Submission of No Objection Certificate in case of remittance to a non-resident
Circular No. 759 was issued by the Central Board of Direct Taxes on 18 November 1997. Its subject is Submission of No Objection Certificate in case of remittance to a non-resident.
Removes the requirement of a No Objection Certificate from the Income-tax Department before a remittance to a non-resident. In its place the person remitting furnishes an undertaking in duplicate addressed to the Assessing Officer, accompanied by a certificate from an accountant, other than an employee, as defined in the Explanation below section 288, in the form annexed. The undertaking is submitted with the certificate to the Reserve Bank of India, which forwards a copy to the Assessing Officer. In the undertaking the remitter states the amount, nature and payee of the remittance and the tax deducted, and undertakes to pay any shortfall with interest, accepts liability to penalty and prosecution for default, and undertakes to produce documents to enable the Department to determine the income and tax. The accountant certifies, after examining the remitter's books, the nature of the remittance, the rate at which tax is deductible and that the tax has been deducted and paid to the credit of Government.
The Reserve Bank of India's Office Manual had provided that no remittance be allowed without a No Objection Certificate from the Department, and it was decided to let remittances go through on the undertaking and accountant's certificate instead.
Submission of No Objection Certificate in case of remittance to a non-resident
1. Section 195 of the Income-tax Act, 1961 provides that any person responsible for paying to a non-resident any sum chargeable under the Act shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by cheque or draft or any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.
2. The Reserve Bank of India have provided in their Office Manual that no remittance shall be allowed unless a No Objection Certificate has been obtained from the Income-tax Department. It has since been decided that henceforth remittances may be allowed by the Reserve Bank of India without insisting upon a No Objection Certificate from the Income-tax Department and on the person making the remittance furnishing an undertaking (in duplicate) addressed to the Assessing Officer accompanied by a certificate from an Accountant (other than an employee) as defined in the Explanation below section 288 of the Income-tax Act, 1961 in the Form annexed to this circular. The person making the remittance shall submit the undertaking along with the said certificate of the Accountant to the Reserve Bank of India, who in turn, shall forward a copy thereof to the Assessing Officer.
3. The contents of this Circular may be brought to the notice of all the officers working in your charge.
UNDERTAKING
To
..............................................................................
(Designation of the Assessing Officer)
..............................................................................
..............................................................................
I/We................................................................................................................……………………...........................................
(name, address & Permanent Account Number)
propose to make a remittance of.....................................................................................…………………………………...........
(Amount)
being.............................................................................................................................................……………………..............
(nature of payment)
to.....................................................………………….............................................................................................................
(name and complete address of the person to whom the remittance has been made)
after deducting a sum of Rs........................ being the tax @.............................., which is the appropriate rate of tax deductible at source on the said amount of remittance.
2. A certificate from the accountant as defined in Explanation below section 288 of the Income-tax Act, certifying the nature and amount of income, amount of tax payable and the amount actually paid, is also annexed.
3. In case it is found that the tax actually payable on the amount of remittance made, has either not been paid or has not been paid in full, I/we undertake to pay the said amount of tax along with interest found due in accordance with the provisions of the Income-tax Act.
4. I/We will also be subject to the provisions of penalty and prosecution for the said default as per the Income-tax Act.
5. I/We also undertake to submit the requisite documents, etc., for enabling the Income-tax Department to determine the nature and amount of income and tax, interest, penalty, etc., payable thereon.
(Name and Signature)
Date...............................
Place..............................
(The Undertaking shall be signed by the person authorised to sign the return of income of the person making the payment).
CERTIFICATE
I/We have examined the books of accounts of M/s..........................................................…………………………………………………………………
.....................................................................................................................................................................………………………………………….
(Name, address and Permanent Account Number of person making the remittance)
for ascertaining the nature of the remittance, of.........................................…………………………………………........................................
(amount of remittance)
to...........................................................................................................................………………………………………….............................
(Name and complete address of the person to whom the remittance is being made)
and the rate at which the tax is deductible at source thereon and hereby certify that a sum of Rs........................... has been deducted as tax at the appropriate rate and has been paid to the credit of the Government.
.................................................
Accountant
Place......................
Date.......................
Circular : No. 759, dated 18-11-1997.
At the bank counter when a foreign remittance is being processed, and later in a proceeding under section 201 if the tax certified as deducted proves short.
Source: the Income Tax Department’s own published text — its page for this instrument.