Section 195 of the Income Tax Act, 1961, addresses the deduction of tax at the source when making payments to non-residents. According to this section, any entity responsible for making payments to non-residents must withhold tax at the applicable rates if the sum is subject to taxation under the Act. In such cases, the necessary taxes must be deducted and remitted, and the person making the remittance must submit a CA certificate in Form 15CB, along with a self-declaration in Form 15CA, through online channels.

Form 15CB serves as the Tax Determination Certificate, in which a Chartered Accountant (CA) assesses the remittance concerning its liability under the Income Tax Act and in accordance with the provisions outlined in Double Tax Avoidance Agreements.

The purpose behind requiring Form 15CB/CA is to ensure the proper deduction and payment of taxes before funds are transferred abroad. Furthermore, it serves as a means for authorities to gather information and oversee the flow of foreign exchange out of the country.

In Form 15CB, a Chartered Accountant certifies the particulars of the payment, the applicable TDS rate, and any TDS deduction in accordance with Section 195 of the Income Tax Act. If Double Tax Avoidance Agreement (DTAA) provisions are relevant, they are also considered, along with other information regarding the nature and purpose of the remittance.