If you are a resident of India and are making or receiving payments from a foreign entity, then it is important to comply with the Income Tax Act 1961 provisions. The importance of the Income Tax Act 1961 is that you should file Form 15CA and Form 15CB before making any remittance to a foreign entity or a non-resident. So when someone wants to remit money outside India, the bank will check if the tax has been paid. If it is not paid, it has to be issued by a chartered accountant or an assessing officer. Foreign remittances have many tax implications, and missing out will penalize taxpayers. Read below to learn more about Forms 15CA & 15CB. But first, a note on what is written in the Income Tax Act 1961.
It states that any entity or individual who remittances to a non-resident or a foreign company must minus the income tax. The remitter should also give an undertaking in Form 15CA with payment details. A CB certificate a CA provides is needed for payments of less than 5.
Form 15CA income tax is a declaration of payment outside India that a company or an individual makes to a non-resident. It is a form that must be submitted online on the IT website (income tax) before any remittance to the non-resident. The Form 15CA & CB are needed for the NRI form when they get income from rent or the sale of immovable property into their account. The objective of submitting this form is to allow the IT department to keep track of foreign remittances. It also enables the IT department to track if the remitter pays taxes and track tax liability as per the Income Tax Act. The information in Form 15CA can be submitted online using the Income Tax Department website. After the submission, the proof needs to be printed, and a copy presented to the bank as tax clearance proof from the IT department.
Form 15CB & CA issued certificates derived under Section 195 (6), Income Tax Act 1961, for remittances to foreign companies or non-residents. It is a tax showing that you have paid the correct tax per the existing rates. It is done to verify that the remittances comply with the DTAA and Income Tax Act provisions between the foreign country and India.
Coming to why income tax filing makes a Form 15CA and 15CB requirement mandatory, the primary purpose was to gather taxes at the initial stage, as taking taxes from a non-resident later may not be possible. Before the Income Tax Act amendment of 1961, the remitter had to furnish a certificate in a specific format that the RBI prescribed. But to make the transactions more efficient and for better tracking and monitoring purposes, the e-filing of certificates with the necessary information was proposed.
Both Form 15CB and 15CA applicability are based on the amount and nature of remittance.
Below are a few mandatory pieces of information the remitter needs to file Form 15ca cb.
- Name, Address, PAN, Place of Business, Email ID, Phone Number and the Status (Company/firm/other)
- Name and Status (Firm/Company/Other), Address, Country (to which the payment is to be made), and Place of Business
- Country to which payment is made, Currency, Payment Amount in INR, Date of Payment, Nature of Payment (invoice copy from the remitter)
- Remitter’s Bank Name and branch name, BSR Code of Bank
- Duly filled Form 10F by the remittee’s authorized person
- A certificate stating that the remittee has no permanent Indian establishment.
For filing form 15CA and CB for foreign remittance, keep a Valid PAN (Permanent Account Number) issued by the Income Tax Department handy.
The penalty for not submitting Form 15CA and CB or for late filing is Rs 100,000 for every instance.
It is a declaration form that should be submitted for foreign remittances made by Indian taxpayers. This form must be filled out for every remittance made before completing the transaction.
Form 15CB is a certificate that has to be obtained from a Chartered Accountant of a remitter who makes an aggregate payment of more than five lakhs to a non-resident/foreign company in a fiscal year and is charged to income tax.
The limit of the aggregate amount of remittance is five lakhs during a fiscal year, after which Form 15CA has to be submitted.
If PAN is not furnished as per 37BC, Income Tax Rules, a TDS of 20% excluding health education cess and the surcharge is deducted. If PAN is provided, it is 15% per DTAA rate.