Income Tax Forms 15CA and CB

What is Form 15CA and 15CB

What Is Form 15CA & CB?

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.

Income Tax Act, 1961: Section 195

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.

What are Form 15CA and CB, and why do we need them?

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.

When is Form 15CA and CB Applicable?

Both Form 15CB and 15CA applicability are based on the amount and nature of remittance.

Applicability of Form 15CA is as follows.

  • A taxpayer, irrespective of whether the payment is subject to tax, intending to pay a foreign company or resident has to submit this form.
  • Form 15CA for foreign remittance is needed even when the remitter can be a foreign or domestic company or a resident or non-resident.
  • It is needed when the income is received, accrued, or deemed to be accrued as per the Income Tax Act, Section 5.

Form 15CB applicability is as follows

  • It should be filed by a CA when payment is made.
  • When the payment is taxable to a foreign company or a non-resident, it is taxable.
  • The remittance exceeds Rs 5 lakh.
  • When a certificate/order is not received from the AO (Assessing Officer).

When are Form 15CA and CB not required?

Form 15CA is not required when:

  • The payment is made per the Rule 37BB Income Tax rules specified remittance list.
  • When a remitter does not need RBI approval as per the FEMA (Foreign Exchange Management Act), 1999 Section 5.
  • When the payment is tax exempted under a tax treaty or Income Tax Act.
  • When a person pays to seek education abroad, the amount does not exceed the RBI prescribed limit.
  • When the aggregate payment amount is less than 5 lakh rupees in a financial year, the payment is not for purchasing a foreign asset or a foreign tour.

Form 15CB is not required when:

  • The payment is non-taxable in India.
  • If the total payment is less than 5 lakh rupees in a fiscal year.
  • When the payment made by the individual is not for the purchase of a foreign asset or a foreign tour, and the amount does not cross the prescribed RBI limit.
  • When the remittance made is for seeking education abroad, and the amount does not cross the RBI prescribed limit.

Payments where Form 15CA and CB are not needed

  • Loans to non-residents
  • Imports less than 5 lakh rupees
  • Indian funding abroad
  • Freight insurance
  • Travel for education, medical treatment, pilgrimage, or business travel.
  • Diplomatic missions import
  • Advance remittance for imports
  • Operating costs of Indian airline companies, Indian shipping companies, or firms operating abroad.
  • Remittances for office maintenance abroad
  • Payments by non-residents for savings and family maintenance
  • Payments towards personal gifts and donations
  • Contributions or donations to international institutions
  • Reductions, rebates, or refunds on the value of the invoice of export accounts
  • Payments by foreign embassies that are in India
  • Remittances for international bidding by residents
  • Payment towards tax or tax refunds.

Details needed to file Form 15CA and 15CB

Below are a few mandatory pieces of information the remitter needs to file Form 15ca cb.

  • Remitter Details
  • - Name, Address, PAN, Place of Business, Email ID, Phone Number and the Status (Company/firm/other)

  • Remitter Details
  • - Name and Status (Firm/Company/Other), Address, Country (to which the payment is to be made), and Place of Business

  • Remittance details
  • - Country to which payment is made, Currency, Payment Amount in INR, Date of Payment, Nature of Payment (invoice copy from the remitter)

  • Remitter bank details
  • - Remitter’s Bank Name and branch name, BSR Code of Bank

  • Documents needed from remitee
  • - Duly filled Form 10F by the remittee’s authorized person

  • Remittee’s tax residency certificate
  • - A certificate stating that the remittee has no permanent Indian establishment.

Steps for Filing Form 15CA and CB

For filing form 15CA and CB for foreign remittance, keep a Valid PAN (Permanent Account Number) issued by the Income Tax Department handy.

  • Next, find out if Form 15CB is needed. It will be required if you pay more than five lakhs in a particular financial year. If such a remittance is made this fiscal year, a CA has to file Form 15CB, stating that the payment is taxable and the due taxes are paid.
  • After this step, the remitter has to fill out the various parts of Form 15CA online using the IT e-filing website. The details of the remitter, remittance amount, nature of payment, and remittee are to be filled in.
  • Once the forms are properly filled and Form 15CB is obtained, if required, the documents must be uploaded by the remitter.
  • Post submission of the form, an acknowledgement is received that contains a unique number. This acknowledgment should be saved for future reference.

The penalty for not submitting Form 15CA and CB or for late filing is Rs 100,000 for every instance.

Frequently Asked Questions

What is the 15CA complete form?

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.

Why is form 15CB required?

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.

In which cases 15CB is not required?

  • The payment is non-taxable in India.
  • If the total payment is less than 5 lakh rupees in a fiscal year.
  • When the payment made by the individual is not for the purchase of a foreign asset or a foreign tour, and the amount does not cross the prescribed RBI limit.
  • When the remittance made is for seeking education abroad, and the amount does not cross the RBI prescribed limit.

What is the limit of 15CA?

The limit of the aggregate amount of remittance is five lakhs during a fiscal year, after which Form 15CA has to be submitted.

What is the TDS rate for 15CA CB?

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.