Changes to tax procedures for sales proceeds under FDI and FVCI routes
This is subsequent to the changes in Income Tax (IT) procedures for submitting the Client Undertaking and Tax Certificate from the local Certified Public Accountant (CPA) for remittance of sales proceeds of Foreign Direct Investment (FDI) and Foreign Venture Capital Investments (FVCI) transactions, including shares converted from DR (Depository Receipts) and FCCB (Foreign Currency Convertible Bonds)
To summarize the key changes:
- Changes to the Client Undertaking: The existing form used for this purpose (Annexure ‘A’) has been replaced with a new Form 15CA. The Form 15CA will have to be filed electronically on a website designated by the IT department, and a signed printout of this form will have to be submitted by the authorized client representative. The new Form 15CA requires additional information as compared to the earlier Annexure ‘A’, including the entity type for remitter, beneficiary details, details to clarify the tax rates used for specific types of remittances etc.
- Changes to the CPA certificate: The CPA certificate has to be given in a new format called Form 15CB.
- The above changes apply to investments done under the Foreign Direct Investment (FDI) and Foreign Venture Capital Investments (FVCI) routes, but not to investments done under the Foreign Institutional Investor (FII) route (except to the extent of the modified format of the CPA certificate).
The IT Department of India has now issued the following additional clarifications on the new procedures:
- The client or his CPA will have to upload the Form 15CA on the following website designated by the IT: www.tin-nsdl.com
- The processed Form 15CA will have to be downloaded from this website by the client or his CPA, and the client or a person authorized by the client will have to sign the Form 15CA.
- The CPA will provide the CPA tax certificate in the new format (Form 15CB)
- The signed Form 15CA and Form 15CB (in duplicate) will have to be sent in original to Citi India for completing the tax process linked to the remittance.
- Citi India in turn will forward one set of these forms to the tax authorities as per current process.
- The detailed instructions for filling up of Form 15CA are available at: https://onlineservices.tin.nsdl.com/TIN/JSP/tds/Form15CAHome.jsp
The Reserve Bank of India (RBI) will also be issuing instructions for banks in India on the revised process. These guidelines are effective from 01 July 2009.
Source: Government of India, Department of Revenue Circular no. 04/2009. Please click on the following link to access the notification: http://law.incometaxindia.gov.in/TaxmannDit/DisplayPage/dpage1.aspx?md=1
