Furnishing of information made more stringent and penalty introduced -Sections 195 and 271-I

Presently, when any person responsible for making a payment to a non-resident of any interest or other sum chargeable under the provisions of this Act, such person is required to deduct tax from such payment under Section 195(1). Further, sub-Section (6) of Section 195 requires such person to furnish the information relating to payment of any sum in Form 15CA. In most cases, a view was taken that this provision applied only to payments which gave rise to income chargeable to tax in India. Consequently, payments that did not give rise to income chargeable to tax in India were not reported in the Form 15CA.

Now, sub-Section (6) is proposed to be amended to provide for furnishing of information whether or not such remittances are chargeable to tax. This would cast a heavy burden on persons who make payments to non residents-especially in case of import of goods. Even for such payments, now, the obligation to furnish Form 15CA (and also Form 15CB) will have to be complied with.

This burden has been further compounded by the proposal to introduce a new Section 271-I to levy a penalty of Rs. 1,00,000/- if the person required to furnish information under Section 195 fails to furnish such information or furnishes inaccurate information.

This amendment is effective from 1st June 2015.

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