15CA-15CB Filing
Assume that you are an Indian citizen who sends money abroad or receives money from someone abroad. In that scenario, adherence to the legal provisions outlined in the Income Tax Act of 1961 is required. As per the Act, before sending money to a foreign entity, you have to submit Forms 15CA and 15CB to the tax authorities. Completing these forms can be difficult and necessitate in-depth familiarity with tax legislation. With our team of specialists, India Filings can help you navigate the 15CA-15CB filing procedure with ease and ensure that your compliance obligations are met without any fuss.
Section 195 of the Income-tax Act, 1961
By Section 195 of the Income Tax Act of 1961, before any person or organization pays money to a non-resident—including a foreign company—income tax at the relevant rate must be subtracted.
In Form 15CA, the remitter is required to furnish an undertaking detailing the specifics of the payment being sent to the non-resident. Additionally, for payments over INR 5 lakh, a certificate in Form 15CB attested by a chartered accountant is needed. The type of payment, the applicable tax rate, and the amount of tax withheld are all specified in this certificate.
Importance of Form 15CA and Form 15CB
For any payments made by a resident to a non-resident, the Income Tax Act, 1961 requires the submission of Forms 15CA and 15CB.
A declaration made by the payer is contained in Form 15CA. On the other hand, Form 15CB is a certification that a Chartered Accountant (CA) issues to verify that the terms of the Double Taxation Avoidance Agreement and the Income Tax Act have been followed.
These two papers are necessary to guarantee timely and accurate reporting of any payments made to non-residents as well as prompt tax collection.
Form 15CA
A declaration of remittance made by an individual or business to a non-resident is called Form 15CA. Before remitting a non-resident, the income tax department’s website requires the completion of a necessary form. This form serves the function of allowing the income tax department to monitor overseas remittances and verify that the remitter is fulfilling their tax obligations in compliance with the Income Tax Act.
Form 15CB
As previously stated, Form 15CB is a certificate that a CA issues by the Income Tax Act of 1961 Section 195(6) to make payments to non-residents or foreign corporations. It is employed to confirm that the payment being made conforms with the terms of the Foreign Trade Agreement (FTAA), if applicable, and the Income Tax Act.
Applicability of Form 15CA and Form CB
The Income Tax Act of 1961 in India applies to remittances made abroad using Forms 15CA and 15CB. The type and volume of the remittance determines whether these forms are applicable.
Applicability of Form 15CA
Applicability of Form 15CA is as follows:
- Any individual planning to send money to a foreign firm or non-resident, regardless of whether the money is taxable
- A resident, non-resident, domestic firm, or foreign company may be the remitter.
- According to Section 5 of the Income Tax Act, a declaration is necessary whenever income originates, is received, or is presumed to accrue, occur, or be received in India.
Applicability of Form 15CB
- The CA must file Form 15CB at the time the remittance is made.
- When a foreign corporation or non-resident receives a taxable remittance
- The amount is more than INR 5,00,000.
- When an order/ certificate has not been obtained from the Assessing Officer (AO).
When is Form 15CA not required?
- If the payment is made using the list of approved payments found in Income Tax Rules Rule 37BB, Form 15CA is not needed.
- When the individual sending the payment does not require Reserve Bank of India approval according to Section 5 of the Foreign Exchange Management Act (FEMA), 1999.
- Additionally, if the remittance is tax-free under the Income Tax Act or an applicable tax treaty, Form 15CA is not needed.
- When the total amount remitted by an individual throughout the fiscal year does not surpass five lakh rupees, and the remittance is not utilized for a foreign tour or payment towards the acquisition of any foreign asset.
- The amount remitted by a person to pursue education overseas is not above the ceiling set by the RBI.
When is Form 15CB not required?
- If the payment is not taxed in India, Form 15CB is not needed.
- If the remittee’s country of residence considers the income taxable then the remittance is sent to that country.
- If the total amount of remittances made during the fiscal year does not exceed Rs. 5,00,000, Form 15CB is not required.
- The amount remitted by an individual is not above the RBI’s stipulated limit if it is not for a foreign tour or payment for the acquisition of any foreign asset.
- The amount remitted by a person to pursue education overseas is not above the ceiling set 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 overseas investment
- Payment in advance for imports
- Trade between middlemen
- Imports made by diplomatic offices
- Loans made available to non-residents
- Shipments under Rs. 5,000,000
- projects built by Indian businesses, including the import of products for the project site
- Insurance for freight
- Operating Costs for Indian Airlines Companies
- Journeys under the basic travel quota (BTQ), pilgrimages, medical care, business trips, and educational programs
- Payment for operating expenses of Indian shipping firms/companies operating abroad
- Foreign embassies in India’s remittances
- Non-residents’ contributions to savings and family maintenance
- Remittances for gifts to friends and family
- Remittances are allowed for gifts and grants to international governments’ charitable organizations as well as to the governments themselves.
- Contributions or Donations to Foreign Institutions
- Refunds, discounts, or rebates on the invoice amount due to exports
- Remittance for taxes paid or refunded
- Payments made by locals to bid internationally.
- Paid by nations to philanthropic and religious organizations overseas.
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:
Parts of Form 15CA
Based on the amount of remittance and the need for further certificates or orders under the Income Tax Act, Form 15CA is divided into four sections.
- Remittances up to Rs 5 lakh that are taxable during the financial year fall under Part A.
- Part B is for remittances made during the financial year that exceed Rs 5 lakh and are subject to tax; the Assessing Officer has provided an order or certificate under Section 195(2)/197/195(3) of the Income Tax Act.
- A certificate on Form 15CB from a chartered accountant is required for taxable remittances over Rs 5 lakhs throughout the fiscal year, and this is part of Part C.
- Remittances that are exempt from tax under the terms of the Income Tax Act are filed under Part D.
Various parts of Form 15CB
- Information on the remitter, the beneficiary, and the type of transfer are all included in Part A.
- Part B: In this section, the Chartered Accountant (CA) must confirm that the terms of the Double Taxation Avoidance Agreement and the Income Tax Act have been followed, as well as offer specifics on the pertinent articles and sections.
- The CA must attest to the accuracy and truthfulness of the data on the form in accordance with Part C.
- This is an optional appendix to the form that you can use to add more details or information.
Penalty for not filing Form 15CA-15CB
Penalty for not filing Form 15CA-15CB
PAN of the remitter and the beneficiary: Both the beneficiary’s and the remitter’s Permanent Account Numbers (PANs) must be supplied.
Amount of the remittance: The amount to be remitted must be given in Indian Rupees.
Nature and purpose of the remittance: It is necessary to specify the type of remittance, such as dividends, royalties, or payment for services.
Relevant sections and articles of the Income Tax Act and DTAA: The pertinent articles and sections of the Double Taxation Avoidance Agreement (DTAA) and the Income Tax Act, if applicable, must be mentioned.
Bank details: It is necessary to supply the beneficiary’s and the remitter’s bank information, including account number, branch name, and bank name.
Certificate from a Chartered Accountant (Form 15CB): If a certificate in Form 15CB is needed, information such as the Chartered Accountant’s name and membership number, the certificate’s issuance date, and the payment details must be supplied.
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 provide a valid Permanent Account Number (PAN).
Determine whether Form 15CB is required: A Chartered Accountant (CA) must file Form 15CB attesting that the remittance is taxable in India and that the relevant taxes have been paid if the amount exceeds INR 5 lakhs.
Fill Form 15CA: Form 15CA must be electronically completed on the income tax department’s e-filing website by the individual making the remittance. The form asks for information about the sender, the recipient, the kind of remittance, and the amount being sent.
Get CA certification: The remitter must get a certificate from a CA in Form 15CB if it is necessary.
Submit Form 15CA and 15CB: The remitter is required to upload the completed and certified paperwork onto the income tax department’s electronic filing website.
Obtain an acknowledgment: You will receive an acknowledgment with a unique number after submitting Form 15CA. This acknowledgment is something you should save for future use.
Please take note that the process for submitting Forms 15CA and 15CB may change based on the particular transaction as well as additional variables.
From preparation to submission, India Filings can assist you with filing Form 15CA-CB and make sure you adhere to all relevant requirements.
Frequently Asked Questions(FAQs)
Before paying a non-resident, the remitter must electronically submit Form 15CA, a declaration form, to the bank. A Chartered Accountant (CA) will certify the completion of Form 15CB, a certificate that verifies the deduction of taxes and other legal obligations.
A declaration form, Form 15CA, is what the remitter gives the bank. Simultaneously, a certificate issued by a CA to confirm the deduction of taxes and the fulfillment of further regulatory obligations is known as Form 15CB.
The person in charge of remittances outside of India is required to file Forms 15CA and 15CB. The party making the payment to a non-resident or foreign corporation can be an individual, a business, or any other type of entity.
Different types of transactions require Form 15CA and 15CB filing. Some of them are:
- payment for services or commodities imported.
- Royalty or technical fees paid.
- Remittance of dividends.
- Repayment of interest on deposits or loans.
- Repayment for joint enterprises or cooperation abroad.
- Remittance for costs associated with education
- money sent home to pay for medical care overseas.
- reimbursement for out-of-town expenses
- money sent in to pay the insurance premium.
- whatsoever other amount that is subject to taxation under the 1961 Income Tax Act.
For certain overseas payments, Forms 15CA and 15CB are not required. The type and size of the remittance determine whether filing these documents is necessary.
Forms 15CA and 15CB are required for remittances made outside of India, according to the existing legislation, with the following exceptions:
- Remittances are excluded from some taxes under Income Tax Rules, 1962, Rule 37BB. Remittances that are not subject to taxation include gifts and donations, government payments, payments for specific investments, etc.
- Section 195 of the Income Tax Act, 1961 states that remittances under INR 5 lakhs are not liable to TDS.
The Authorized Dealer Bank (AD Bank) verifies the data entered in Form 15CA and compares it to the data in Form 15CB.
It is required to electronically file Form 15CA-15CB via the Income Tax Department’s website.
Penalties and interest may be incurred for failure to file Forms 15CA and 15CB. The penalty for not filing Form 15CA and 15CB is specified under Section 271-I of the Income Tax Act, 1961. The penalty for failing to file Forms 15CA and 15CB or filing them incorrectly is INR 1 lakh, or the amount of the transaction, whichever is less, according to the present legislation. The Assessing Officer (AO) may apply the penalty following a chance for the remitter to explain non-compliance.
No, you cannot utilize one Form 15CA for more than one transaction. Even when many transactions are connected to the same beneficiary, a distinct Form 15CA needs to be completed for each transaction.
If the transactions are identical—that is, they have the same beneficiary, amount, and purpose—one Form 15CA can be used for several transactions.
According to the Income Tax Department’s instructions, if the following criteria are satisfied, a single Form 15CA may be used for several transactions:
- For every transaction, the remittance’s nature and intent are the same.
- For every transaction, the same amount is remitted.
- The same beneficiary receives the remittance.
- For every transaction, the remittance country is the same.
A certificate known as Form 15CB is given out by an Indian chartered accountant, or CA. The CA attests that the remitter’s remittance is not subject to Indian taxation and that any applicable taxes have been withheld and deposited with the Indian government by the relevant requirements of the Income Tax Act, 1961.
The validity of Form 15CB is six months from the date of issuance. As a result, the remitter needs to make sure that the payment is sent within six months of Form 15CB’s issuing date.
Yes, a foreign business may submit Form 15CA-15CB to India through its designated signatory.
No, in order to transfer money between NRE and NRO accounts, Form 15CA-15CB is not needed.
It is not necessary to have Form 15CA-15CB to remit money to Bhutan and Nepal.
No, remittances from India to an individual holding a Permanent Account Number (PAN) in India do not require Form 15CA-15CB.
Only remittances made to non-resident or foreign entities must be submitted on Form 15CA-15CB. For tax purposes, a person with a PAN in India is regarded as a resident, hence Form 15CA-15CB is not necessary in these circumstances.
Before sending money outside of India, Forms 15CA and 15CB must be submitted. However, in some circumstances, the remitter may request a condonation of delay from the Assessing Officer (AO) if the remittance is done without filing Form 15CA/15CB. The AO may permit the remitter to file the paperwork after the remittance if they are satisfied with the justifications provided.