Form 15CA and 15CB of Income Tax

Last updated : September 19th, 2024 10:57 am

Form 15CA and 15CB of Income Tax

Understanding Forms 15CA and 15CB is crucial for anyone making payments to non-residents under the Indian Income Tax Act. These forms are designed to ensure that the correct amount of tax is deducted and remitted to the government. To initiate any payment to a non-resident, you must first complete Form 15CA, which is an online declaration form. Then, Form 15CB, certified by a Practicing Chartered Accountant, verifies that the payment details are accurate and that the taxes withheld comply with the Income Tax Act regulations. In this article, we provide a detailed guide on Form 15CA and 15CB, explaining their importance and the process for their completion.

Get hassle-free assistance with Forms 15CA and 15CB from IndiaFilings. Our team is ready to help you ensure compliance and accuracy in your international payments.

Form 15CA

Form 15CA is a mandatory document that must be submitted to the Income Tax Department whenever a resident individual or entity makes a payment to a non-resident. The payer must provide specific details and information per the provisions outlined in the Income Tax Act. This form aids the Income Tax Department in monitoring foreign remittances and determining their tax implications. Additionally, it enables non-residents to claim credit for any taxes deducted in India. Submission of Form 15CA is done exclusively through the online platform provided by the Income Tax Department’s e-filing portal.

Objective

Form 15CA serves as a crucial tool for the Indian Tax Authorities to monitor overseas payments and remittances, ensuring that such transactions comply with the regulations of the Income Tax Act. This form is designed to keep a check on cross-border payments involving non-residents to ensure that the payer is adhering to the tax obligations set forth by the law.

Types of Payments

The use of Form 15CA is required for various payments made to non-residents. These include, but are not limited to, royalties, dividends, interest, salaries, and fees for professional, technical, or consultation services. It encompasses nearly any transaction where a non-resident receives payment from an Indian source.

Applicability

Form 15CA must be filled out and submitted whenever a payment is made to a non-resident or a foreign corporation, regardless of whether the transaction is subject to tax withholding. This requirement applies to all remitters, domestic or international firms or resident or non-resident individuals. According to Section 5 of the Income Tax Act, 1961, this form is necessary when income is deemed to originate, accrue, or be received within India.

Elements of Form 15CA

• Part A: This section is filled out for remittances not exceeding Rs. 5 lakhs during the fiscal year and which are subject to taxation.
• Part B: This part is applicable for taxable remittances exceeding Rs. 5 lakhs, but only when an order or certificate as per Sections 195(2), 195(3), or 197 of the Income Tax Act has been issued by the Assessing Officer.
• Part C: For taxable remittances over Rs. 5 lakhs, this section should be completed alongside a certificate obtained from a chartered accountant in Form 15CB.
• Part D: This is used when the remittance or the portion of the remittance does not fall under the taxable category as per the IT Act of 1961.

When is Form 15CA Not Needed?

• Rule 37BB Exemption: If the remittance falls under the specified list in Rule 37BB of the Income Tax Rules, Form 15CA is not required.
• FEMA Compliance: No Form 15CA is required when remittances are made under the provisions where prior approval from the Reserve Bank of India (RBI) is not necessary as per Section 5 of the Foreign Exchange Management Act (FEMA), 1999.

Form 15CB

Form 15CB is a certificate confirming that the Tax Deducted at Source (TDS) from payments to non-residents complies with the regulations outlined in the Income Tax Act and the Double Taxation Avoidance Agreement (DTAA). Issued by a practising Chartered Accountant, it includes pertinent information such as payment details, TDS rate, DTAA provisions, and compliance with Section 195 of the Income Tax Act. Prior to remitting any funds to a non-resident, Form 15CB must be filed.

Objective

Form 15CB is a critical document issued by a Chartered Accountant (CA) that confirms a remittance to a non-resident or foreign corporation complies with the applicable tax provisions. This certificate ensures that all tax obligations are met according to the Income Tax Act and relevant Double Taxation Avoidance Agreements (DTAAs). It is designed to prevent future tax disputes or penalties by thoroughly vetting the remittance details.

Applicability

Form 15CB is required in the following scenarios:

• Chartered Accountant Requirement: A CA must file Form 15CB to validate the remittance.
• Taxable Remittances: The form is necessary when the remittance is taxable and is being sent to a non-resident or a foreign corporation.
• Remittance Threshold: It applies when the remittance amount exceeds Rs 5 lakh.
• Absence of AO Order: This is required when the Assessing Officer has not issued a specific order or certificate relieving the remitter from tax deduction at source (TDS) obligations.

Elements of Form 15CB

• Part A: Contains basic information about the remitter, the beneficiary, and the nature of the remittance.
• Part B: The CA confirms adherence to the terms of the DTAA and the Income Tax Act, providing details on applicable articles and sections.
• Part C: This part requires the CA to certify the correctness and truthfulness of the information provided in the form.
• Annexure: An optional appendix that can be attached to the form to include additional details or documentation relevant to the remittance.

When is Form 15CB Not Needed?

Form 15CB is not required in certain circumstances:

• Non-Taxable Payments: If the payment is not subject to tax in India.
• Income Taxed Abroad: If the remittance is going to a country that considers the income taxable there.
• Small Payments: For payments under Rs 5 lakh within a fiscal year, only “Part-A” of Form 15CA must be filled.
• Under RBI Limits: If the remittance amount is below the limit specified by the Reserve Bank of India (RBI) for purposes other than foreign travel or acquisition of foreign assets.
• Educational and Personal Remittance: If the remittance is for overseas education and stays within RBI’s prescribed limits.
• Existing Certifications: If a certificate under Section 197 or Sections 195(2) / (3) has been obtained from the AO, the need for Form 15CB is negated.

Form 15CB is an essential tool in the compliance toolkit for remittances to non-residents, ensuring that all cross-border payments adhere to tax laws and regulations.

Difference Between Form 15CA and Form 15CB

Forms 15CA and 15CB are integral parts of remitting money to non-residents from India, ensuring compliance with the Income Tax Act. Although they are used in conjunction, they serve different purposes and are required at different stages of the remittance process. Understanding the specific roles and differences between these two forms is crucial for anyone involved in making international payments. Here’s a detailed breakdown of the differences between Form 15CA and Form 15CB:

Form 15CA

• Purpose: Form 15CA acts as a declaration by the remitter, stating that the appropriate taxes have been deducted and that all the details provided are accurate as per the remitter’s knowledge. It is essentially a tool used by the Indian tax authorities to gather information about payments that are taxable in the hands of non-resident recipients.
• Content: This form contains details of the payment, the remittee, and the remitter, along with the nature and purpose of the remittance. It also includes details about the tax deducted at source (TDS).
• Filing: Form 15CA is filled out by the person responsible for making the remittance (the payer) and submitted online on the official Income Tax Department website. There are four parts to this form, and the specific part to be filled out depends on the nature and amount of the remittance and whether a Certificate from a Chartered Accountant (Form 15CB) is required.
• Usage: It is used primarily by the Income Tax Department to track cross-border money transfers and ensure that all taxes due on these transfers are collected and accounted for.

Form 15CB

• Purpose: Form 15CB serves as a certificate from a Chartered Accountant. This form is a more detailed examination and certification of the aspects covered in Form 15CA. The CA certifies that the taxes on the remittance have been calculated as per the tax treaty provisions, if applicable, and as per the Income Tax Act.
• Content: It includes a detailed statement of the payment, including the nature of remittance, the amount of tax deducted at source, and confirmation that the remitter has complied with all applicable tax provisions. It also verifies that the information provided in Form 15CA is correct to the best of the CA’s knowledge.
• Filing: Form 15CB is prepared and certified by a Chartered Accountant before remittance. This certification is required for the completion of Form 15CA Part C.
• Usage: The form is particularly important for verifying the compliance of the remittance with the provisions of the Income Tax Act and the applicable Double Taxation Avoidance Agreement (DTAA).

Documents Required for Filing forms 15CA and 15CB

Here’s a breakdown of the documents and details needed for the efficient and accurate filing of these forms:

Details of Remitter

• Personal and Contact Information: Full name, Permanent Account Number (PAN), address, and email ID of the remitter.
• Bank Details: Information about the remitter’s bank through which the remittance will be made, including bank name, branch, and account number.
• Digital Signature: A digital signature is required to validate the identity of the remitter during the online submission process.

Details of Foreign Remittance

• Country of Destination: The country where the payment is being sent.
• Currency Details: Type of currency being remitted and the equivalent amount in Indian Rupees.
• Nature of Remittance: The purpose of the remittance, such as royalties, dividends, consultation fees, etc.
• Date of Remittance: The date the remittance was made or will be made.

Details of Remittee (Recipient)

• Recipient Information: Name and contact details of the non-resident recipient (remittee).
• Bank Details: Bank name, account number, and branch details of the remittee’s bank.
• Country of Residence: The country where the remittee is based or resides.

Additional Documents

• Form 10F: Declaration by the remittee that they are a resident of a country outside India, necessary if the Double Taxation Avoidance Agreement (DTAA) is to be applied.
• Tax Residency Certificate (TRC): Issued by the tax authorities of the remittee’s country of residence, this certificate is crucial for availing benefits under the DTAA.
• Declaration of Permanent Establishment: A declaration to this effect must be provided if the income is attributed to a permanent establishment in India.
• CA Certificate (Form 15CB): A certificate issued by a Chartered Accountant, certifying the details of the payment, tax deducted at source, and other tax compliance as per Indian tax laws.

Procedure for Filings Form 15CA and CB.

Here is a detailed step-by-step procedure to guide you through filing Form 15CA and CB  online on the Income Tax Department’s e-filing portal.

Filing Form 15CB

Form 15CB must be prepared and certified by a Chartered Accountant (CA). This involves the CA reviewing the payment details against the tax requirements and certifying that all provisions of the Income Tax Act have been adhered to:

• Visit Your CA: Provide your CA with all necessary documentation related to the payment to be made to a non-resident.
• CA Prepares Form 15CB: The CA will prepare Form 15CB, reviewing all relevant tax regulations and double taxation avoidance agreements applicable.
• CA Submits Form 15CB: Using their login credentials on the Income Tax e-Filing portal, the CA will submit the completed Form 15CB online after preparing it offline using the utility downloaded from the portal.

Filing Form 15CA Online

Once Form 15CB is submitted by the CA, you can proceed with filing Form 15CA through the Income Tax e-Filing portal. Here’s a step-by-step guide:

• Access the Portal: Go to the Income Tax Department’s e-filing portal and log in with your credentials.
• Navigate to E-File: Select the “E-File” menu and then click on “Income Tax Forms” from the dropdown menu.
• Select the Form: Choose Form 15CA from the list of forms. You may need to enter your PAN details if not already populated.
• Choose the Appropriate Part of Form 15CA: Depending on the nature of the remittance and the involvement of Form 15CB, select the part of Form 15CA that you need to fill:
  • Part A: For remittances not exceeding Rs 5 lakh in the fiscal year.
  • Part B: For remittances where specific orders/certificates from the AO are available.
  • Part C: For remittances exceeding Rs 5 lakh in the fiscal year and covered under Form 15CB.
  • Part D: For remittances not taxable under the IT Act.
• Fill and Submit Form 15CA: Enter all required details in the selected part of Form 15CA based on the guidelines provided in the form. Attach any required documents and submit the form online.
• Complete Verification: After submitting Form 15CA, fill out the verification section, confirming that all details provided are correct to your knowledge.
• Confirmation: Upon successful submission, a confirmation pop-up will appear, and you should receive an acknowledgement at the registered email address.

Conclusion

Forms 15CA and 15CB are crucial for ensuring compliance with the Income Tax Act during international transactions involving payments to non-residents. Form 15CA serves as an online declaration by the remitter to the Indian Tax Authorities, detailing taxes withheld on payments made abroad. At the same time, Form 15CB, certified by a Chartered Accountant, validates the information in Form 15CA, ensuring all tax provisions and treaties are adhered to. Together, these forms prevent tax evasion, facilitate transparent reporting, and help maintain systematic records for tax credits, which are essential for upholding legal compliance and facilitating smooth international business operations.

Streamline your international transactions with IndiaFilings! Let our experts handle the filing of Forms 15CA and 15CB for you, ensuring compliance and ease every step of the way.