RBI not to give instructions on Tax Deduction at Source on remittances to Non-residents - CBDT Notification to prevail

10(4) An authorized person shall, in all his dealings in foreign exchange or foreign security,comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorized person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorization under this section.

11. Reserve Bank's powers to issue directions to authorised person.-(1) The reserve Bank may, for  the purpose of securing compliance with the provisions of this Act and of any rules, regulations,  notifications or directions made there under, give to the authorised persons any direction in regard  to making of payment or the doing or desist from doing any act relating to foreign exchange or  foreign security.

In view of the CBDT Notification No. S.O 2659(E) dated September 2, 2013 on furnishing of information under Section 195(6) of the Income Tax Act, 1961, , RBI has vide its notification dated 30 ^th June,2014 has clarified that it has reviewed the policy of issuing instructions for clarifying tax issues. Now Reserve Bank of India will not issue any instructions under the FEMA, on tax issues. It shall be mandatory on the part of Authorised Dealers to comply with the requirement of the tax laws, as applicable.

It is to be noted that CBDT has, vide notification dated 02/09/2013 provided that under sub section (1) of section 195 of Income Tax Act, 1961 any person responsible for paying to a non resident, not being a company or to a foreign company any interest or any other sum chargeable under the Act shall deduct tax at source.
Further, as per sub section (6) of section 195 of Income Tax Act, 1961 read with rule 37BB of the income tax rules, 1962 such person shall also file prescribed information in form 15CA electronically. Also based on the amount of the remittance, a certificate from a chartered accountant is also required in Form 15CB. The notificationis effective from 15 ^th Oct, 2013.

Download RBI Notification dated 30-06-2014 >>

Download Foreign Exchange Management Act (FEMA), 1999 >>

Download CBDT Notification and Excel Form 15CB under Rule 37BB >>