Taxation

Implications of Form 15CA and Form 15CB

In the present times of globalisation, there are the least restrictions imposed on businesses due to which they are spreading around the world with huge international transactions on a daily basis. Taxability and Tax deduction is complicated proceeding when NRIs are involved. Eligible rate of tax, deductions allowed, etc. on business transactions made with Non-residents Indians are governed under the Income Tax Act. Here in this article we are going to discuss about Form 15CA & 15 CB in detail;

Rule 37BB – An Overview

Rule 37BB governs the manner to furnish the information or file the declaration by the assessee who makes any payment to Non-Resident India (NRIs) or foreign companies as per the following:

• Payment made is less than INR 5 Lakhs:

The assessee shall give the declaration of such payment in Part A of Form 15CA.

• Payment exceeds INR 5 Lakhs:
  • The assessee shall give the detail of such payment in Part B of Form 15CA.
  • The assessee shall give the details of such payment in Part C of Form 15CA.
  • The assessee has to file the declaration in form 15CB certified by Chartered Accountant.
  • Order from the Assessing Officer as per Section 195(2) & 195(3).
  • Certificate from Assessing Officer under section 197 of Income Tax Act, 1961

• Payment made is not taxable as per Income Tax Act, 1961:

Assessee is required to furnish the details of such payment in Part D of Form 15CA.

Definition of Non-Resident India (NRIs) & Foreign company

NRIs:

An individual is said to be Resident of India ifhe fulfills the following condition:

1. Has stayed in India for 182 days or more in that relevant year

OR

• Has stayed in India for a period of full 1 year out of 4 years previous year and at least 60 days in a relevant previous year.

The assessee will be considered as Non-Resident Indian (NRIs) if he doesn’t satisfy any of the above conditions.

Foreign Company:

As per Section 2(32) of the Income Tax Act, 1961, any company which is not a domestic company(a domestic company is registered in India and is liable for taxation as per the provisions of Indian Income Tax Acts)

Form 15CA under Rule 37BB

Form 15CA is filed for filing the declaration by a remitter who has the remit or paid in the course of international transactions.  This form is used as a medium for collecting the information concerning the payments for which tax is payable by the recipient (non-resident) of such income. With the help of this form, Income Tax Departments keep an eye on every foreign transaction and foreign remittances.  

In case the payment is not liable for taxation or doesn’t relate to NRIs, such form is exempted, provided that remitter shall submit the declaration in the form of note specifying the nature of the payment and the exempted condition thereof.

Information to be furnished in Form 15CA

Following are the details of the information required to be disclosed in Form 15CA:

• Name & Address of the remitter and recipient of payment
• Principal Place of Business of both the party
• PAN of remitter
• Email id, phone number & other contacting details of remitter
• Status of both parties such as company, firm, individual, etc.
• The country in which the payment is made.
• Currency in which payment is made
• Proposed date of remittance
• Nature of the remittance along with the supporting documentation of a copy of the invoice
• Name, branch and BSR code of the bank of the remitter
• Designation & details of signing an authority
• Duly filed Form 10F by the receipt of such payment.

• A certificate that declares the remittee has no permanent establishment in India
• Tax Registration Certificate of the country in which the remittee is registered.

Procedure to file Form 15CA

Following is the step by step process to file this form online:

• Visit the income tax website https://www.incometaxindiaefiling.gov.in/
• Log in to the account by using login credentials such as PAN as user-id & password
• Select the “Income Tax Forms” from the drop-down menu under the e-file menu.
• Choose Form 15CA amongst all the options of forms.
• Select the type of form amongst Part A, B, C, or D as per the class of declaration.
• Part C is pre-filled by the acknowledgment number of e-form 15CB
• Complete the form by filling the necessary details and submit it.

Parts of Form 15CA

Following are the four different parts of form 15CA to be filed depending upon the taxability and amount of remittance:

• Part A: if the remittance is liable to be taxed and the value of remittance doesn’t exceed INR 5 Lakhs in any FY.
• Part B: if the remittance is liable to be taxed and the value of remittance exceeds INR 5 Lakhs in any FY.
• Part C: if the remittance is liable to be taxed, the value of remittance exceeds INR 5 Lakhs in any FY along with the certificate is required to be submitted in Form 15CB to be given by a Chartered Accountant.
• Part D: in case the remittance is not taxable under the provisions of Rule 37BB.

Form 15 CB under Rule 37BB

• Form 15CB is compulsorily filed before the submission of Part C of Form 15CA.
• Form 15CB declares and gives an assurance that applicable provisions of the Income Tax concerning foreign remittances are properly adhered to.
• Form 15CB is duly certified by Chartered Accountant, declaring the remittance is chargeable under the provisions of the Income Tax Act.

Exemption to file Form 15CA/15CB

Following international transactions are exempted from the purview of this section:

• Indian Investment Abroad in equity, debt securities, real estates and in a wholly-owned subsidiary
• Any Loans are given to NRIs
• Advance payment against any import
• Payments for the settlement of invoice against import
• Imports made by a diplomat mission
• Import made for the use by ECD office for the value below INR 5 Lakhs.
• Any operations & expenses made to Indian Airlines Companies that are operating abroad.
• Payment for the business travel
• Travel expenses for medical treatment
• Pilgrimage trip
• Postal services
• Any construction of projects abroad done by Indian entities.
• Freight Insurance is taken for the import or export of goods.
• Maintenance of Indian Embassy abroad
• Any remittance by the foreign embassy to India
• Any remittance or payment made by any NRIs to its family residing in India
• Donations made to charitable and religious institute operating abroad
• Donations made by the government to any international institution.
• Refund or rebate in the invoice value on account of export made

Also, there is no need to furnish the information in Form 15CA and 15CB for the payments that require no approval from RBI under its Liberalized Remittance Schemes.

Suggested Reads:

• Section 194-H of the Income Tax Act, 1961
• Section 73 of the Income Tax Act, 1961
• Get Clarity on the Difference between Tax Planning and Tax Avoidance