15CA-15CB Filing - Compliance for Foreign Remittances

Suppose you are an Indian resident making payments to a foreign entity or receiving payments from a foreign entity. In that case, it is mandatory to comply with the legal provisions of the Income Tax Act 1961. According to the Act, you must file Form 15CA and 15CB with the tax authorities before remitting funds to a foreign entity. Filing these forms can be complex, requiring extensive knowledge of tax laws and regulations. IndiaFilings can assist you in navigating the process of filing 15CA-15CB with ease; our team of experts ensures that your compliance requirements are met without any hassle.

Section 195 of the Income-tax Act, 1961

As per Section 195 of the Income Tax Act 1961, any individual or entity responsible for making payment to a non-resident, which includes a foreign company, must deduct income tax at the applicable rate prior to the payment being made.

The remitter must also submit an undertaking in Form 15CA, which provides details of the payment being made to the non-resident. Furthermore, a certificate in Form 15CB, attested by a chartered accountant, is required for payments exceeding INR 5 lakh. This certificate provides details of the nature of the payment, the tax rate applied, and the amount of tax deducted.

Importance of Form 15CA and Form 15CB

Form 15CA and Form 15CB are necessary forms that must be submitted under the Income Tax Act, 1961, for any payments made by a resident to a non-resident.

Form 15CA is a declaration made by the person making the payment. In contrast, Form 15CB is a certificate issued by a Chartered Accountant (CA), ensuring that the provisions of the Income Tax Act and the Double Taxation Avoidance Agreement have been complied with.

Both these forms are essential for ensuring timely and accurate reporting of any payments made to non-residents and for ensuring that taxes are collected on time.

Form 15CA

Form 15CA is a declaration of remittance made to a non-resident by an individual or a company. It is a mandatory form to be submitted online on the income tax department's website before remitting a non-resident. The purpose of this form is to enable the income tax department to track foreign remittances and ensure that the remitter is paying taxes according to the provisions of the Income Tax Act.

Form 15CB

As mentioned above, Form 15CB is a certificate issued by a CA under Section 195(6) of the Income Tax Act, 1961, for making payments to non-residents or foreign companies. It is used to verify that the payment being made complies with the provisions of the Income Tax Act and DTAA, if any, between India and the foreign country.

Applicability of Form 15CA and Form CB

Form 15CA and 15CB are applicable for making foreign remittances under India's Income Tax Act 1961. The applicability of these forms depends on the nature and amount of the remittance.

Applicability of Form 15CA

Applicability of Form 15CA is as follows:

• Any person intending to make a remittance to a non-resident or foreign company, irrespective of whether the remittance is subject to tax
• The remitter can be a resident, non-resident, domestic company, or foreign company
• The declaration is required when the income accrues, arises, is received, or is deemed to accrue, occur, or received in India, as per Section 5 of the Income Tax Act.

Applicability of Form 15CB

• Form 15CB is required to be filed by the CA when the remittance is made.
• When the remittance to a non-resident or foreign company is taxable
• The payment exceeds INR 5,00,000
• When an order/ certificate has not been received from Assessing Officer (AO).

When is Form 15CA not required?

• Form 15CA is not required when the remittance is made per the specified payment list in Rule 37BB of Income Tax Rules.
• When the individual making the remittance does not require Reserve Bank of India approval according to Section 5 of the Foreign Exchange Management Act (FEMA), 1999.
• Form 15CA is also not required when the remittance is exempted from tax under the Income Tax Act or a relevant tax treaty.
• When an individual and the aggregate amount make the remittance during the financial year does not exceed five lakh rupees, and the remittance is not for a foreign tour or payment for the purchase of any foreign asset.
• When an individual makes the remittance to pursue education abroad, the amount does not exceed the limit prescribed by the RBI.

When is Form 15CB not required?

• Form 15CB is not required when the remittance is not taxable in India.
• If the remittee's country of residence considers the income taxable and the remittance is sent to that country.
• Form 15CB is not necessary if the total remittances during the fiscal year do not surpass Rs. 5,00,000.
• When an individual makes the remittance and is not for a foreign tour or payment for the purchase of any foreign asset, the amount does not exceed the limit prescribed by the RBI.
• When an individual makes the remittance to pursue education abroad, the amount does not exceed the limit prescribed by the RBI.

Specified payments where Form 15CA/15CB is not required

As per the latest rules and regulations, the payments where Form 15CA & 15CB are not required include the following:

• Indian investment abroad
• Advance payment against imports
• Intermediary trade
• Imports by diplomatic missions
• Loans extended to Non-Residents
• Imports below Rs.5,00,000
• Construction of projects by Indian companies/firms, including import of goods at the project site
• Freight insurance
• Operating expenses of Indian Airlines Firms
• Travel under basic travel quota (BTQ)/ pilgrimage/ medical treatment/business travel/education
• Payment for operating expenses of Indian shipping firm/companies operating abroad
• Payments for maintenance of offices abroad
• Remittances by foreign embassies in India
• Remittance by non-residents toward family maintenance and savings
• Remittance toward donations and personal gifts
• nations to charitable and religious institutions abroad can be remitted.
• Remittances for donations and grants to charitable institutions of foreign governments and governments themselves are permitted.
• Donations or Contributions to international institutions
• Refunds or reduction or rebates in invoice value on account of exports
• Remittance towards payment or refund of taxes
• Payments by residents for international bidding.

The Contents of Form 15CA and Form 15CB

Form 15CA/15CB is segregated into sections based on various situations. The applicant needs to go through the form and fill in the proper details in the relevant section:

Penalty for not filing Form 15CA-15CB

The penalty for not filing or late filing of Form 15CA-15CB is Rs. 10,000 per instance.

Details required for filing the forms

To file Form 15CA and 15CB, the following details are required:

• PAN of the remitter and the beneficiary: The Permanent Account Number (PAN) of the remitter and the beneficiary must be provided.
• Amount of the remittance: The remittance amount must be provided in Indian Rupees.
• Nature and purpose of the remittance: The nature and purpose of the remittance must be specified, such as payment for services, royalty, or dividends.
• Relevant sections and articles of the Income Tax Act and DTAA: If applicable, the relevant sections and articles of the Income Tax Act and Double Taxation Avoidance Agreement (DTAA) must be specified.
• Bank details: The bank details of the remitter and the beneficiary, including the bank name, branch, and account number, must be provided.
• Certificate from a Chartered Accountant (Form 15CB): If a certificate in Form 15CB is required, details such as the name and membership number of the Chartered Accountant, the date of issuance of the certificate, and the details of the remittance must be provided.

Procedure for filing Form 15CA and 15CB

The process for filing Form 15CA and 15CB is as follows:

• Obtain a valid PAN: Before filing Form 15CA, the Income Tax Department must issue a valid Permanent Account Number (PAN).
• Determine whether Form 15CB is required: If the remittance exceeds INR 5 lakhs, then Form 15CB must be filed by a Chartered Accountant (CA) certifying that the remittance is taxable in India and the appropriate taxes have been paid.
• Fill Form 15CA: The person making the remittance must fill out Form 15CA online on the income tax department's e-filing website. The form requires the details of the remitter, the remittee, the nature of the remittance, and the remittance amount.
• Get CA certification: If Form 15CB is required, the remitter must obtain a certificate from a CA in Form 15CB.
• Submit Form 15CA and 15CB: Once the forms are filled and certified, the remitter must upload the forms on the income tax department's e-filing website.
• Obtain an acknowledgment: After submitting Form 15CA, you will receive an acknowledgment with a unique number. You should keep this acknowledgment for future reference.

Note that the procedure for filing Form 15CA and Form 15CB may vary depending on the specific transaction and other factors.

IndiaFilings can help you file Form 15CA-CB, from preparation to submission, and ensure that you comply with all the applicable regulations.