Any payment or any remittance is done to a Non-resident is subject to many rules and regulations. Initially, when an individual user to make payment or remittance to Non-Resident, he was bound to furnish a certificate in a standard format specified by RBI. The purpose behind collecting the taxes at the time of the remittance is to avoid a situation where it becomes difficult or impossible to collect the tax from the NRI later.
Now in order to check and track the transactions in a well- manner, re-filling of data in the certificates is introduced.
Section 195 of the Income tax act, 1961 makes it compulsory to deduct the Income-tax from payments made to Non-Resident. The person making payment/ remittance to non – resident holds the responsibility to furnish an undertaking (in form 15CA) attested by a Chartered Accountants Certificate in Form 15CB. So when a person has to make any payment or remit any money to non-resident, the bank will have to verify the payment of tax and act accordingly.
For the deduction of tax, there are certain tax slabs, formed for different specific amounts on which tax is levied and two Forms, Form 15CA, and Form 15CB for two different cases, which has to be submitted online duly filled.
The Form 15CA has to be furnished online by a person making any remittance of foreign nature to a non-resident. The Form 15CB regulates the tax deduction as per the income tax rules and also prohibits the double tax provision. The filing of Form 15CB requires an attestation from a chartered accountant.
In Form 15CB, we are required to mention information like details of the remittee, details of the remitter, nature of remittance including royalty, salary, commission etc, Tax Residency Certificate and Bank details of the remitter from the remitter in the case of DTAA (Double Taxation Avoidance Agreement).
But there are at least 28 types of foreign remittance where you do not require any submission of Form 15CA or Form 15CB
A person making the remittance (a payment) to a Non Resident or a Foreign Company has to submit the form 15CA. This form is submitted online.
Form 15CA is a declaration of remitter which is used as a mechanism for collecting information in respect of payments which are liable to tax on behalf of recipient non-resident. This form assists the Income Tax Department in keeping eye on foreign remittances & their tax accountability. The Rule 37BB defines it as a duty of authorized dealers/banks to confirm the receptivity of such forms from the remitter.
E-filing of this form is an initiative for an effective & efficient Information Processing System which would facilitate the Income-tax Department greatly in tracking the foreign remittances accurately and effortlessly.
The Financial Institutions are now keeping a hawkeye on all such transactions and forms prior to the effectiveness of remittance. The revised Taxation Rule, 37BB, binds all the Financial Institutions to furnish Form 15CA to an income-tax authority for further proceedings after receiving it from remitter.
It should be kept in mind that Form 15CA is not needed to be filed when the remittance paid to a Non-resident is non taxable which interprets that the Form 15CA is filled up only when the remittance paid to a non-resident is taxable and does not surpass an amount of fifty thousand rupees and the aggregated remittance for the Financial year does not exceed two lakh fifty thousand rupees.
Note: Government has authorized the filing of 15CA/15CB via GenTDS Software.
Parts of Form 15CA
You will receive a message on your screen and a confirmation email in your registered email account once you finish the entire process.
What is Form 15CB?
15CB is the Tax Determination Certificate where the CA verifies the remittance with respect to the liability provisions under Section 5 and 9 of the Income Tax Act coupled with the provisions of Double Tax Avoidance Agreements. In this form, a C.A. validates the details of the payment, TDS rate and TDS deduction as per the norms mentioned in Section 195 of the Income Tax Act, if any DTAA is applicable, and other details of nature and purpose of the remittance.
Form 15CB liability could be examined by accessing the certificate obtained from a CA in the Form 15CB. The requirement of the certificate has been stated and prescribed in Section 195(6) of the Income-tax Act.
A. Details of Remitter
B. Details of Remittee
C. Details of the Remittance
5. Nature of Remittance as Per Agreement (Invoice Copy to Be Asked From Client)
D Bank Details of the Remitter
Here are a few major impacts of New Rule on 15CA & 15CB in short:
Applicable since 1st October 2013
Sub-rule (2) of the revised Rule 37BB makes the furnishing of Form 15CA to the authorized dealer before the remittance of the payment.