The world is becoming smaller every day. More and more cross border transactions are happening on a daily basis. Some examples of these transactions may include:
1. When a business makes a payment to its technician/freelancer who is a non-resident
2. When a business makes a payment to its advertiser who is a non-resident
3. When a business makes a payment of royalty to a non-resident
There can be numerous other examples.
Section 195 of the Income Tax Act, 1961, says that it is mandatory to deduct Income Tax from payments made to non-residents. Herein comes the concept of Form 15 CA and CB. As per the Act and its allied rules. The person making payment/ remittance to non – resident holds the responsibility to furnish an undertaking (in form 15CA) attested by a Chartered Accountants Certificate in Form 15CB.
Form 15 CA
When to file: When payment made is below Rs 5 lakh
Mode of submission: Online
Form 15CA is a declaration by remitter. This is used as a tool for collecting information in respect of payments which are liable to tax on behalf of recipient non-resident.
This form is a way for the Income Tax Department to keep an eye on foreign remittances & their tax accountability.
Parts of Form 15CA
Part A – Part A of the Form is required to be filed when the remittance amount is taxable under the income tax Act 1961 and the aggregate of remittance exceeds Five lakh rupees in that particular F.Y.
Part B – Part B of the Form 15CA is needed to be filled when the remittance amount exceeds five lakh rupees in the F.Y. and when an order /certificate u/s 195(2)/ 195(3)/197 of Income Tax Act has been acquired from the A.O. (Whether Nil rate or Lower rate Certificate).
Part C- Part C of the Form 15CA is needed to be filled when the remittance amount in the F.Y. exceeds Five Lakh rupees during the F.Y. and a certificate in Form No. 15CB from an accountant as stated in the description below sub-section (2) of section 288 has been obtained.
Part D – The Part D of Form 15CA is filled when the remittance is not taxable other than payments referred to in rule 37BB(3) by the person referred to in rule 37BB(2)
Form 15 CB
15CB is the Tax Determination Certificate where the CA verifies the remittance with respect to the liability provisions under Section 5 and 9 of the Income Tax Act coupled with the provisions of Double Tax Avoidance Agreements. In this form, a C.A. validates the details of the payment, TDS rate and TDS deduction as per the norms mentioned in Section 195 of the Income Tax Act, if any DTAA is applicable, and other details of nature and purpose of the remittance.
Points to Note:
1. It should be kept in mind that Form 15CA is not needed to be filed when the remittance paid to a Non-resident is non taxable which interprets that the Form 15CA is filled up only when the remittance paid to a non-resident is taxable and does not surpass an amount of fifty thousand rupees and the aggregated remittance for the Financial year does not exceed two lakh fifty thousand rupees.
2. It is to mandatory to upload Form 15CB before filling Part C of Form 15CA. To present the details in Part C of Form 15CA, the acknowledgment number of e-Filed Form 15CB should be given.
3. Form 15CB is to be filled only when the remittance amount exceeds Rs 5 Lakh during the F.Y. under the income tax act 1961.
4. The online filing of 15CA/15CB as per XML based latest scheme generation and uploading are also compulsory.
Documents required for Form 15CA and 15 CB
|Details of the Remitter||1. Remitter’s Name and address|
|2. Remitter’s PAN|
|3. Status of the Remitter (Firm/Company/Other)|
|4. E-Mail Address and Phone No|
|5. Remitter’s PAN|
|Details of the Remittee||1. Name, address and Status of the Remittee|
|2. Principal Place of Business|
|3. Country of the Remittee|
|Details of the Remittance||1. Currency in Which Remittance Is Made|
|2. Country to Which Remittance Is Made|
|3. Amount of Remittance in Indian & Foreign Currency|
|4. Proposed Date of Remittance|
|5. Amount of Tax in Foreign Currency|
|6. Nature of Remittance as Per Agreement -Professional Fee/Technical Fees/Royalty,etc|
|7. Rate of Tax as per DTAA and Income tax|
|8. Details of Tax Residency Certificate (TRC), if any|
|9. Details/reasons for lower deduction of tax, if any|
Transactions for which 15CA CB is not required to be filed:
1.Indian investment abroad -in equity capital (shares)
2.Indian investment abroad -in debt securities
3.Indian investment abroad-in branches and wholly owned subsidiaries
4.Indian investment abroad -in subsidiaries and associates
5. Indian investment abroad -in real estate
6. Loans extended to Non-Residents
7.Advance payment against imports
8. Payment towards imports-settlement of invoice
9. Imports by diplomatic missions
10. Intermediary trade
11. Imports below Rs.5,00,000-(For use by ECD offices)
12. Payment- for operating expenses of Indian shipping companies operating abroad.
13. Operating expenses of Indian Airlines companies operating abroad
14. Booking of passages abroad -Airlines companies
15. Remittance towards business travel.
16. Travel under basic travel quota (BTQ)
17. Travel for pilgrimage
18. Travel for medical treatment
19. Travel for education (including fees, hostel expenses etc.)
20. Postal Services
21. Construction of projects abroad by Indian companies including import of goods at project site
22. Freight insurance – relating to import and export of goods
23. Payments for maintenance of offices abroad
24. Maintenance of Indian embassies abroad
25. Remittances by foreign embassies in India
26. Remittance by non-residents towards family maintenance and savings
27. Remittance towards personal gifts and donations
28. Remittance towards donations to religious and charitable institutions abroad
29. Remittance towards grants and donations to other Governments and charitable institutions established by the Governments.
30. Contributions or donations by the Government to international institutions
31. Remittance towards payment or refund of taxes.
32. Refunds or rebates or reduction in invoice value on account of exports
33. Payments by residents for international bidding
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