Q 1. Who has to submit Form 15CA and 15CB?
Ans. Any Person, responsible for paying any sum to a Non Resident, not being a Company, or to a Foreign Company, shall furnish Form 15CA and 15CB. Such sums sought to be remitted outside India may be chargeable or may not chargeable to tax in India.
Q 2. What is the purpose of submitting 15CA and 15CB?
Ans. The Income Tax department has to ensure that the amount sought to be remitted outside India by a person in India has been subjected to tax before such remittance is made through an authorized dealer (including Banks) in India. Once the remittance is made outside India without out deduction of tax (TDS), such money can never be assessable as income in the hands of such non-resident in India in future. 15CA and 15CB is submitted to Income Tax department detailing the nature of the transactions and the tax deducted on such remittance. The authorized dealer in India requires a copy of such forms to release the foreign exchange and to initiate such remittance.
Q 3. What are different Parts of 15CA?
Ans. Part A: To be filled up if the remittance is chargeable to tax under the provisions of the Income-Tax Act 1961 and the remittance or the aggregate of such remittances, as the case may be, does not exceed Five Lakh Rupees during the Financial Year
Part B: To be filled up if the remittance is chargeable to tax under the provisions of the Income-Tax Act 1961 and the remittance or the aggregate of such remittances as the case may be exceeds Five Lakh Rupees during the Financial Year and an order/certificate/u/s 195(2)/195(3)/197of Income Tax Act has been obtained from the Assessing Officer.
Part C: To be filled up if the remittance is chargeable to tax under the provisions of Income Tax Act 1961 and the remittance or the aggregate of such remittances, as the case may be, exceed Rs.5 Lakhs Rupees during the Financial Year and certificate in Form No 15CB from a Chartered Accountant has been obtained.
Part D: To be filled up if the remittance is not chargeable to Tax under the provisions of the Income Tax Act 1961. (Note: Even as it is not chargeable to tax under the provisions of the Income Tax Act ,1961 Part D itself is not required if such payments are of the nature (a) made by an Individual and it does not require prior approval of RBI as per Sec 5 of FEMA, 1999 read with Schedule III to the FE (Current Account Transactions) Rules 2000 OR (b) Referred to in Rule 37BB(3) and made by a person referred to in Rule 37BB(2))
However, it has been clarified by Department that 15CA and 15CB is not required if such payments are of the nature which does not require RBI approval under its Liberalized Remittance Scheme OR referred to in Rule 37BB(3) and made by a person referred to in Rule 37BB(2)
Q 4. When different parts of 15CA and 15CB are applicable?
Ans. Part A,B,C of 15CA is required only if the Income sought of be remitted is chargeable to tax in India in the hands of the non-resident recipient. Part D is required only when such income is not chargeable to tax in the hands of the non-recipient. Even in the case of Part D, this part is not required to be submitted if the amount sought to be remitted are of the nature referred to in Part III of FE(Current Account Transactions) Rules 2000 OR referred to in Rule 37BB(3) of Income Tax Rules 1962.
Q 5. Even if it is not required at all why banks in certain cases prefer to accept the same from the remitter?
Ans. Different banks maintain different mechanisms either as a part of the requirement of laws or to meet their internal control procedures. Their check list might consist of these documents from the remitter even if such documents are not required as a part of law.
Q 6. What is Form 15CB and when it is required?
Ans. As pointed out above 15CB is required only as an attachment along with Part C of 15CA.
Q 7. Who is authorized to issue 15CB under the Income Tax Act, 1961?
Ans. A Chartered Accountant holding valid Certificate of Practice.
Q 8. How 15CA and 15CB can be submitted?
Ans. Only through digital form in Income Tax Return Website. A copy has to be submitted to Authorized Dealer before remittance.
Q 9. Who is a Non Resident Indian and Person of Indian Origin?
Ans. Non Resident Indian means a person who is resident outside India who is a citizen of India. A PIO means a person resident outside India who is a citizen of any country other than Bangladesh and Pakistan or such other countries as specified by CG and such a person must satisfy the following conditions;
Q 10. What are tax incidence of a Non- Resident in India?
Ans. The Non-resident is chargeable to tax in India with respect to 1. Income received or deemed to be received in India by him or on his behalf. 2.Income accrues or arise or deemed to accrue or arise in India to him.
Q 11. What are income deemed to accrue or arise in India?
Ans. There are certain incomes which actually may arise or accrues to a non-resident outside India but under the Indian Tax Laws such incomes are deemed to accrue or arise to such non-resident in India and is subjected to tax in India. The following income are deemed to accrue or arise in India in the hands of all assesses (including Non resident) irrespective of their residential status.
(i) Income from any Business connection in India
(ii) Income from any Property, Asset or sources of Income in India
(iii) Capital gain on a transfer of a capital asset situated in India.
(iv) Income from salary if Services are rendered in India.
(v) Income from salary for the services which are rendered outside India provided that Employer is GoI and employee is a citizen of India.
(vi) Dividend paid by an Indian Company
(vii) Income by way of fees for technical services payable by The Govt, a Resident India or a Non-resident Indian.
Q 12. How the TDS is to be deducted from a Non –Resident before remittance?
Ans. In accordance with the provisions of Sec 195 the Income Tax Act.
Q 13. If such income of a non-resident are to be taxed in India as well as in his country of residence, at what rate the TDS has to be deducted?
Ans. Tax has to be deducted based on the provision of the DTAA entered into with that country before remittance. To obtain DTAA benefits, Tax Residency Certificate from the Remittee and Form No 10F (Self Declaration) is required. If the income sought to be remitted is a business income in the hands of Remittee Permanent Establishment Declaration is also required to be obtained. Otherwise not.
Q 14. What are the transactions under the LRS for which RBI approval is not required and therefore 15CA and 15CB is not required?
Ans. A resident Individual can avail of foreign exchange facility for certain purposes taken together within the limit of USD 2,50,000 in a financial year without the prior approval of RBI. Any additional remittance in excess of the said limit for the following purposes shall require prior approval of the Reserve Bank of India. This includes (i) Private visits to any country (except Nepal and Bhutan)(ii) Gift or donation. (iii) Going abroad for employment (iv) Emigration (v) Maintenance of close relatives abroad (vi) Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment / check-up. (vii) Expenses in connection with medical treatment abroad subject to conditions(viii) Studies abroad subject to conditons etc.
Q 15. What are the transactions referred to in Rule 37BB(3) for which Form No. 15CA and Form No. 15CB is not required?
|Sl No||Purpose Code||Nature of Payments|
|1||S0001||Indian Investment in Abroad-Equity Capital(Shares)|
|2||S0002||Indian Investment in Abroad-In Debt Securities|
|3||S0003||Indian Investment in Abroad-In Branches and Wholly Owned Subsidiaries|
|4||S0004||Indian Investment in Abroad-In Subsidiaries and Associates|
|5||S0005||Indian Investment in Abroad-In Real Estate|
|6||S0011||Loans Extended to Non Residents|
|7||S0101||Advance payment against Imports|
|8||S0102||Payment towards Imports –Settlement of Invoices|
|9||S0103||Imports by Diplomatic Missions|
|11||S0190||Imports below Rs.5,00,000.00(For use by ECD Offices)|
|12||S0202||Payment for operating expenses of Indian Companies operating abroad|
|13||S0208||Operating Expenses of Indian Airline Companies operating abroad|
|14||S0212||Booking of passage abroad –Airline Companies|
|15||S0301||Remittance towards Business Travel|
|16||S0302||Travel under Basic Travel Quota(BTQ)|
|17||S0303||Travel for Pilgrimage|
|18||S0304||Travel for Medical Treatment|
|19||S0305||Travel for Education(Fee, Hostel Fee etc)|
|21||S0501||Construction of Project abroad by Indian Companies incl. import of goods at project site|
|22||S0602||Freight Insurance-Relating to Import and Export of Goods|
|23||S1011||Payment for maintenance of office abroad|
|24||S1201||Maintenance of Indian Embassies abroad|
|25||S1202||Remittance by Foreign Embassies in India|
|26||S1301||Remittance by Non Residents towards family maintenance and savings|
|27||S1302||Remittance towards personal gift and donations|
|28||S1303||Remittance towards donations to religious and charitable institutions abroad|
|29||S1304||Remittance towards grants and donations to other Governments and charitable institutions established by the Governments|
|30||S1305||Contributions or Donations by the Governments o International institutions|
|31||S1306||Remittance towards payment or refund of taxes|
|32||S1501||Refund or Rebates or reductions in invoice value on account of exports|
|33||S1503||Payments by Residents for International Bidding|
Q 16. What are the accounts that an NRI and PIOs can open in India and the balance of which account are freely re-patriable? .
|Particulars||NRE A/c||FCNR(B) A/c||NRO A/c|
|Who can Open||NRI & PIO||NRI & PIO||Resident o/s India|
|A/c Type||Savings,Current, Recurring,FD||Term Deposit Only||Savings,Current, Recurring,FD|
|Repatriability||Fully Re-patriable||Fully Re-patriable||Only Current Income* credited sub to USD 1M in a FY along with other assets.|
|Taxability of Interest||Exempt||Exempt||Taxable|
|Taxability of Principal||Exempt||Exempt||Based on nature of Income|
|Availing Loans in India against Accounts/Deposits and its Re-patriability||Loans can be availed but amount of loan is not Re-patriable and has to be used in India.||Loans can be availed but amount of loan is not Re-patriable and has to be used in India.||Loans can be availed but cannot be used for re-lending, carrying on agriculture/plantation activity or investment in Real Estate.|
|Availing Loans outside India against Accounts/Deposits||Can be availed through correspondent branches||Can be availed through correspondent branches||Not Permitted|
|Changes in Residential Status from NRI to RI||Should be designated as resident A/c or funds held in a/c may be transferred to RFC A/c.||Deposits may be continued till maturity. Upon maturity it may be transferred to resident Rupee A/c or RFC A/c.||Should be re-designated as resident a/c upon return if he desires to stay in India for uncertain period. Similarly for resident when he becomes a non-resident.|
Q 17. What are the re-patriable amounts for a Non Resident or PIO?
Provided that the aggregate amounts that can be re-patriated is limited to Rs. USD One Million per financial year.
Remittance of all installments in a Financial Year should be made through the same authorized dealer.
Q 18. Whether 15CA and 15CB is required for the above Transfer by way of re-patriation?
Ans. 15CA and 15CB is applicable depending upon whether the amount sought to be remitted outside India by a person in India or by an NRI or a PIO is chargeable to tax in India in the hands of the recipient. Part A,B and C is required if amount sought for remittance is chargeable to tax in India and Part D is required if the amount sought to be remitted is not chargeable to tax in India. 15CB is required as a part of Part C. If remittance abroad is an income in India I the hands of the non-resident recipient TDS has to be deducted u/s 195.If re-patriation is made by NRO or PIO, it needs to ascertain whether the income sought to repatriated has suffered tax at the time of its credit to NRO Account. If tax has suffered while crediting such amount, he need not again be taxed upon its remittance and in such cases Part D can be used. If Part D is used there is no requirement to produce 15CB. If the remittance is made for the 33 matters referred to as an answer to QNo.15 department has clarified that 15CA and 15CB is not required. Even then banks prefer to accept it as a part of their internal control mechanism.
Disclaimer: Author is a Chartered Accountant and the matters described in this article are to make a general awareness about the foreign currency accounts and transactions and its remittance abroad and are of his personal views. You may contact your tax consultant for expert opinion. Author can be reached at ‘[email protected]’