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Foreign remittances have tax implications, which many times is missed out inadvertently by taxpayers.
As per section 195 of the Income Tax Act, tax is required to be deducted for any sum which is taxable under the Income Tax Act. So when a person desires to make any payment or remit any money to non resident, the bank will require to check whether the tax was paid or not. If not paid; it will be checked if it is certified by the Chartered accountant or the Assessing Officer. But there are at least 28 types of foreign remittance where you do not require any submission of Form 15CA or Form 15CB.
Form 15CA is a declaration of remitter and is used as a tool for collecting information in respect of payments which are chargeable to tax in the hands of recipient non-resident. This is starting of an effective Information Processing System which may be utilized by the Income Tax Department to independently track the foreign remittances and their nature to determine tax liability.
Authorised Dealers/ Banks are now becoming more vigilant in ensuring that such Forms are received by them before remittance is affected, since now as per the revised Rule 37BB, a duty is casted on them to furnish Form 15CA (received from the remitter) to an income-tax authority for the purpose of any proceedings under the Income-tax Act.
Income Tax Department has now created online facility to file information. Thus the Form 15CA is required to be filed online with the tax department. After that, proof of online submission should be printed out. This copy is required to be given to the Bank as a proof of tax clearance from the tax department.
Form 15 CB is Form which is required to be signed by a Chartered Accountant. This is a kind of certification regarding rates and right kind of tax paid by you. Certain details are required from Form 15CB at the time of filing Form 15CA.
At first glance it appears that Form 15CA is not required to be filled if the remittance or payment to non-resident Indian is not chargeable to tax.
As per Income Tax (Fourteenth Amendment) Rules, 2013, No reporting in Form 15CA and 15CB is to be made in case of the following nature of foreign remittances since October 2013 has been provided in Rule 37BB.
Form 15CA and Form 15CB are required when you make foreign remittances under the Income Tax Act, 1961. Which of the forms needs to be used depends on the nature of foreign remittance and the amount you wish to remit. While you gather information regarding how to file returns online, it’s important to understand the applicability of these forms as well.
Form 15CA is an online remitter’s declaration that states any payment made outside Indiahas been subject to tax in India.
PART A
To be filled for taxable remittances upto Rs 5 lakhs. |
PART B
To be filled fortaxableremittances exceeding Rs. 5 Lakhsand an order/Certificate under Section 195(2)/195 (3)/197 of the Income Tax Act has been obtained from the Assessing Officer.
|
PART C
To be filled for taxableremittances exceeding Rs. 5 Lakhsalong with a certificate in Form 15 CB is received from a chartered accountant.
|
PART D
To be filledwhen the payment made to the NRI is not chargeable to tax under the IT Act of 1961 |
1. Form 15CA is not required when the remittance is made per the specified payment list in Rule 37BB of Income Tax Rules.
2. When the individual making the remittance does not require prior approval of RBI according to Section 5 of the Foreign Exchange Management Act (FEMA), 1999.
Form 15CB is a certificate issued by a Chartered Accountant (CA) u/s 195(6) that ensures that the provisions of the Double Taxation Avoidance Agreement and the Income Tax Act have been complied with in respect of tax deductions while making the payments
1. Form 15CB is not required when the remittance is not taxable in India.
2. If the remittee's country of residence considers the income taxable and the remittance is sent to that country.
3. Form 15CB is not required where "Part-A" of Form 15CA is to be filled in, i.e. in case payments does not exceed Rs Five Lakhs during the financial year.
4. When an individual makes the remittance and is not for a foreign tour or payment for the purchase of any foreign asset, the amount does not exceed the limit prescribed by the RBI.
5. When an individual makes the remittance to pursue education abroad, the amount does not exceed the limit prescribed by the RBI.
6. Form 15CB is not required where a certificate from the AO u/s 197 or 195(2) / (3) has been obtained
List of payments where Form 15CA / 15CB is not required |
|
Purpose code as per RBI |
Nature of Payment |
S0001 |
Indian investment abroad -in equity capital (shares) |
S0002 |
Indian investment abroad -in debt securities |
S0003 |
Indian investment abroad -in branches and wholly owned subsidiaries |
S0004 |
Indian investment abroad -in subsidiaries and associates |
S0005 |
Indian investment abroad -in real estate |
S0011 |
Loans extended to Non-Residents |
S0202 |
Payment- for operating expenses of Indian shipping companies operating abroad. |
S0208 |
Operating expenses of Indian Airlines companies operating abroad |
S0212 |
Booking of passages abroad -Airlines companies |
S0301 |
Remittance towards business travel. |
S0302 |
Travel under basic travel quota (BTQ) |
S0303 |
Travel for pilgrimage |
S0304 |
Travel for medical treatment |
S0305 |
Travel for education (including fees, hostel expenses etc.) |
S0401 |
Postal services |
S0501 |
Construction of projects abroad by Indian companies including import of goods at project site |
S0602 |
Freight insurance – relating to import and export of goods |
S1011 |
Payments for maintenance of offices abroad |
S1201 |
Maintenance of Indian embassies abroad |
S1202 |
Remittances by foreign embassies in India |
S1301 |
Remittance by non-residents towards family maintenance and-savings |
S1302 |
Remittance towards personal gifts anddonations |
S1303 |
Remittance towards donations to religious and charitable institutions abroad |
S1304 |
Remittance towards grants and donations to otherGovernmentsand charitable institutions established by the Governments. |
S1305 |
Contributions or donations by theGovernmentto international institutions |
S1306 |
Remittance towards payment orrefundof taxes. |
S1501 |
Refunds or rebates or reduction in invoice value on account of exports |
S1503 |
|
Details of Remitter
a. Name of the remitter
b. Address of the remitter
c. PAN of the remitter
d. Principal place of business of the remitter
e. E-Mail address and phone no. of remitter
f. Status of the remitter (firm/company/other)
Details of remittee
a. Name and status of the remittee
b. Address of the remittee
c. Country of the remittee (country to which remittance is made)
d. Principal place of the business of the remittee
Details of the remittance
a. Country to which remittance is made
b. Currency in which remittance is made
c. Amount of remittance in Indian currency
d. Proposed date of remittance
e. Nature of remittance as per agreement (invoice copy to be asked from client)
Bank details of the remitter
a. Name of bank of the remitter
b. Name of branch of the bank
c. BSR Code of the bank
Others
a. Father’s name of the signing person
b. Designation of the signing person
Documents from the remittee
a. Form 10F duly filled by the authorized person of the remittee.
b. Tax residency certificate from the remittee (tax registration of the country in which remittee is registered).
c. Certificate that the remittee does not have any permanent establishment in India.
While you learn how to file ITR online via the e-filing portal, it’s crucial to understand the process of filing Form 15CA and Form 15CB as well. These are essential when you make a foreign remittance. Here’s a step-by-step guide to file Form 15CA and Form 15CB.
1. PAN of the remitter and the beneficiary
2. Amount of the remittance
3. Nature and purpose of the remittance
4. Bank details
5. Certificate from a Chartered Accountant (Form 15CB)
Form 15CA and Form 15CB are not applicable for transactions that do not necessitate RBI approval.
A. Form 15CA and Form 15CB are two mandatory forms that need to be submitted under the Income Tax Act, 1961 for payments made to a non-resident by a resident of India. Form 15CA is the declaration made by the remitter about the foreign remittance. Whereas, Form 15CB is a declaration from the CA stating the compliance of the Income Tax Act, 1961 and the Double Taxation Avoidance Agreement.
A. Invoice, tax residency certificate (TRC), the agreement between the parties and Form No. 10F.
A. Yes, it’s mandatory to file Form 15CB, before the filing of Form no. 15CA (Part-C). This is because Part C of the e-filing of Form 15CA requires the details of Form 15CB. To ensure the pre-filling of the details, verify the acknowledgement number of the e-Verified Form 15CB.
A. Filing of Form 15CA requires submitting the details of the remitter, remittee and remittance. Also, the AO approval, Form 15CB and the details of the CA are needed in applicable situations. Thus, the PAN of the remitter, remittee and the CA the Form 15CB and the approval certificate are in the list of documents required.
A. In case of non-compliance with Form 15CA and Form 15CB, a penalty is payable under Section 271-I of the Income Tax Act, 1961. The lower of Rs 1 lakh or the remittance amount is payable as a penalty for non-filing or incorrect filing of Form 15CA and 15CB.
A. Form 15CB should be used to remit more than Rs 5 lakh in a financial year to a non-resident which is taxable and where approval from AO is not obtained. Here, a CA has to furnish Form 15CB for the Assessee.
A. No, Form 15CB is not mandatory. It is an event-driven form that should only be completed when the remittance surpasses Rs. 5 lakh within a financial year, and you are mandated to provide an accountant certificate as per the provisions of Section 288 of the Income Tax Act, 1961
A. Yes, Form 15CA can be withdrawn within 7 days from the date of Submission. The link to withdraw the submitted form will be available on the website of the Assessee concerned.
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