*CBDT introduces new rule for making online application for lower withholding on payments to non-residents*

*CBDT introduces new rule for making online application for lower withholding on payments to non-residents*

A notification no. 18 issued by CBDT on 16 March 2021  that amends the Income Tax Rules, 1962 by inserting Rule 29BA (Rule) that deals with online application for lower withholding on payments to non-residents (NR) under the Indian Tax Laws (ITL) . The Notification also notifies final Form 15E  for making such application.

The extant procedure for making application for lower withholding on payments to NR is a physical paper-based submission process with no specific form prescribed. Pursuant to recent amendments in the ITL, which empower the CBDT to prescribe the form and manner of filing such application, the CBDT had earlier published a draft of the Form, seeking stakeholders’ comments.

The CBDT has now notified the Rule and the Form. Broadly, the Form requires furnishing of elaborate details of the payer, NR payee, transaction details and taxability under the ITL, including relief claimed under the Double Taxation Avoidance Agreement (DTAA), along with copies of transaction documents. The Rule requires the taxpayer to file such Form under digital signature or through electronic verification code. The Tax Authority shall, after examining the specific information of the NR recipient, issue lower withholding order after determining the appropriate proportion of sum chargeable to tax. Such order shall be valid only for the payment to NR named therein and for such period of the year as may be specified in the certificate or cancellation by the tax authority, whichever is earlier.

CA Amresh Vashisht