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 Form 15CB with the tax authorities before remitting funds to a foreign entity. Filing these 15 CA and CB Forms can be complex, requiring extensive knowledge of tax laws and regulations. IndiaFilings can assist you in navigating the process of filing form 15CA and form 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 15 CA, 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 15 CA 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.

Form 15CA

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

Applicability of Form 15CA

• 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 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 remittance does not require RBI approval per FEMA, when the remittance is exempt under the Income Tax Act or a tax treaty, and in some other specified circumstances (see detailed rules).

When is Form 15CB not required?

Form 15CB is not required when the remittance is not taxable in India or when the total remittances in the fiscal year do not exceed Rs. 5,00,000 and other specified exceptions apply.

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

As per the latest rules and regulations, examples include: Indian investment abroad, advance payment against imports, intermediary trade, imports by diplomatic missions, loans to non-residents, imports below Rs.5,00,000, certain project imports, freight, insurance, operating expenses of airlines, travel under BTQ, remittances for education within RBI limits, donations to charitable institutions abroad, refunds related to exports, and others described in the official guidance.

The Contents of Form 15 CA and Form 15CB

Both forms are structured into parts/sections to capture the remitter, beneficiary, nature of payment, tax treatment, and CA certification where applicable.

Parts of Form 15CA

• Part A is for remittances up to Rs 5 Lakhs during the financial year that are taxable.
• Part B is for remittances exceeding Rs 5 Lakhs where an order/certificate from AO exists.
• Part C is for taxable remittances exceeding Rs 5 Lakhs requiring Form 15CB.
• Part D is for remittances not chargeable to tax under the Income Tax Act.

Various parts of Form 15CB

Part A includes details of the remitter, the beneficiary, and the nature of the remittance. Part B verifies compliance with the Income Tax Act and DTAA. Part C requires CA certification that the information is true and correct. An optional annexure can be attached for extra details.

Penalty for not filing Form 15 CA-15CB

The penalty for not filing or late filing of 15 CA and CB form may be ₹10,000 per instance (users should check the current law for updates).

Details required for filing the forms

• PAN of the remitter and the beneficiary
• Amount of the remittance (in INR)
• Nature and purpose of the remittance
• Relevant sections and DTAA articles (if applicable)
• Bank details of remitter and beneficiary
• CA certificate details for Form 15CB when required

Procedure for filing Form 15 CA and 15CB

1. Obtain a valid PAN for the remitter (if required).
2. Determine whether Form 15CB is required (commonly for remittances > INR 5 lakh).
3. Fill Form 15CA online on the income-tax e-filing portal.
4. If required, obtain Form 15CB from a CA.
5. Upload/submit Form 15CA (and 15CB where applicable) on the portal and obtain an acknowledgement number.

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