Ashish Garg & Associates 15CA-CB Filing

15CA-CB Filing

15CA-15CB Filing – Compliance for Foreign Remittances

Section 195 of the Income-tax Act, 1961

Section 195 of the Income-tax Act, 1961 mandates that any person making a payment to a non-resident or a foreign company must ensure that the correct amount of tax is deducted at source (TDS) on such payment. The tax withheld is deposited with the government, and the deductor is required to file the appropriate forms to report these foreign remittances to the tax authorities.

To comply with Section 195, taxpayers are required to submit Form 15CA and Form 15CB to the Income Tax Department before remitting funds abroad. These forms help ensure that the correct TDS is deducted and that the payments are not in violation of the Income-tax Act.

Importance of Form 15CA and Form 15CB

  • Form 15CA: This is a self-declaration form by the remitter, used to report the details of the remittance being made to a non-resident. It ensures that the remitter has deducted the appropriate tax as per the provisions of the Income-tax Act.
  • Form 15CB: This is a certificate issued by a Chartered Accountant (CA), certifying that the tax has been correctly deducted at source (TDS) in compliance with the Income-tax Act for foreign remittance. Form 15CB is required to validate the details provided in Form 15CA.

Together, these forms facilitate the reporting of foreign payments and ensure that the remitter is complying with the provisions of the law, reducing the chances of non-compliance.

Applicability of Form 15CA and Form 15CB

  • Form 15CA is applicable when any payment is made to a non-resident, and it is mandatory to declare the remittance and provide details of TDS deducted.
  • Form 15CB is required to be certified by a Chartered Accountant when the amount paid is greater than Rs. 5 lakh (in a financial year) or if the remittance involves a payment that is subject to a lower tax rate under the Income-tax Act or a Double Taxation Avoidance Agreement (DTAA).

When is Form 15CA not required?

Form 15CA is not required in the following cases:

  1. Payments to Foreign Governments or International Organizations: Payments made to a foreign government or any international organization covered under the rules are exempt from filing Form 15CA.
  2. Payments to Indian Entities: Payments made to Indian entities do not require the filing of Form 15CA.
  3. Remittance for Personal Expenses: If the remittance is for personal expenses and not business-related, Form 15CA is not required.
  4. Payments Subject to Nil or Exempt TDS: Payments where the TDS is either exempt or is at a nil rate under a Double Taxation Avoidance Agreement (DTAA).

When is Form 15CB not required?

Form 15CB is not required in the following situations:

  1. Payments Below Rs. 5 Lakh: Form 15CB is not needed for remittances that do not exceed Rs. 5 lakh in a financial year.
  2. Payments Where TDS is Not Applicable: In case the remittance is exempt from TDS under the Income-tax Act or is eligible for a lower withholding tax rate under the applicable DTAA, Form 15CB may not be needed.
  3. Personal Remittances: For personal remittances made by an individual that are not related to business or professional income, Form 15CB is not required.

Specified Payments Where Form 15CA/15CB is Not Required

Form 15CA and Form 15CB are not required in the following cases:

  1. Dividend Payments: Payments to non-resident shareholders for dividends are subject to TDS under Section 115A and do not require Form 15CA or Form 15CB if the remittance is less than Rs. 5 lakh.
  2. Interest Payments by Banks: Interest payments made by banks on loans to non-residents do not require the forms if the tax has already been deducted.
  3. Payments for Import of Goods: Payments for the import of goods do not require the filing of Form 15CA and Form 15CB.
  4. Royalty and Fees for Technical Services: If the remittance is for royalty or technical services and the TDS is already deducted, Form 15CA/15CB may not be required.

The Contents of Form 15CA and Form 15CB

  • Form 15CA contains the following information:
    1. Details of the Remitter: Name, address, PAN, etc.
    2. Details of the Recipient: Name, address, country, and other details of the non-resident.
    3. Details of Payment: Amount, nature of the remittance, and the date of the payment.
    4. Tax Deduction Details: The amount of tax deducted at source (TDS) and the relevant section under which it is applicable.
    5. Verification: A declaration from the remitter that all the details provided are correct.
  • Form 15CB contains the following details:
    1. Certificate by Chartered Accountant (CA): Confirmation that tax has been deducted as per the provisions of the Income-tax Act and any applicable DTAA.
    2. Verification: A statement confirming that the CA has verified the remittance details and tax payment records.
    3. Signature of CA: The Chartered Accountant certifies that the remittance complies with all tax regulations.
    4. Details of Payment: A brief overview of the payment and the nature of the remittance.

Penalty for Not Filing Form 15CA-15CB

Failure to file Form 15CA and Form 15CB as required can lead to penalties under the Income-tax Act, 1961:

  1. Penalty for Non-Compliance: The penalty can range from Rs. 1,00,000 to Rs. 5,00,000 for failing to file the forms in the prescribed manner.
  2. Interest on Late Payment: In addition to penalties, interest may be charged for the delay in remitting taxes due on the payments made to non-residents.
  3. Prosecution: If the default is willful or involves fraud, prosecution under the Income-tax Act may be initiated, which can lead to fines and even imprisonment in extreme cases.

Details Required for Filing the Forms

To file Form 15CA and Form 15CB, the following details are required:

  1. Basic Information of the Remitter: Name, PAN, address, contact details, etc.
  2. Payment Information: Details of the remittance such as amount, nature, and purpose.
  3. TDS Details: Tax deducted at source, the applicable section under which the tax has been deducted, and the relevant tax rate.
  4. Bank Account Details: Bank details for remittance of funds.
  5. CA Certification: Chartered Accountant’s certification with their professional details, including membership number.
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