Overview and Applicability of Form 15CA and 15CB Provisions

Every foreign remittance made for the purpose of business is required to file Form 15CA in Income Tax Portal declaring the amount of remittance, currency, country of payee and nature of transaction for which payment is required to be made.

No bank can clear foreign remittance request of the business until they submit the Form 15CA. So before requesting foreign payment to the Bank, you must have filed the Form 15CA.

Form 15CB is a certification form issued by a qualified chartered accountant who certifies the amount of tax to be paid in India against the amount of foreign remittance made outside India.

When to file Form 15CA and Form 15CB ?

The Income Tax Form 15CA is mandatory to be furnished irrespective of the amount of foreign remittance. Form 15CA is divided into 4 parts [Part A, Part B, Part C and Part D]. Each Part of Form 15CA required to be filed in different circumstances.

However, filing of Form 15CB is required only in special cases where foreign remittance exceeds INR 5 Lakhs.

What is Income Tax Form 15CA ?

Income Tax Form 15CA is the mandatory form to be submitted to the income tax department when India business makes the payment outside India.

Every taxpayer in India should file form 15CA when Foreign Remittance is done as it is the basic declaration defining the details of the payment to non-resident or a foreign company.

It is mandatory to submit Income Tax Form 15CA under Income Tax Act. The major reason why Income Tax Form 15CA is mandatory is to helps the Income.

Tax Department to track the foreign remittances and their classification to determine the taxes due or the tax liability.

Different Type of Form 15CA

1. Part A of Form 15CA : When the foreign remittance is less than Rs. 5 Lakhs in a specific financial year to a single foreign entity then you need to file Part A of Form 15CA only.

2. Part B of Form 15CA : Part B of the Form 15CA is needed to be filled when the remittance amount exceeds five lakh rupees in the Financial Year and Indian taxpayer has Income Tax Order /certificate u/s 195(2)/ 195(3)/197 of Income Tax Act, 1961.w.r.t specified foreign parties which suggest not to deduct tax or deduct tax at low rate.

3. Part C of Form 15CA : Similarly, when the foreign remittance exceeds Rs. 5 Lakhs and possesses no special income tax rate certificate then Part C is required to be filed.In addition to PartC of Form 15CA, you also need to submit the form 15CB issued by a chartered accountant.

4. Part D of Form 15CA : You need to file only Part D of form 15CA if the remittance comes under a particular exemption list.

Important Note : If the remittance amount doesn't exceed the taxable limit, no form has to be submitted. You might need to consult a CA to know the taxable limit for your payment.

Why Banks ask for Form 15CA/ 15CB for foreign remittance ?

Authorised Dealers/Banks are becoming more careful and ensure that such Forms are received by them prior to foreign remittance so that no income earned evade by Income Tax in India.

The updated Rule 37BB now imposes a responsibility on banks to provide Form 15CA (received from the remitter) to an income-tax department.

The Income Tax Department has recently established an online filing system. As a result, the tax authority requires that Form 15CA be filed electronically.

The proof of the online application should then be obtained. This copy must be presented to the banks as evidence of tax clearance by the relevant tax authorities.

What is Income Tax Form 15CB ?

Form 15CB is required when foreign remittance is above 5 Lakhs outside India. Form 15CB is prepared and issued by CA. Form 15CB includes the details of the payment, TDS rate, TDS deduction and other details of nature and purpose of remittance.

In other words, form 15CB is the Tax Determination Certificate in which the CA examines income tax chargeability on foreign remittance as per Income Tax law and DTAA.

Form 15CB required to be submitted online and no time limit is prescribed for filing the Form.

Know the purpose of Form 15CA and 15CB :

Previously, anyone sending money to a non-resident had to provide a certificate in a format prescribed by the RBI. This was done because anyone earning the income in India should also pay the taxes to the Indian Government.

Furthermore, the primary goal was to collect taxes at the time of remittance or as a TDS (Tax Deducted at Source) because collecting taxes from Non-Residents at a later time can be impossible or less feasible.

As a result, to efficiently monitor transactions and collect taxes, the government implemented e-filing of form 15CA and 15CB instead of the certificates.

Now, the deduction of income tax on payments made to non-residents is made mandatory by Section 195 of the Income Tax Act of 1961. An undertaking (in Form 15CA) and a Chartered Accountants Certificate (in Form 15CB) must be provided by the individual sending the payment to a non-resident individual or a company.

What happens if you don't file Income Tax Form 15CA and 15CB ?

If an assessee who is required to file Form 15CA and 15CB fails to do so before transferring a remittance to a non-resident, he would be subject to penalties under section 271 of the Income Tax Act of 1961.Even if the individual provided false information, the penalty clause will apply.

Furthermore, the assessing officer can mandate the assessee to bear the consequences and pay the penalty of Rs.1 lakh if the assess fails to comply and submit form 15CA and 15CB.

1. Digital Signature Certificate

2. Bank Details of the Remitter

3. Tax Residency Certificate

4. Details of the Remitter Including PAN Card, Name, Address, Principal Place of Business, E-Mail Address, Phone Number and the Business Entity Type

5. Details of the Receiver (in Form 10F) such as: -

   1. Name and Status of the Remittee

   2. Address of the Remittee

   3. Country of the Remittee (Country to Which Remittance Is Made)

   4. Principal Place of the Business of the Remittee

6. Details of the Remittance- for example :-

   1. Country to Which Remittance Is Made

   2. Currency in Which Remittance Is Made

   3. Amount of Remittance in Indian Currency

   4. Proposed Date of Remittance

   5. Nature of Remittance as Per Agreement

7. Bank Details of the Remitter :-

   1. Name of Bank of the Remitter

   2. Name of Branch of the Bank

   3. BSR Code of the Bank