IMPROVING EFFECTIVENESS OF TAX ADMINISTRATION

Online filing of application seeking determination of tax to be deducted at source on payment to non-residents

Under sub-section (2) of section 195 of the Act, if a person who is responsible for paying any sum to a non-resident which is chargeable to tax under the Act (other than salary) considers that the whole of such sum would not be income chargeable in the case of the recipient, he can make an application to the Assessing Officer to determine the appropriate proportion of such sum chargeable. This provision is used by a person making payment to a non-resident to obtain certificate/order from the Assessing Officer for lower or nil withholding-tax. However, the process is currently manual. In order to use technology to streamline the process, which will not only reduce the time for processing of such applications, but shall also help tax administration in monitoring such payments, it is proposed to amend the provisions of this section to allow for prescribing the form and manner of application to the Assessing Officer and also for the manner of determination of appropriate portion of sum chargable to tax by the Assessing Officer.

Similar amendment is also proposed to be made in sub-section (7) of section 195 which are applicable to specified class of persons or cases.

These amendments will take effect from 1st November, 2019.

[Clause 47]

 

 

 

Withholding tax online applications enabled to streamline Assessing Officer determinations for non-resident payments and improve monitoring. Amendments to section 195(2) permit electronic filing by payers seeking determination of the portion of payments to non-residents chargeable to tax and authorize prescription of the form and manner of application and of the Assessing Officer's procedure for determining the taxable portion; a parallel change to section 195(7) applies to specified classes, with the reforms intended to speed processing and improve administrative monitoring.