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Checklist to File Form 15CA & Form 15CB

Nowadays Form 15CA and 15CB are of a lot importance. We professional atleast have to issue one Form 15CB every day and form 15CA is also to be made by the professional on behalf of the client.

Form 15CA is a Declaration of Remitter and is used as a tool for collecting information in respect of payments which are chargeable to tax in the hands of recipient non-resident. This is starting of an effective Information Processing System which may be utilized by the Income tax Department to independently track the foreign remittances and their nature to determine tax liability. In the modern times, the system for selection of cases into scrutiny have reduced drastically and without scrutiny there was no check to ensure that taxable foreign remittances have been made after deduction of tax or not. Therefore, the remittance channel i.e. Banks have been directed to obtain Form 15CA and 15CB before making any remittance. Authorised Dealers/ Banks are now becoming more vigilant in ensuring that such Forms are received by them before remittance is effected since now as per revised Rule 37BB a duty is casted on them to furnish Form 15CA received from remitter, to an income-tax authority for the purposes of any proceedings under the Income-tax Act and also the revised FEMA Guidelines issued in July’2014 cast duty on the banks to ascertain the Tax Liability in each case of remittance. As per the revised RBI Guidelines, The RBI in this regard will not issue any guidelines with respect to deduction of tax at source on foreign remittances. Therefore the Banks are urging the remitters to provide such Form 15CA and 15CB even in case of Import purchases.  
Here is an attempt to make a comprehensive check list/procedure for effecive furnishing of Form 15CA and 15CB.

Exemption Under Section 54EC Limited to 50 Lacs

Capital Gains Exemption on investment in Specified Bonds

Accordingly, It is proposed to insert a proviso in Sub-Section (1) so as to provide that the investment made by an assessee in the long term specified asset, out of capital gains arising from transfer of one or more original asset, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lac rupees.

This amendmend will effect from 1st April, 2015 and will accordingly apply in relation to assessment year 2015-16 and subsequent years.

TDS 2% on Non-Exempt payment under Life Insurance Policy w.e.f 01.10.2014

Under the existing provisions of section 10(10D) of the Act, any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt subject to fulfillment of conditions specified under the said section.

Therefore, the sum received under a life insurance policy which does not fulfill the conditions specified under section 10(10D) are taxable under the provisions of the Act.

In order to have a mechanism for reporting of transactions and collection of tax in respect of sum paid under life insurance policies which are not exempted under section 10(10D) of the Act, it is proposed to insert a new section in the Act to provide for deduction of tax at the rate of 2 per cent. on sum paid under a life insurance policy, including the sum allocated by way of bonus, which are not exempt under section 10(10D) of the Act. In order to reduce the compliance burden on the small tax payers, it has also been proposed that no deduction under this provision shall be made if the aggregate sum paid in a financial year to an assessee is less than Rs. 1,00,000/-.

Interest on Housing Loan increase to Rs. 200000

The existing provisions contained in section 24 of the Act provide that income chargeable under the head “Income from house property” shall be computed after making certain deductions. Clause (b) of the said section provides that where the property is acquired with borrowed capital, the amount of any interest payable on such capital shall be allowed as deduction in computing the income from house property. The second proviso to clause (b) of the said section, inter-alia, provides that in case of self occupied property where the acquisition or construction of the property is completed within three years from the end of the financial year in which the capital is borrowed, the amount of deduction under that clause shall not exceed one lakh fifty thousand rupees.

Increase Limit of Deduction Under Section 80C

Under the existing provisions of section 80C of the Act, an individual or a Hindu undivided family, is allowed a deduction from income of an amount not exceeding one lakh rupees with respect to sums paid or deposited in the previous year, in certain specified instruments. The investments eligible for deduction, specified under sub-section (2) of section 80C, include life insurance premia, contributions to provident fund, schemes for deferred annuities etc. The assessee is free to invest in any one or more of the eligible instruments within the overall ceiling of Rs. 1 lakh.
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