The CBDT on 16th March, 2021 has notified a new Rule 29BA (referred to herein as the “Rule”) under which payer will have to submit Form 15E for determining the taxable portion of any amount (other than salary) to a non-resident where he considers that the entire amount is not chargeable to tax as per Sec195(2) of the Income Tax Act,1961(referred to herein as the “Act”) or only a proportion of the sum is chargeable to tax and therein tax shall be deducted only on that proportion of the sum as per Sec195(7) of the Act.
This rule will come into effect from 1st April,2021. The rule prescribes a fixed format for Form 15E will be made electronically under Digital Signature or via electronic verification code. This rule is similar to Rule 28AA in which application in Form 13 can be made online for seeking certificate under Section 197 of the Act.
While processing the application filed under this rule, the Assessing Officer will take into consideration various aspects such as the tax payable on estimated income of the previous year relevant to the assessment year; tax payable on the assessed or returned or estimated income of preceding four previous years; existing liability under the Income-tax Act, 1961 etc.
The certificate granted for the application made section 195(2) and 195(7) of the Act shall remain in force till the expiry of the period specified in the certificate, unless it is cancelled by the Assessing Officer at any time before the expiry. An application for a fresh certificate can be made, after the expiry of the period of validity of the earlier certificate or within three months before the expiry of the current certificate issued.
With the notification of this rule and form, the payer of sums of money to the non-resident has been given an option to make an application in Form 15E and seek certainty on the sums of money on which withholding tax is required to be deducted.
