CA. Rashi Goyal (Chartered Accountant) (512 Points)
03 December 2010Hi,
If a company is refunding the excess share/debenture application money without any interest component and also making declaration to the authorised dealer that no part of remittance includes any interest.
Is company required to obtain 15CA and 15CB u/s 195.
Regards,
Rashi Goyal
CMA.Jayashree
(Senior Accounts Officer)
(39 Points)
Replied 03 December 2010
Hi,
Yes. We have to give 15ca & 15cb for the refund of share application money also u/s 195.
Regards,
Jayashree
CA. Rashi Goyal
(Chartered Accountant)
(512 Points)
Replied 03 December 2010
As per income tax Act, section 195 is applicable if any income is paid to non resident. As per my understanding refund of any advance amount is not in the nature of Income.
Could you please provide any documentry evidence supporting that the returning of advance money without any interest requires the CA certificate.
Regards,
Rashi Goyal
CMA.Jayashree
(Senior Accounts Officer)
(39 Points)
Replied 03 December 2010
Hi,
Except for payment of import of materials, for all outward remittances bankers are demanding 15ca & 15cb.Recently in our company we have also refunded the share aplication money with 15ca & 15cb. Even for reimbursement travel expenses, if it is a outward remittance wer have to give 15ca & 15cb.
regards,
Jayashree
CA. Rashi Goyal
(Chartered Accountant)
(512 Points)
Replied 03 December 2010
Hi,
Would like to rectify your reply, the payments for import are specifically included iby the RBI. I am herewith providing the RBI circular:
"""RBI/2007-2008/100
A. P. (DIR Series) Circular No. 03
July 19, 2007
To,
All Category - I Authorised Dealer banks and Authorised banks
Madam / Sir,
Remittances to non-residents - Deduction of tax at source
Attention of Authorised Dealer Category - I (AD Category - I) banks and authorised banks
is invited to A. P. (DIR Series) Circular No.56 dated November 26, 2002 enclosing a copy of
Central Board of Direct Taxes (CBDT) Circular No.10/2002 dated October 9, 2002
(F.No.500/152/96-FTD) regarding revision in the format of the undertaking and the certificate to be submitted by the remitter at the time of making remittances to non-residents.
2. We have been receiving queries from authorised dealers whether such undertaking and
certificate should be obtained in all cases of remittances in foreign currency to non-residents
including remittances for trade payments. On the basis of the communication received from
CBDT, Department of Revenue, Ministry of Finance, Government of India, it is clarified that under Section 195 of the Income Tax Act read with Rule 29B of the IT Rules, any person responsible for making payment to a non-resident or to a foreign company, any interest or any other sum chargeable under the IT Act, shall at the time of payment or credit of the amount deduct Income Tax thereon at the rate in force. Section 195 of the IT Act is not limited to interest income and it takes into account business income also. Further, points 7 and 8 of the Chartered Accountant's certificate deals with remittances for supply of articles or things (plant, machinery, equipment, etc.) or computer software and business income, respectively.
3. Accordingly, a remitter of foreign exchange is required to submit to the authorised dealer, an undertaking and Chartered Accountant’s certificate in the format prescribed by CBDT vide circular No. 10/2002 dated October 9, 2002 at the time of making the remittance in foreign exchange to non-residents including remittances which are in the nature of trade transactions such as import payments.
4. AD Category - I banks and authorised banks may bring the contents of this circular to the notice of their customers and constituents concerned.
5. The directions contained in this circular have been issued under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to
permissions / approvals, if any, required under any other law.. """
The above RBI circular specifically include the trade payments but it is silent for refund of advance payments. We had recently refunded the share application money but our AD has not asked for the form 15CA & 15CB.
If i see the provisions of Income tax act the amount is not in the nature of income hence the form 15CA & CB are not applicable. The trade payments are also not included as per secion 195 but RBI circular specifically includes such payments hence as per RBI the form 15CA & CB are applicable on trade payments not covered u/s 195.
As per my understanding the refund of share/debenture application money is niether included as per section 195 of IT act nor as per RBI regulations.
Please reply along with some relevent evidences, not as per the generally accepted practices.
Regards,
Rashi Goyal
upendra
(Manager- A & F)
(21 Points)
Replied 03 December 2010
Hi,
you have to follow the rule if you refund interest.
does not require for share application money refund
Step 1 : Obtain a certificate from a Chartered Accountant in Form No 15CB
Step 2:Furnish the information in Form No15CA
Step 3:Electronically upload Form 15CA on the designated website
Step 4:Take Print out of Form 15CA and file a signed copy
Step 5:Remit money to the Non Resident
REgards
upendra
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 08 September 2011
Ideally Form 15CA and 15CB should not be required for refund of share application money, but if the bank refuses to remit the the payment without the same , you may need to submit the same to bank.
Anuj
+91-9810106211
femaquery @ gmail.com
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