29 January 2024
One company had to make Non resident payment. TDS under sec 195 was paid in 28.2.2015. Since the company was not having liquid resource to make payment, though TDS was paid. Now the company has received the funds during 2023-24, the company wants to make Non resident payment now. Since the date of payment of TDS is more than 7 years, can it be used to pay off Non resident payment now. Is there any timelimit for making payment what are the precautions to be taken for issuing Form 15CB
11 July 2024
In your scenario, the payment of TDS under Section 195 was made on 28th February 2015, and now the company wishes to use this TDS to pay the Non-Resident (NR) payment in the financial year 2023-24. Here are the key points to consider:
### Time Limit for Using TDS Credit
1. **Validity of TDS Certificate (Form 16A)**: TDS certificates (Form 16A) issued by the deductor are valid for claiming credit against tax payable by the deductee. Generally, these certificates are valid for use in the financial year in which TDS is deducted and the subsequent year. However, for practical purposes, the Income Tax Department allows TDS credits to be used for a reasonable period beyond these years if circumstances justify it.
2. **Relevance of the TDS Payment Date**: The TDS payment date (28th February 2015 in your case) is crucial because the tax is considered paid when deposited with the government. However, the challenge arises if there's a significant delay in utilizing this credit against actual NR payment due to the passage of time.
### Precautions for Issuing Form 15CB
Form 15CB is a certificate issued by a Chartered Accountant certifying the payment to non-residents and ensuring compliance with Indian tax laws. Here are the precautions to take when issuing Form 15CB:
1. **Ensure TDS Compliance**: Verify that the TDS has been correctly deposited with the government and reflected in the company's TDS certificates (Form 16A).
2. **Verify TDS Credit**: Ensure the TDS credit is available for use against the NR payment. This might involve checking with the Income Tax Department or reviewing past tax filings and TDS certificates.
3. **Currency Conversion**: If the payment is in foreign currency, ensure the exchange rate used is as per RBI guidelines on the date of remittance.
4. **Documentary Evidence**: Gather all necessary documents related to the NR payment, including contracts, invoices, proof of services rendered or goods supplied, and any communication with the non-resident.
5. **Accuracy in Form 15CB**: The CA issuing Form 15CB must verify the accuracy of the information provided, including the purpose of payment, taxability, and compliance with Indian tax laws.
### Consultation with Experts
Given the complexity and potential implications of delayed TDS credit utilization, it's advisable to consult with a qualified Chartered Accountant or tax advisor. They can provide specific guidance tailored to your company's situation, ensure compliance with regulatory requirements, and help minimize any tax risks associated with the NR payment.
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