies need to have 15CA and 15CB even for these payments?

Posted 2 years, 6 months ago by Rahul Rai

Thanks for providing this information because while working on a technical and marketing part, through this I came to know about the how important is 15CA and 15CB. Now I will know about the every payment made to nonresidents. 

Posted 2 years, 5 months ago by Deepika Yadav

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