Remitting Money Abroad: Here's The Right Procedure As Per Tax Laws

As a step to further clamp down instances of tax evasion, black money, money laundering and other such practices, the Narendra Modi led government asked Chartered Accountants for their support in the mission. The Minister also asked professionals to maintain their integrity in respect of auditing and certification practices.

Earlier in the year, to curb the malpractices resorted to by such professionals, government has introduced penal provisions according to which if the tax professional, merchant banker or valuer issues any wrong certificate then he or she is liable to a penalty amounting to Rs. 10000 per incorrect certificate or report.

Foreign Remittances and NIL tax withholding certificate

Apart from the so many certificates and reports that needs to be furnished by a CA, for foreign remittance made to a non-resident outside India, the NIL tax withholding certificate is to be obtained by a CA or tax professional.

The provision of Indian tax laws requires deduction of TDS on any amount remitted to the foreign national and the amount of such deduction is equivalent to the income tax liability of the non-resident.

But in case, the person making the payment to the non-resident is of the view that no TDS is applicable then an application in respect of the same has to be made to the tax officer of the applicable jurisdiction to issue a certificate or an order to allow for making the payment to a foreign national without the deduction of TDS. To further ease down the work both for the party making the payment as well as the tax authorities, the government has allowed CAs to issue a NIL or lower TDS certificate for any payment abroad to a non-resident.

But as there are high chances that after issue of the certificate these transactions may be applicable for tax liability in India, government is further scrutinizing such transactions. So instead of making the remittance against a CA certificate it makes more sense to approach the tax officials and obtain a NIL tax withholding order. More so, the tenet needs to be followed in case of transactions that involve complicated tax issues.

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