Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: VAT Audit :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: ACCOUNTING STANDARD :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TDS :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: articles on VAT and GST in India :: form 3cd :: ACCOUNTING STANDARDS
News Headlines »
 TDS on rent and other tax tasks to complete before March 31
 5 income tax changes which will come into effect from April 1, 2018
 Why you shouldn't be a last-minute tax filer
 How to calculate income tax for this assessment year on Moneycontrol
 6 Tax notices you may get and how to cope with them Income Tax Notice
 Deadline to pay advance tax ends tomorrow: Here is a step-by-step guide
  Central Goods and Services Tax (Second Amendment) Rules, 2018
 Income Tax Return Filing Deadline: Waiver On LTCG Tax To End On 31 March. Details Here
 Income tax returns (ITR) filing: Top mistakes that can be very costly
 Income Tax Return (ITR) filing: 6 last-minute things you can still do to save tax for FY17-18
 How to file Income Tax Returns online in 5 simple steps

CA certificate will add to existing expense
October, 22nd 2007

Importers and exporters have a new problem. They have to submit a Chartered Accountant (CA) certificate regarding tax deduction at source (TDS), before making remittances to non-residents.
Reserve Bank of India (RBI), vide its AP (DIR) circular no. 03/2007-08 dated 19.07.2007, has clarified that a remitter of foreign exchange is required to submit to the authorised dealer, an undertaking and CA certificate in the format prescribed by Central Board of Direct Taxes (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.
The issue regarding tax deduction at source has a fair history. Prior to 8th November 1997, a No Objection Certificate (NOC) was required from Income Tax authorities before allowing remittances to non-residents. The CBDT issued circular No.759 dated 18.11.1997 dispensing with that requirement and remittances were allowed against an undertaking accompanied by a CA certificate. RBI circulated the formats through AD (MA) circular no. 48 dated 29.11.1997.
However, the certificates were issued prescribing TDS in certain cases where tax was liable to be deducted or prescribing TDS at a lower rate than was payable on the basis of the provisions of the Income Tax Act and the applicable Double Taxation Avoidance Agreements. The format of the certificates did not provide for necessary details or the reasons for adopting a certain rate for TDS. This resulted in unnecessary calling of information from the assessees at a later stage and thus gave rise to grievances on the part of the tax-payers. Therefore, in order to streamline the procedure as well as to ensure the correct TDS, the CBDT revised the formats of the undertaking and CA certificate. RBI circulated the revised formats vide its AP (DIR) circular no. 56/2002-03-RB dated 26.11.2002.
Even so, queries persisted from authorised dealers as to 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, RBI has now 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, says the RBI. Further, points 7 and 8 of the CA certificate deal with remittances for supply of articles or things (plant, machinery, equipment, etc.) or computer software or business income, says RBI.
The importers and exporters have to now run after their CA for certificates for every remittance of income of non-residents and that adds to the transaction costs and also practical difficulties. It would be better if such certificates are dispensed with for small remittances below a threshold limit and if only consolidated periodic certificates are called for. It is a matter for the Commerce Minister to take up with the Finance Minister in the interest of cutting transactions costs of importers and exporters.

T N C Rajagopalan

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Achievements

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions