No Burden of form 15 cb/ca for transfer of gifts from relatives to NRI

As per the latest amendment in the provisions of income tax act, 1961, 15CA/CB is applicable only if a person is responsible for paying to a non-resident, any interest or salary or any other sum chargeable to tax. Also no CA Certificate is required in Form 15CB and no furnishing of Form 15CA to the Income Tax department for any payment or money transfer out of India that is not taxable. 

Clarification to above: It means that nor CA certification is required in Form 15CB neither furnishing of Form 15CA is required to the Income Tax department for any payment or money transfer out of India that is not Taxable. As a result, Form 15CA/CB may not be required for the transfer from NRO to NRE or for outward remittance from NRO funds.

When is 15CB/CA is required:

• Payment that is taxable but does not exceed Rs. 50,000 or aggregate of payment does not exceed Rs. 250,000 in a financial year then form 15CA Part A need to furnished to Income Tax Department.
• For any other payment, updated CA Certificate in Form 15CB to be obtained and revised Part B of the Form 15CA to be furnished to the Income Tax department.

As per the latest amendment in the Form 15CB/CA, CA certification is not required if a resident is making payment to NRI’s as a gift in cash or cheque. Gifts are not chargeable to tax if they are received from relatives, in cash or in kind. As Gifts is always exempt income for Individuals and HUF.

Due to preparation and attestation of Form 15CA/CB by a Chartered Accountant, many of our NRI clients had been facing issues in getting their funds repatriated from NRO to their NRE accounts or any other Foreign Accounts even when the source of fund was a Gift received from their relatives. This also created delay in transfer of fund as it required certain details with the certification process like stating the source of fund and the reason for not deducting TDS.

Although new Form 15 CA/CB has come into force, NRI’s are not relaxed due to certain guidelines of FEMA which needs to be looked into. However, they are relaxed from preparation and attestation of Form 15CA/CB by a Chartered Accountant and submitting it to the bank.

FEMA Guidelines:

An Application for Remittance Abroad (For Payments other than Imports and Remittances Covering Intermediary Trade in Form A2 has to be submitted.

The gift amount should be credited to the Non-Resident (Ordinary) Rupee Account (NRO) a/c of the NRI / PIO and credit of such may be treated as an eligible credit to NRO a/c. The gift amount would be within the overall limit of USD 100,000 per financial year as permitted under the Liberalized Remittance Scheme (LRS) for a resident individual. It would be the responsibility of the resident donor to ensure that the gift amount being remitted is under the LRS and all the remittances under the LRS during the financial year including the gift amount have not exceeded the limit prescribed under the LRS.

A resident individual may make a remittance under the Liberalized Remittance Scheme for resident individuals up to USD 75,000 for acquisition of shares (of listed companies) or debt instruments in a company abroad.

As per guidelines, a person resident in India:

• Can purchase a foreign security out of the funds held in RFC account maintained in accordance with Foreign Exchange Management (Foreign Currency accounts by Person Resident in India) Regulations, 2000;
• Can acquire bonus shares on the foreign securities held in accordance with the provisions of the FEMA or rules or regulations made there under;
• When not permanently resident in India, can purchase a foreign security from out of his foreign currency resources outside India;

The overall limit to remit Medical expense is USD 100,000. Remittance in excess of USD 100,000 is allowed without any monetary limit subject to estimate from doctor in India or a doctor/hospital abroad. Reserve Bank approval is required to release exchange if the amount exceeds the estimate from the doctor in India or doctor/hospital abroad.

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