Tax Authorities to Scrutinize Foreign Remittances
Apr. 7 – Foreign companies and non-resident individuals that need to send funds to foreign countries will need to notify the Income Tax authorities according to a new regulation by the Central Board of Direct Taxes. According to the new regulation 37BB, the company or individual that sends the money abroad will have to notify the income tax authorities before remitting money outside India so that the Indian tax authorities can keep a tab on the taxes paid on the remittances.
The new regulation will come into effect as of July 1st, 2009 and involves obtaining form 15CB from a chartered accountant and electronically filing in 15CA at a website designated by the Income tax department. Thereafter a signed print out of the form 15CA should be submitted to the Income Tax department prior to the remitting the payment. The form 15CA needs to be signed by an individual competent to sign the Return of Income.
The Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture, transmission of data and shall also be responsible for the day-to-day administration in relation to furnishing the information in the manner specified.
At present, a remitter is required to furnish an undertaking to the tax authority accompanied by a certificate from a chartered accountant. But, these documents are submitted to bank through which remittance is affected, who in turns forwards it to the tax authorities. The increase in remittances has made manual handling and tracking of certificates difficult, leading to a time lag and thereby preventing prompt action by the tax authorities, according to a report in the Economic Times.