Basic Information: –
- What is the need of 15CA and 15CB?
- The Person Making Remittance (Payment) to Non-Resident is Require to furnish a Certificate in Specified format circulated by RBI for the purpose of collecting Tax at a stage when Remittance (Payment) is made as it may not be possible to collect tax from Non-resident at a later stage. Thus, to Monitor and track the transaction in an efficient manner it was proposed to introduce E-filling of Information in the Certificate.
- What is Form 15CA and 15CB?
- As per Section 195 of Income-tax Act, 1961, every person liable for making a payment to non-residents shall deduct TDS from the payments made to non-residents if such sum is chargeable to Income-tax then the withholding tax needs to be deducted and form 15CA and 15CB are the declarations for the same.
- A person making the payment to a Non-Resident or a Foreign Company has to submit the form 15CA, A Certificate from Chartered Accountant in form 15CB is required after uploading the form 15CA online.
- The furnishing of information for payment to non-resident, not being a company, or to a foreign company in Form 15CA has been classified into 4 parts –
PART A: – Where the remittance or the aggregate of such remittance does not exceed 5 lakh rupees during the F.Y. (whether taxable or not).
PART B: – Where an order /certificate u/s 195(2)/ 195(3)/197 of Income Tax Act has been obtained from the A.O. (Whether Nil rate or Lower rate Certificate).
PART C: – Where the remittance or the aggregate of such remittance exceed 5 lakh rupees during the FY.
PART D: – Where the remittance is not chargeable to tax under Domestic law.
- 15CB is the Tax Determination Certificate where the CA examines the Payment with regard to chargeability provisions under Section 5 and 9 of the Income Tax Act along with the provisions of Double Tax Avoidance Agreements furthermore CA certifies details of the payment, TDS rate and TDS deduction as per Section 195 of the Income Tax Act, if any DTAA is applicable, and other details of nature and purpose of the remittance.
- Payment / Remittances don’t require 15CA & 15CB?
- Individual is not required to furnish the information in Form 15CA and 15CB for remittance which requires no RBI approval.
- List of payments (28 items) mentioned in Rule 37BB which does not require compliances and reporting through the submission of 15CA and 15CB.
- The remittance is of the nature specified in the list below:
|Sl. No.||Nature of Payment|
|1||Indian investment abroad -in equity capital (shares)|
|2||Indian investment abroad -in debt securities|
|3||Indian investment abroad-in branches and wholly owned subsidiaries|
|4||Indian investment abroad -in subsidiaries and associates|
|5||Indian investment abroad -in real estate|
|6||Loans extended to Non-Residents|
|7||Advance payment against imports|
|8||Payment towards imports-settlement of invoice|
|9||Imports by diplomatic missions|
|11||Imports below Rs.5,00,000-(For use by ECD offices)|
|12||Payment- for operating expenses of Indian shipping companies operating abroad.|
|13||Operating expenses of Indian Airlines companies operating abroad|
|14||Booking of passages abroad -Airlines companies|
|15||Remittance towards business travel.|
|16||Travel under basic travel quota (BTQ)|
|17||Travel for pilgrimage|
|18||Travel for medical treatment|
|19||Travel for education (including fees, hostel expenses etc.)|
|21||Construction of projects abroad by Indian companies including import of goods at project site|
|22||Freight insurance – relating to import and export of goods|
|23||Payments for maintenance of offices abroad|
|24||Maintenance of Indian embassies abroad|
|25||Remittances by foreign embassies in India|
|26||Remittance by non-residents towards family maintenance and savings|
|27||Remittance towards personal gifts and donations|
|28||Remittance towards donations to religious and charitable institutions abroad|
|29||Remittance towards grants and donations to other Governments and charitable institutions established by the Governments.|
|30||Contributions or donations by the Government to international institutions|
|31||Remittance towards payment or refund of taxes.|
|32||Refunds or rebates or reduction in invoice value on account of exports|
|33||Payments by residents for international bidding.|
- Applicability of 15CA and 15CB w.r.t Taxability under IT Act?
- Taxability – Section 5 of IT Act itself clearly defines the scope of taxable Income but the confusion arises when it comes to Section 9, so following is the summary of Sec 9 just to understand the whole matrix:-
- Summary of Section 9 –
|Sr. No.||Nature of Income||Taxability|
|1.||Business Income||Taxable if direct or indirect business connection in India or property or asset or source in India or transfer of a capital asset situated in India.|
|2.||Capital Gain||Taxable if Shares/Property is situated in India or derives its value substantially from assets in India.|
|3.||Salary Income||If earned in India.|
|4.||Interest Income||If sourced in India (if payer is Resident).|
|5.||Royalties||If incurred for business in India irrespective of the residential status of the payer.|
|6.||FTS||If incurred for business in India irrespective of the residential status of the payer.|