Earlier remitter was required to report foreign remittances in Form 15CA only if such payment was chargeable to tax. Due to such requirement the income-tax department was not able to collect the information in respect of foreign remittances on which tax was deductible but was not deducted by the payer. The mechanism of obtaining of information in respect of remittances fulfilled twin objectives of ensuring deduction of tax at appropriate rate from taxable remittances as well as identifying the remittances on which the tax was deductible but the payer had failed to deduct the tax. Therefore, obtaining of information only in respect of remittances which the remitter declared as taxable defeated one of the main purposes of obtaining information for foreign remittances, i.e., to identify the taxable remittances on which tax was deductible but was not deducted.
In view of this fallacy, provisions of section 195 have been amended to provide that the person responsible for paying any sum, whether chargeable to tax or not, to a non-resident shall be required to furnish the information of the sum paid. However, Rule 37BB of income-tax Rules was not amended accordingly at that time.
Now, the Government has finally substituted old Rule 37BB with new Rule 37BB. It shall come into force with effect from April 1, 2016. Similarly, old Forms 15CA and 15CB have also been substituted with new Form 15CA and 15CB.