RBI directs banks to strictly follow 15CA and 15CB procedure while remitting money.  As per Section 195 of the Income Tax Act 1961, every person liable for making a payment to non-residents shall deduct TDS from the payments made or credits given to non-residents at the rates in force.

RBI  also mandates that except in cases of certain personal remittances which have been specifically exempted, no remittance should be made to a non-resident without furnishing an undertaking in Form 15CA accompanied by a certificate from an Accountant in Form 15CB

The purpose of this undertaking and certificate is to collect taxes at the stage when the remittance is made as it may not be possible to recover the tax at a later stage from the non-residents. The format of the undertaking in Form 15CA which is to be filed electronically and the format of the certificate of the Accountant in Form 15CB have been notified vide Rule 37BB of the Income Tax Rules 1962

The current direction states that RBI has reviewed the policy relating to issue of instructions under Foreign Exchange Management Act, 1999 (FEMA), clarifying tax issues. It has now been decided that RBI will not issue any instructions under the FEMA, in this regard. It shall be mandatory on the part of Authorised Dealers to comply with the requirement of the tax laws, as applicable.

4. Authorised Dealers may bring the content of this circular to the notice of their constituents concerned. Further, they may also be advised to approach CBDT for any clarification in this regard.

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