A STEP FORWARD TO USE TECHNOLOGY UNDER THE INCOME TAX ACT, 1961- DIGITAL APPLICATION BY ASSESSEE AND APPROVAL BY ASSESSING OFFICER IN RELATION TO DEDUCTION OF TDS UNDER SECTION 195 IN CASE OF NON RESIDENT

Section 195(2) of the Income Tax Act, 1961 (hereinafter referred to as Act) provides an option to any person paying any sum to non- resident if he considers that the total sum payable to non- resident is not chargeable to income tax under the Act, he may apply for determination of appropriate amount on which the TDS under section 195 may be deducted from the payment to be made to non-resident.

Earlier, the said application was said to be made by any person manually to the Assessing officer to obtain certificate/order from the Assessing Officer for lower or nil withholding-tax.

However, with the objects to use technology to streamline the process, reducing the time for processing of such applications and to help tax administration in monitoring such payments, amendment was made vide the Finance (No.2) Act, 2019 in Section 195(2) to allow for prescribing the form and manner of application to the Assessing Officer by such person to determine such appropriate sum along with the manner of determination of appropriate portion of sum chargeable to tax by the Assessing Officer.

In reference to the above, the Central Board of Direct Tax has now inserted a new Rule 29BA in the Income Tax Rules, 1962vide Notification No. 18/2021 dated 16-03-2021 for the above said digital application for grant of certificate for determining appropriate proportion of sum (other than salary), payable to non-resident, chargeable in case of the recipients in Form 15E electronically.

The above said application shall be made under digital signature or through electronic verification code.

The Assessing Officer shall examine the said appropriate amount upon which the TDS shall be deducted by the applicant and issue a certificate in manner as prescribed therein Rule 29BA.

Also, the said Form 15E has been inserted after the Form 15D in the Income Tax Law.

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