Applicability of Form 15CA and 15CB w.e.f 01/10/2013

Print Friendly, PDF & Email

Filling 15CA in case of foreign remittance in Income Tax Act

As per Section 195 of the Income Tax Act 1961, every person liable for making a payment to non residents shall deduct TDS from the payments made or credits given to non-residents at the rates in force.

Mechanism of form 15CA

Therefore the mechanism of form 15CA was introduced via rule 37BB of the Income Tax Act, so as to enable the person responsible for making foreign remittance to give information on foreign remittance & deduct TDS at the rates in force.

We can also say that the role of TDS return is played by form 15CA in case of foriegn remittance.

Also the Reserve Bank of India has also mandated that except in cases of certain personal remittances which have been specifically exempted, no remittance should be made to a nonresident without furnishing an undertaking in Form 15CA accompanied by a certificate from an Chartered Accountant in Form 15CB if applicable.

Form 15CA is divided into 4 parts

PART A – To be filled up if the remittance is chargeable to tax under the provisions of the Income-tax Act,1961 and the remittance or the aggregate of such remittances, as the case may be, does not exceed five lakh rupees during the financial year.

PART B – To be filled up if the remittance is chargeable to tax under the provisions of the Income-tax Act,1961 and the remittance or the aggregate of such remittances, as the case may be, exceeds five lakh rupees during the financial year and an order/ certificate u/s 195(2)/ 195(3)/ 197 of Income-tax Act has been obtained from the Assessing Officer.

PART C – To be filled up if the remittance is chargeable to tax under the provisions of Income-tax Act, 1961 and the remittance or the aggregate of such remittances, as the case may be, exceeds five lakh rupees during the financial year and a certificate in Form No. 15CB from an accountant as defined in the Explanation below sub-section (2) of section 288 has been obtained.

PART D – To be filled up if the remittance is not chargeable to tax under the provisions of the Income-tax Act,1961 {other than payments referred to in rule 37BB(3)} by the person referred to in rule 37BB(2).

Payments referred to in rule 37BB(3) i.e where no submission of form 15CA is required

  • The remittance is made by an individual and it does not require prior approval of Reserve Bank of India as per the provisions of section 5 of the Foreign Exchange Management Act, 1999 (42 of 1999) read with Schedule III to the Foreign Exchange (Current Account Transaction) Rules, 2000.
  • or the remittances specified below:

 

Sl.

No.

Nature of payment (Rule-37BB, Income-tax Rules)
1Indian investment abroad – in equity capital (shares)
2Indian investment abroad – in debt securities
3Indian investment abroad – in branches and wholly owned subsidiaries
4Indian investment abroad – in subsidiaries and associates
5Indian investment abroad – in real estate
6Loans extended to Non-Residents
7Advance payment against imports
8Payment towards imports – settlement of invoice
9Imports by diplomatic missions
10Intermediary trade
11Imports below Rs.5,00,000 – (For use by ECD offices)
12Payment for operating expenses of Indian shipping companies operating abroad
13Operating expenses of Indian Airlines companies operating abroad
14Booking of passages abroad – Airlines companies
15Remittance towards business travel
16Travel under basic travel quota (BTQ)
17Travel for pilgrimage
18Travel for medical treatment
19Travel for education (including fees, hostel expenses etc.)
20Postal services
21Construction of projects abroad by Indian companies including import of goods at project site
22Freight insurance – relating to import and export of goods
23Payments for maintenance of offices abroad
24Maintenance of Indian embassies abroad
25Remittances by foreign embassies in India
26Remittance by non-residents towards family maintenance and savings
27Remittance towards personal gifts and donations
28Remittance towards donations to religious and charitable institutions abroad
29Remittance towards grants and donations to other Governments and charitable institutions established by the Governments
30Contributions or donations by the Government to international institutions
31Remittance towards payment or refund of taxes
32Refunds or rebates or reduction in invoice value on account of exports
33Payments by residents for international bidding.

Rate on which TDS is to be deducted

Deciding Rate is important Factor while filing for 15CA and 15CB. Some of the points that should be kept in mind while deciding the rate are given below.

a. Rate specified in Income Tax Act or in Double Taxation Avoidance Agreement, which ever is lower should be the rate on which TDS should deducted.

b. If income is chargeable to tax in India and relief is claimed under the DTAA, whether TRC has been obtained from the recipient?

c. If remittance is on account of capital gains details of amount of short-term, long-term capital gains and the basis of arriving at the taxable income.

d. Provisions of Section 206AA will be applicable, if remittance is chargeable to tax and PAN of remittee is not available.

Concept of Grossing up

Suppose 100 Dollars are required to be remitted . RBI reference rate for 1 Dollar is 50 Rupees. This means 5000 Rupees are required to be remitted.

Now let us assume that the rate of TDS is 20%.

Here 5000/(100-20)% = 6250 is the Gross Remittance. 6250 * 20% = 1250 is the TDS and 5000 is remittance net of TDS.

This concept is called ” Concept of Grossing up”.

Currency Conversion Rate

No specific mechanism of converting foreign currency in to Indian currency has been specified , therefore it is advised that RBI reference rate should be taken for converting foreign currency into Indian currency.

What is the difference Between Form 15CA and Form 15CB?

A lot of people are confused about as to what is the difference Between Form 15CA and Form 15CB. Form 15CA is filed by the tax deductor/ remittor where as form 15 CB is a certificate by practicing chartered accountant that :

  1. The Agreement/ Arrangement between tax deductor/ remittor and benficiary (person to whom funds are transferred)
  2. Nature of transaction, and rate of TDS adopted
  3. books of accounts and other relevant documents involved in the transaction are as per provisions of Income Tax Act.

 

Click here to download Form 15CA

Click here to download Form 15CB

 

You Might Also Like

2 Comments

  1. 1

    Whether for transfer of funds from NRO Saving
    Account to NRE Saving account of same person submission of Form 15CA and 15CB are required in light of CBDT notification dated 16 December 2015

  2. 2

    Yes

    Any person making a payment to a non-resident, including an NRI transferring funds from NRO to NRE account would be required to obtain a certificate from a Chartered Accountant in form 15CB and file form 15CA to the income tax department.

Leave a Reply

Your email address will not be published. Required fields are marked *