Any payment made to a non-resident or a foreign company is subject to various rules and regulations.
As per provisions of Section 195 of Income-tax Act,1961 any person responsible for paying money to a non-resident including a foreign company shall deduct income tax for payment made to a non-resident.
Making payments outside India requires one to submit Form 15CA and 15CB.
What are Form 15CA and 15CB?
The basic purpose of filling the forms is to collect the taxes at an earlier stage when the remittance is made as it becomes difficult to collect it from a non-resident at a later stage.
Thus, to monitor and check the effectiveness of such transaction e-filing of forms 15CA and 15CB were introduced.
Form 15CA is a declaration made by the person remitting the money wherein he states that he has deducted the tax from any payments so made to the non-resident.
Form 15CB is a certificate issued by a Chartered Accountant ensuring that the provisions of the Income Tax Act have been complied with in respect of tax deductions while making the payments.
What does Form 15CB include?
- Details and nature of payment made to a Non-Resident.
- Compliance with Section 195 of the Income Tax Act.
- Rate of TDS deducted.
Applicability of Form 15CA and Form 15CB
Form 15CA is a declaration by any person intending to make remittance:
- To non-resident or to a foreign company (irrespective of whether remittance is subject to tax)
- By remitter who can be resident /non-resident/ domestic company/foreign company
- When income accrues/ arises/ received or deemed to accrue/ arise/ received in India (Section 5 of Income Tax Act).
Form 15CB is a certificate required to be filed by the Chartered Accountant when the remittance is made.
- To a non-resident or foreign company is taxable and
- The payment exceeds Rs. 5,00,000/-; and
- When order/certificate has not been received from Assessing Officer (AO).
When is Form 15CA not required?
- When the remitter makes remittance as per the specified list of payments in Rule 37BB of Income Tax Rules.
- Not applicable to an individual who does not require RBI approval as per Section 5 of the Foreign Exchange Management Act, 1999.
When is Form 15CB not required?
- When the remittance is not taxable.
- If the income is taxable in the country of residence of the remittee.
- When the aggregate of remittances during the financial year does not exceed Rs. 5,00,000.
Various Parts of Form 15CA
Part A – Section A
It is filled in by the remitter when the payment or the total sum of the payment extended by the remitter to the NRI recipient during a particular Financial Year is Rs. 5 Lakhs or less.
Part B – Section B
It is in the role when such payments are more than Rs. 5 Lakhs. Information is entered by the filer in Section B after acquiring a certificate from the Assessing Officer (valid under section 197) or the order from the Assessing Officer (valid under sub-section (2) or sub-section (3) of section 195).
If such payments made during a particular FY exceed Rs. 5 Lakhs, the related information has to be entered in Section C of Form 15CA after acquiring the Tax Determination Certificate or Form 15CB from authorized CA (valid under sub-section (2) of section 288).
Payments made by the remitter during a particular FY which is not referred to in sub-section 37BB or in other words are not taxable under law, the information related to such payments is to be entered in Section D of Form 15CA.
Procedure for filing forms
Form 15CA is available online on the government’s official income tax e-filing portal. The form is electronically submitted to concerned authorities.
Here is the step-wise guidance to file Form 15CA:
Step 1: Visit the official E-filing ‘ portal at https://incometaxindiaefiling.gov.in/ and log in by using the valid credentials.
Step 2– Select ” E-file” from the menu placed at the top of the page and then click on Income Tax Forms.
Step 3– The PAN details of the taxpayer are pre-filled. Choose “Form 15CA” from the drop-down list named “Form Name”.
Step 4– Select your required section from “Select relevant part from the down “
Step 5– Fill the selected part of Form 15CA and click on the “submit” button.
Step 6– Fill in the details in the verification portion of the respective part of Form 15CA.
Please Note– Form 15CB needs to be uploaded before you fill Part C of Form 15CA as the acknowledgment number of Form 15CB is required while filing the respective part.
Once the form is successfully filled, a notification “successfully submitted” will pop up on the screen along with a confirmation email sent to the registered email account.
Chartered Accountants can fill in Form 15CB through the below-mentioned procedure:
Step 1: Visit http://incometaxindiaefiling.gov.in/ and click on the “Downloads” tab.
Step 2: Select the required “Forms (Other than ITR)” and then convert them either in Excel
Step 3: Create the XML file using your chosen utility.
Step 4: log in to the account on the e-filing portal and click on the “e-File” tab. Select “Upload Form” from the drop-down menu.
Step 5: Fill in the PAN/TAN details of the assessee, PAN of C.A., select “Form Name” as “15CB“, and “Filing Type” as “Original”. Press “submit”
As soon as you press the submit button you will receive a success notification along with an email sent to your registered email ID.
Form 15 CA can be accessed at https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007842.pdf
Learn more about the Penalty for non-filing of Form 15CA & Form 15CB here.