Requirement for certificate of an accountant under Rule 37BB, or certificate in form 15CB as it is popularly known, originates from Section 195 (6) of Income Tax Act, 1961 (“the Act”) which requires a person making payment to a non resident to furnish information relating to such payment in the form and manner as prescribed by the CBDT. Rule 37BB of the Income Tax Rules, 1962 stipulates detailed requirements in this regard. It has prescribed form 15CA to be submitted by the payer and form 15CB in which, a certificate is to be given by a chartered accountant. Instead of the accountant’s certificate, a certificate from the assessing officer under Section 197 of the Act or an order from the assessing officer under sub sections (2) or (3) of Section 195 are also acceptable.
 
As most of us are aware, post notification No. SO 2659 (E) dated 2 September 2013 issued by the CBDT, new form 15CB is in force. Vide this notification, Rule 37BB has been amended whereby it stipulates the following:

1. In case amount being paid does not exceed INR Fifty thousand and aggregate of such payments made during the financial year does not exceed INR Two lakh fifty thousand, the person paying the amount has to just provide with information in Part A of form 15CA without obtaining any certificate from a chartered accountant or assessing officer;

1. In case of payments other than those mentioned in ‘a’ above, the payer has to provide with information in Part B of form 15CA after obtaining certificate from a chartered accountant in form 15CB or certificate/ order from the assessing officer, as the case may be.

 
Sub Rule (2) of Rule 37BB stipulates that the information in Form No. 15CA shall be furnished by the person electronically to the website designated by the Income-tax Department and thereafter signed printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment.
 
Major contents of form 15CB
I presume that he readers would be conversant with format of the revised form 15CB now and hence have not discussed clause wise requirements hereunder. Instead, I have attempted to clarify issues surrounding applicability of TDS and rates thereof.
 
While determining applicability of TDS in the given transaction, please check nature of transaction with supplier invoice/ copy of agreement, if any. If based on its nature, the remittance is not taxable in India at all (for e.g., reimbursement of travelling expenses), since it does not accrue or arise in India under Section 9, nor is it deemed to be received in India under Section 5, state the same accordingly under “relevant section of the Act” in form 15CB. In that case, even though the receiver does not have a PAN in India or a Tax Residence Certificate (TRC) from a foreign government, no TDS will be applicable. In such case, no Double Taxation Avoidance Agreement (DTAA) needs to be invoked.
 
In case the transaction is taxable under Income Tax Act, applicability of DTAA benefit needs to be checked. According to Section 90 (4) of the Act, no DTAA benefit will be available to a non-resident unless he/ she/ it produces a TRC issued by government of a foreign country/ territory. Even after producing TRC, DTAA benefit may not necessarily be available. One also has to check if the payee (non-resident) has a PAN in India. If he does not have a PAN in India, Section 206AA (1) will be applicable and tax shall be deductible at the higher of the following rates:

1. rate specified in the relevant provision of this Act; or

2. rate or rates in force (i.e., as per DTAA); or

3. at the rate of twenty per cent.

 
Section 206AA (1) will apply notwithstanding the payee furnishing TRC to the payer. In such case, DTAA benefit cannot be availed. Thus, to avail benefit under DTAA, both, TRC of the non-resident and his PAN in India must be available.
 
In case tax is required to be deducted at source at a rate specified in the Act, the payer should add education cess also to the TDS amount, unlike in case of resident payees where no education cess needs to be added to TDS (except on salary). Please refer second page of the link http://incometaxindiapr.gov.in/incometaxindiacr/contents/tpp/TDS-Rates-ENGLISH.pdf. Though rates given in the link are for the FY 2012-13, there is no change in substantive law that I am discussing about.
 
The position will, however, be different if the payee takes benefit of DTAA. In that case, no education cess will be applicable on TDS amount, as held by ITAT, Kolkata in DIC Asia Pacific Pte. Ltd. V/s Assistant Director of Income Tax (2012).
 
If TDS is applicable, the payer must have deducted and paid the same to the government account before requesting a certificate in form 15CB. Chartered Accountant issuing the certificate should verify copy of challan for payment of TDS. He has to mention proposed date of payment, date of deposit of tax and date of certificate. It has to be noted that the certificate is issued after depositing the tax with government account but before remitting funds to non-resident. Thus, date of certificate cannot be before date of depositing tax and cannot be after proposed date of payment. It can however, match with these dates.
 
Explanation 2 to Sub-rule (4) of revised Rule 37BB exempts certain foreign remittances with specified natures of payment from providing with information as required by sub-rule (1), i.e., from submitting form 15CA or certificate in form 15CB.
 
Material referred: CBDT notification No. SO 2659 (E) dated 2-9-2014, Rule 37BB of Income Tax Rules, 1962, Sections 90 and 206AA of Income Tax Act, 1961.