The Central Board of Direct Taxes (CBDT) issues the Income Tax (19th Amendment) Rules, 2020. The Rules were issued by a notification dated 10th August, 2020 and will come into force from that date.
Firstly, the Amendment Rules introduce a new provision under 37 BC of the Income Tax Rules, 1962. Section 37BC covers ‘Relaxation from deduction of tax at a higher rate under section 206AA’. The new provision clarifies that provisions of section 206AA shall not apply in respect of payments made to a person being a non-resident, not being a company, or a foreign company if the provisions of section 139A do not apply to such person on account of rule 114AAB.
Pertinently, Section 139A deals with applications made to the Assessing Officer for the allotment of PAN.
Therefore, in simple words, the requirement to furnish PAN shall be dispensed in relation to payments made to a non-resident person [other than a (foreign) company], if the conditions mentioned below are satisfied.
Secondly, the Amendment Rules insert Rule 114AAB which deals with ‘Class or classes of person to whom provisions of section 139A shall not apply’. It stipulates that the provisions of section 139A shall not apply to a non-resident [other than a (foreign) company], who has made an investment in a specified fund during a previous year. This is subject to the following conditions:
- Such non-resident person does not earn any income in India, other than the income from investment in the specified fund during the previous year;
- any income-tax due on the income of non-resident has been deducted at source and remitted to the Central Government by the specified fund at the rates specified;
- the non-resident furnishes the following details and documents to the specified fund, namely:—
(a) Name, e-mail id, contact number;
(b) Address in the country or specified territory outside India of which he is a resident;
(c) A declaration that he is a resident of a country or specified territory outside India; and
(d) Tax Identification Number in the country or specified territory of his residence and in case no such number is available, then a unique number on the basis of which the non-resident is identified by the Government of that country or the specified territory of which he claims to be a resident.
Thirdly, the Amendment introduces a new Form No. 49BA in terms of a quarterly statement that must be furnished by the specified fund in respect of a non-resident referred to in rule 114AAB.
