Section 271I Penalty for failure in furnishing Form 15CA & Form 15CB

Section 271I Penalty for failure in furnishing Form 15CA & form 15CB

What are Form 15ca and 15cb?

Form 15CA is a declaration of the remitter and is used as a tool for collecting information in respect of payments which are chargeable to tax in the hands of recipient non-resident. This form helps the Income Tax Department in tracking foreign remittances & their taxability.

What is Form 15cb used for?

15CB is the Tax Determination Certificate where the CA examines the remittance with regard to changeability provisions under Section 5 and 9 of the Income Tax Act along with the provisions of Double Tax Avoidance Agreements.

Any person making payment to a non-resident (not being a company) or a foreign company is required to furnish payment information in Form 15CA and Form 15CB. In case such a person fails in furnishing the information in Form 15CA and Form 15CB, then he would be liable to pay the penalty under section 271-I of the Income Tax Act.

Further, it should be noted that the penalty under section 271-I is also applicable in case the person furnishes inaccurate information in Form 15CA and Form 15CB.

In the present article, we would try to understand the applicability of provisions of section 271-I; understand the relevant provisions attached with Form 15CA and Form 15CB and the amount of penalty payable under section 271-I.

Applicability of penalty provisions of section 271-I of the Income Tax Act –

The penalty provisions of section 271-I are applicable under any of the following circumstances –

1. The person fails to furnish information in Form 15CA and Form 15CB; or

2. The person has furnished inaccurate information in Form 15CA and Form 15CB.

In case of any of the above default, the defaulter would be liable to pay the penalty under section 271-I.

Understanding the relevant provisions attached with Form 15CA and Form 15CB –

As seen above, the penalty under section 271-I is levied only in a case when the person defaults in filing Form 15CA and Form 15CB, hence it is important to under the relevant provisions attached to the filing of the Form 15CA and Form 15CB.

Provisions of section 195 mandate the person to deduct income tax (i.e. TDS) from the payment made to the non-resident. Here, [as per provisions of section 195 (6) read with rule 37BB] the person making payment to the non-resident is required to furnish the following forms as per the below table –

Particulars	Furnishing of relevant Forms
When the payment made is less than INR 5 Lakhs	Part A of Form 15CA
When the payment made is more than INR 5 Lakhs	Part B of Form 15CA; Chartered Accountant certificate in Form 15CB; and Part C of Form 15CA.
When the payment made is not chargeable to income tax	Part D of Form 15CA

In case the person making payment to a non-resident (not being a company) or a foreign company, fails to furnish the Form, as per the above table or furnishes inaccurate information, then the person would be liable to pay the penalty under section 271-I.

Amount of penalty payable under section 271-I –

In case the person fails to duly furnish information in Form 15CA and 15CB or files the forms with inaccurate information, then penalty under section 271-I of the Income Tax Act gets applicable. In such a case, the Assessing Officer may direct the defaulter to pay an amount of INR 1 Lakhs as a penalty.

However, as per provisions of section 273B of the Income Tax Act, no penalty can be imposed under section 271-I, in case the defaulter proves the reasonable cause for the failure.