The Income Tax Law of our country requires authentication of foreign remittances (payments) made to a Non Resident or Foreign Company, for any amount which is taxable as per the existing laws. A person making a remittance (a payment) to a Non Resident or a Foreign Company has to submit Form 15CA. This form is submitted online.
In some cases, a certificate from a Chartered Accountant in Form 15CB is required before uploading Form 15CA online. Form 15CB is the Tax Determination Certificate where a Chartered Accountant determines the taxability of the remittance as per Income tax Act along with the provisions of Double Tax Avoidance Agreement with the Recipient’s Residence Country.
If the remittance is taxable, then the same shall be remitted only after deduction of withholding tax (ie, TDS). The information provided in Form 15CB mainly includes the details of the remitter, details of the remittee, nature of remittance (whether salary, commission, royalty etc) as per agreement between the two parties, Bank details of the remitter and Tax Residency Certificate from the remitter if DTAA (Double Taxation Avoidance Agreement) is applicable. Banks require these certificates before they make any remittance on your behalf outside India.
Filing Form 15 CA and Form 15 CB
The person making the payment, after obtaining the Certificate in Form 15CB from a Chartered Accountant shall furnish information in Form No. 15CA. Form 15CA is then required to be uploaded by the remitter electronically at the site of the Income-tax Department.
A signed printout of both Form 15CA and 15CB shall be submitted to the authorized dealer/banks, prior to remitting the payment. Authorized Dealers/ Banks are now becoming more vigilant in ensuring that such Forms are received by them before remittance is affected since a duty is casted on them to furnish Form 15CA received from remitter, to an income-tax authority for the purposes of any proceedings under the Income-tax Act.
It should be noted that even in cases, where Form 15CB is not required to be filed, Form 15CA has to be mandatorily furnished by the remitter before making the foreign remittance.
Cases where Form 15CB is not required:
In the following cases, Form 15CB is not required. However, Form 15CA is to be uploaded mandatorily.
- When remittance does not exceed Rs 50,000 (single transaction) and Rs.2,50,000 (aggregate in a financial year).
- When an application is made to the Assessing Officer by the person receiving the income to deduct tax at a lower rate or deduct no tax at all and a Certificate is obtained in this respect.
- When the person responsible for making the payment considers that the whole of the remittance is not taxable and makes an application to the Assessing Officer to charge tax only on the taxable portion and Order is obtained from the Officer in this respect.
Cases in which both Form 15CA and 15CB are not required:
There is a List of 28 items where Form 15CA and Form 15CB are not required as per the Income Tax Rules:
- Indian investment abroad -in equity capital (shares)
- Indian investment abroad -in debt securities
- Indian investment abroad -in branches and wholly owned subsidiaries
- Indian investment abroad -in subsidiaries and associates
- Indian investment abroad -in real estate
- Loans extended to Non-Residents
- Payment- for operating expenses of Indian shipping companies operating abroad
- Operating expenses of Indian Airlines companies operating abroad
- Booking of passages abroad -Airlines companies
- Remittance towards business travel
- Travel under basic travel quota (BTQ)
- Travel for pilgrimage
- Travel for medical treatment
- Travel for education (including fees, hostel expenses etc)
- Postal services
- Construction of projects abroad by Indian companies including import of goods at project site
- Freight insurance – relating to import and export of goods
- Payments for maintenance of offices abroad
- Maintenance of Indian embassies abroad
- Remittances by foreign embassies in India
- Remittance by non-residents towards family maintenance and-savings
- Remittance towards personal gifts and donations
- Remittance towards donations to religious and charitable institutions abroad
- Remittance towards grants and donations to other Governments and charitable institutions established by the Governments
- Contributions or donations by the Government to international institutions
- Remittance towards payment or refund of taxes
- Refunds or rebates or reduction in invoice value on account of exports Payments by residents for international bidding
In all other cases, if there is a remittance outside India, the person who is making the remittance will take a CA’s certificate in Form 15CB and after receiving the certificate submit Form 15CA to the government online.
Nikita Bhatia is the co-founder of VenturEasy, an online platform for Company registration, book-keeping, accounting, tax consultancy and legal compliances in India. A Chartered Accountant and company secretary by profession, she has wide experience in the fields of audit, accountancy, taxation and corporate governance.