Simplifying 15CA-15CB Filing for Foreign Transactions
If you're an Indian resident involved in payments to or from foreign entities, understanding the Income Tax Act 1961 is crucial. You'll need to submit Form 15CA and 15CB to the tax authorities before making international money transfers. However, the process can be complex. This is where Taxgate Advisors can assist. Our experts will guide you through the process, ensuring your compliance is hassle-free.
Income Tax Act, Section 195
As per Section 195 of the Income Tax Act 1961, if you're making payments to non-residents, including foreign companies, you must deduct income tax before processing the payment.
In addition, you'll need to fill out Form 15CA, providing payment details to the tax department. If the payment is above INR 5 lakh, you'll require Form 15CB, which a chartered accountant attests. This form elaborates on payment specifics, tax rate, and deducted tax amount.
Significance of Forms 15CA and 15CB
Forms 15CA and 15CB play a crucial role under the Income Tax Act, 1961, when making payments between residents and non-residents.
- Form 15CA: It's a declaration you provide before sending money abroad. This aids the tax department in monitoring foreign transactions and ensuring correct tax payments.
- Form 15CB: This certificate, issued by a Chartered Accountant (CA), verifies adherence to Income Tax Act and Double Taxation Avoidance Agreement regulations.
Both these forms facilitate timely reporting of payments to non-residents and the accurate collection of taxes.
Form 15CA: Declaration by the Sender
Form 15CA is a mandatory online declaration made before initiating international money transfers. Its purpose is to enable the tax department to ensure compliance with the Income Tax Act.
Form 15CB: Confirmation by CA
Form 15CB is issued by a CA as per Section 195(6) of the Income Tax Act, 1961. It certifies that the payment aligns with Indian laws and any bilateral agreement between India and the foreign country.
When Are Forms 15CA and 15CB Necessary?
Form 15CA: It's needed for any remittance to a non-resident or foreign company, regardless of its taxability. This applies to residents, non-residents, domestic and foreign companies. It's essential when income arises in India.
Form 15CB: Required when the remittance is taxable and surpasses INR 5,00,000, or when there's no order/certificate from the Assessing Officer.
Exceptions: When Are Forms 15CA-15CB Not Needed?
These forms might not be necessary for certain transactions, such as:
- Payments exempt under Rule 37BB of Income Tax Rules.
- RBI approval isn't required under FEMA.
- Payments are exempt under Income Tax Act or a tax treaty.
- Remittances below INR 5 lakh in a year not intended for foreign tours or asset purchases.
- Remittances for education abroad within RBI limits.
Contents of Form 15CA and Form 15CB
These forms are divided into sections based on different scenarios. Form 15CA includes:
- Part A: Remittances up to INR 5 Lakhs during the year that are taxable.
- Part B: Taxable remittances exceeding INR 5 Lakhs with an order/certificate from the Assessing Officer.
- Part C: Taxable remittances over INR 5 Lakhs, requiring Form 15CB from a CA.
- Part D: Remittances not subject to tax.
Various sections in Form 15CB consist of remittance details, CA's verification, and certification of accuracy.
Penalties for Non-Compliance
Failure to file or late filing can result in a penalty of Rs. 10,000 per instance.
How to File Forms 15CA-15CB
- Obtain a valid PAN.
- Determine if Form 15CB is necessary.
- Complete Form 15CA online, sharing remittance details.
- If required, obtain a CA certificate in Form 15CB.
- Submit both forms online.
- Retain the acknowledgment for reference.
Keep in mind, the filing process may differ based on your specific transaction.
If you need assistance, Taxgate Advisors can guide you throughout the process, ensuring your compliance with the regulations.