Issue of 15cb for foreign remittance
This query is : Resolved
27 October 2013
for 15 cb...
country name: vitenam
nature of payment: frieght charges
amount : 8700 usd
please guide me regarding applicability of dtta...and tds should be deducted or not on this foriegn remittance by indian co. while making payment to foreign co. of frieght charges..
country name: vitenam
nature of payment: frieght charges
amount : 8700 usd
please guide me regarding applicability of dtta...and tds should be deducted or not on this foriegn remittance by indian co. while making payment to foreign co. of frieght charges..
28 October 2013
Mr Mehta!
The procedure involves Form 15CA and 15CB. CA certificate is essential. Depending upon the services received CA will determine the amount of TDS.
contact@vkbajaj.co.in
The procedure involves Form 15CA and 15CB. CA certificate is essential. Depending upon the services received CA will determine the amount of TDS.
contact@vkbajaj.co.in
28 October 2013
Please check whether income is taxable in India or not.
Anuj
Anuj
28 October 2013
no...not taxable in India..its ocean freight payment to foreign company not having permament establishment in India
28 October 2013
no...not taxable in India..its ocean freight payment to foreign company not having permament establishment in India
02 August 2024
When dealing with foreign remittances such as payment for freight charges to a foreign company, it's essential to understand the implications of the Double Taxation Avoidance Agreement (DTAA) and TDS requirements. Here's a step-by-step guide for your situation:
### **1. Applicability of DTAA**
- **DTAA with Vietnam:**
- India has a DTAA with Vietnam. According to the DTAA, certain income types might be exempt from Indian tax or may be taxed at a reduced rate.
- **Ocean Freight Charges:** Typically, payments for ocean freight services are not considered "royalty" or "technical service fees" under most DTAAs. As such, they are generally not subject to tax under the Indian Income Tax Act if the foreign company does not have a Permanent Establishment (PE) in India.
### **2. Tax Deducted at Source (TDS)**
- **TDS Applicability:**
- **Freight Charges:** Since the payment is for freight charges and the foreign company does not have a PE in India, this payment generally does not attract TDS under Section 195 of the Income Tax Act, 1961.
- **No TDS Required:** In this case, TDS is not required to be deducted as the nature of the payment and the absence of a PE in India typically exempt it from Indian taxation.
### **3. Form 15CB**
- **Requirement for Form 15CB:**
- **Purpose of Form 15CB:** Form 15CB is a certification provided by a Chartered Accountant to certify that the payment made to a foreign entity is in accordance with Indian tax laws and DTAA provisions.
- **Filing Form 15CB:** Even though TDS may not be applicable, you still need to file Form 15CB to ensure compliance with Indian regulations. The Chartered Accountant will confirm that no TDS is applicable based on the nature of the payment and the DTAA provisions.
### **4. Steps for Compliance**
1. **Consult a Chartered Accountant:**
- Engage a CA to certify Form 15CB, confirming that the payment is in accordance with Indian tax laws and DTAA.
2. **Fill Out Form 15CB:**
- The CA will complete Form 15CB, certifying that the payment of USD 8,700 for freight charges does not require TDS.
3. **File Form 15CA:**
- Along with Form 15CB, you need to file Form 15CA electronically with the Income Tax Department. This form is a declaration of the payment made to a foreign entity and should include details of the payment and the certification.
### **5. Documentation Required**
- **Invoices:**
- Obtain and retain the invoice from the foreign company detailing the freight charges.
- **Proof of Payment:**
- Maintain records of the payment made to the foreign entity.
- **DTAA Certificate (if applicable):**
- If required, obtain a certificate from the foreign company confirming its tax status and absence of PE in India.
### **Summary**
- **DTAA and TDS:** For freight charges to a foreign company with no PE in India, DTAA provisions generally exempt such payments from Indian tax, and no TDS is required.
- **Form 15CB:** Required to confirm compliance with tax regulations.
- **Form 15CA:** Must be filed along with Form 15CB.
Ensure that you consult with a Chartered Accountant to verify the specifics of your case and complete the necessary forms accurately.
### **1. Applicability of DTAA**
- **DTAA with Vietnam:**
- India has a DTAA with Vietnam. According to the DTAA, certain income types might be exempt from Indian tax or may be taxed at a reduced rate.
- **Ocean Freight Charges:** Typically, payments for ocean freight services are not considered "royalty" or "technical service fees" under most DTAAs. As such, they are generally not subject to tax under the Indian Income Tax Act if the foreign company does not have a Permanent Establishment (PE) in India.
### **2. Tax Deducted at Source (TDS)**
- **TDS Applicability:**
- **Freight Charges:** Since the payment is for freight charges and the foreign company does not have a PE in India, this payment generally does not attract TDS under Section 195 of the Income Tax Act, 1961.
- **No TDS Required:** In this case, TDS is not required to be deducted as the nature of the payment and the absence of a PE in India typically exempt it from Indian taxation.
### **3. Form 15CB**
- **Requirement for Form 15CB:**
- **Purpose of Form 15CB:** Form 15CB is a certification provided by a Chartered Accountant to certify that the payment made to a foreign entity is in accordance with Indian tax laws and DTAA provisions.
- **Filing Form 15CB:** Even though TDS may not be applicable, you still need to file Form 15CB to ensure compliance with Indian regulations. The Chartered Accountant will confirm that no TDS is applicable based on the nature of the payment and the DTAA provisions.
### **4. Steps for Compliance**
1. **Consult a Chartered Accountant:**
- Engage a CA to certify Form 15CB, confirming that the payment is in accordance with Indian tax laws and DTAA.
2. **Fill Out Form 15CB:**
- The CA will complete Form 15CB, certifying that the payment of USD 8,700 for freight charges does not require TDS.
3. **File Form 15CA:**
- Along with Form 15CB, you need to file Form 15CA electronically with the Income Tax Department. This form is a declaration of the payment made to a foreign entity and should include details of the payment and the certification.
### **5. Documentation Required**
- **Invoices:**
- Obtain and retain the invoice from the foreign company detailing the freight charges.
- **Proof of Payment:**
- Maintain records of the payment made to the foreign entity.
- **DTAA Certificate (if applicable):**
- If required, obtain a certificate from the foreign company confirming its tax status and absence of PE in India.
### **Summary**
- **DTAA and TDS:** For freight charges to a foreign company with no PE in India, DTAA provisions generally exempt such payments from Indian tax, and no TDS is required.
- **Form 15CB:** Required to confirm compliance with tax regulations.
- **Form 15CA:** Must be filed along with Form 15CB.
Ensure that you consult with a Chartered Accountant to verify the specifics of your case and complete the necessary forms accurately.
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