Form 15CA and 15CB: A Guide to Foreign Remittance Compliance

1. Introduction

In an increasingly globalized economy, cross-border transactions have become commonplace. To ensure tax compliance and prevent tax evasion, the Indian Income Tax Department mandates the filing of Form 15CA and Form 15CB for certain foreign remittances. These forms serve as a mechanism for the government to track payments made to non-residents and ensure that appropriate taxes are deducted at source.

Further, as per recent practical trends, the income tax department has been issuing notices under section 133(6) as well as section 148A of the Income Tax Act, 1961 basis the Form 15CA and 15CB filed by the company wherein details of the transactions are inquired about by the officer. The above trend makes it imperative to understand the concepts of the above-mentioned forms.

2. Legal Framework

• Section 195(6) of the Income Tax Act, 1961: Requires any person making a payment to a non-resident to furnish information whether or not the payment is chargeable to tax.
• Rule 37BB of the Income Tax Rules, 1962: Specifies the procedure, forms, and exemptions related to foreign remittances.

3. What is Form 15CA?

Form 15CA is a declaration of remittance made by a person (resident in India) to a non-resident or a foreign company. It is filed online with the Income Tax Department and submitted to the Authorized Dealer (usually a bank) before the remittance is made.

Purpose of Form 15CA

• To ensure that tax is deducted at source (TDS) on payments made to non-residents, wherever applicable.
• To track foreign remittances and prevent tax evasion.
• To provide a mechanism for the Income Tax Department to monitor payments going outside India.

Parts of Form 15CA

Form 15CA is divided into four parts, depending on the nature and amount of the remittance:

4. What is Form 15CB?

Form 15CB is a Tax Determination Certificate issued by a CA, certifying that the remittance to a non-resident is in compliance with the provisions of the Income Tax Act and applicable Double Taxation Avoidance Agreements (DTAAs). It is required before filing Part C of Form 15CA, when the remittance is taxable and exceeds ₹5 lakh in a financial year.

Key Details in Form 15CB

• Details of the remitter and remittee
• Nature and purpose of the remittance
• Amount of remittance and currency
• Taxability under the Income Tax Act
• Applicable DTAA provisions (if any)
• Rate and amount of TDS deducted

When is Form 15CB Not Required?

• If the remittance is not chargeable to tax.
• If the remittance is ≤ ₹5 lakh in a financial year.
• If a lower/no tax deduction certificate from the Assessing Officer has been obtained.

5. Exemptions from Filing

The Income Tax Department has also provided certain categories of transactions wherein there is no requirement to file Form 15CA/CB to reduce the compliance burden on the remitter and ensure smooth business operations. As per Rule 37BB, no submission of Form 15CA/15CB is required for:

• Remittances by individuals not requiring RBI approval
• 33 specified categories of transactions (e.g., imports, travel expenses, education fees, investments abroad)

A complete list of exempted transactions is available on the Income Tax Department website.

6. Filing Procedure

1.Login to the Income Tax e-Filing Portal.

2. Navigate to e-File > Income Tax Forms > File Income Tax Forms.

3. Select Form 15CA or Form 15CB.

4. Fill in the required details and submit using Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

5. Submit the acknowledgment to the bank before remittance.

7. Penalties for Non-Compliance

Failure to file or incorrect filing of Form 15CA/15CB can attract:

• Penalty under Section 271-I: ₹1 lakh for non-filing or incorrect filing.
• Possible disallowance of remittance by the bank.

8. Practical Tips

• Always consult a Chartered Accountant for complex or high-value remittances.
• Keep documentation such as invoices, agreements, and tax residency certificates ready.
• Use the latest utility and instructions from the official Income Tax portal

9. Conclusion

Forms 15CA and 15CB are essential tools for ensuring tax compliance in foreign remittances. Understanding their applicability, exemptions, and filing procedures can help avoid penalties and ensure smooth international transactions.

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Disclaimer: The information given in this document has been made on the basis of the tax laws prevailing. It is based on the analysis and interpretation of applicable laws as on date. The information in this document is for general informational purposes only and is not legal advice or a legal opinion. You should seek the advice of the legal counsel of your choice before acting upon any of the information in this document. Under no circumstances whatsoever, we are not responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document.