OCIs or Overseas Citizens of India, PIOs or Persons of Indian Origin Residing Abroad, Expatriates or Foreign Citizens Residing in India and NRIs or Non-Resident Indians often remit money lying in the bank accounts in India from their NRO accounts to:>/p>
- Either their Foreign Bank account held by OCI/NRI in their native country outside India
- Or their NRO Bank account in the same bank or some other bank.
When the PIPs/NRIs/OCIs request their respective banks for the remittance, the banks usually ask for additional documents, within which form 15CA and 15CB are the most important. Other documents to be submitted along with these forms include:
- Application for outward remittance from NRO account.
- Source of funds along with documentary support only in some cases.
- Passport copy in some cases and A2 form or a form under the RBI regulations.
What is Form 15CA and 15CB?
Form 15CA and 15CB are income tax forms regulated and governed by the Income Tax Authorities in India. Section 195 of the Income Tax Act 1961 offers provisions for form 15CA and form 15CB. Form 15CA & 15CB are declaration and certification forms associated with remittance/payment made to non-residents. Section 195 does not apply to the remittance by PIOs and NRIs from their NRO accounts to their NRE accounts or other foreign accounts. Banks require forms 15CB and 15CA for this purpose. Both forms are prepared and submitted online on the web portal of the Income Tax department, which is www.incometax.gov.in.
The individual remitting money from their respective bank makes a declaration through form 15CA. In this form, the individual states that he has deducted tax from any payment thus made to him. The remitter or the individual who makes the payment to a foreign company or an NRI files form 15CA income tax. This NRI form is also used as one of the most effective tools to collect information regarding payments chargeable to tax.
The Income Tax Department uses form 15CA to track different foreign payments/remittances and their taxability. According to IT Rule 37BB, authorised dealers or banks must ensure they get such forms from the remitters. Form 15CA CB must be filed with the Income Tax Department, and 15CB should be accompanied by a CA certificate.
While form 15CA is the remitter's declaration, form 15 CB is the certificate issued by a Chartered Accountant. The Chartered Accountant's responsibility is to ensure all important provisions of the Double Taxation Avoidance Agreement and IT Act have been duly complied with regarding tax deductions when making payments.
What is the need for 15 CA and 15 CB?
Suppose you are a Non-Resident Indian receiving money from Indian residents. In that case, banks in India will credit you the money only if the remitter or the individual paying the money has submitted Forms 15 CA and 15 CB. Let's understand the need for these forms.
Let's assume you are an NRI who has let out residential property in India and received rent from the tenant. Since you receive this money from an individual in India, the tenant needs to submit forms 15 CA and 15 CB to pay you the rent.
Under section 195 of the IT Act, individuals paying NRI must collect TDS if the transaction is taxable in India. The remitter must submit Form 15 CA and a certificate from a chartered accountant in Form 15 CB. The main requirement of these forms is to ascertain that the remittance payments made to the NRIs are in line with the income tax laws in India. Both forms are available online and are useful for NRIs to avoid instances of double taxation.
Payment / Remittances don’t require 15CA & 15CB?
Of course, filing forms 15 CA and 15 CB for foreign remittance is crucial. Section 195 of the Income Tax Act of 1961 makes the filing of form 15 CA for foreign remittance compulsory to deduct income tax from the payments made by Indian citizens to the NRIs.
A person making the payment or remittance to an NRI should furnish a declaration under form 15 CA for foreign remittance attested by a CA Certificate in Form 15 CB. When an individual makes any kind of payment or remits money to an NRI, banks must verify the amount's tax payment. There are specific tax slabs for tax deductions that can vary in amounts, and forms 15 CA and CB serve two varied purposes.
Form 15 CB regulates tax deductions according to income tax rules and even prohibits double tax provisions. Filing form 15 CB requires due attestation from a chartered accountant. This form includes information, such as the details of the remitter, details of the remittee and type of remittance, including commission, salary and royalty.
The provision of details from payments made to Non-Residents in form 15 CA is categorised into 4 parts. Based on the case, an individual needs to fill relevant parts, which include:
- Part A: When the payment to the NRI or the aggregate of the payment is not more than Rs. 5 lakh during the fiscal year.
- Part B: When the payment to the NRI or the aggregate of the payment is not more than Rs. 5 lakh during the fiscal year and a certificate or order under Section 195 (2)/ 195 (3)/ 197 of the IT Act is received from the Assessing Officer.
- Part C: Where the payment made to the NRI or the aggregate of the payment exceeds Rs. 5 lakh during the fiscal year, a certificate in Form 15 CB is received from a chartered accountant.
- Part D: When the payment made to the NRI is not chargeable to tax under the IT Act of 1961.
Applicability of 15CA and 15CB w.r.t Taxability under IT Act
Form 15 CB and Form 15 CA applicability conditions are as follows:
- The remitter should submit only Part A of Form 15 CA when the remittance is not more than Rs. 5 lakh in a certain fiscal year.
- The remitter need not submit any form if the remittance amount is not chargeable to tax.
- Remitter must submit only Part D of Form 15 CA if a specified exemption list covers the remittance.
- Remitter needs to submit Part C of Form 15 CA and Form 15 CB if the remittance amount exceeds Rs. 5 lakh.
- The remitter must submit Part B of Form 15 CA if the remittance amount exceeds Rs. 5 lakh and if he or she receives a certificate under Section 195 (2)/195(3)/197 of the Income Tax.
Documents Required for Form 15CA and 15CB
Form 15CA and 15CB requirements of documents include:
- Details of the remitter like name, address, PAN number, email ID, phone number and main place of business.
- Remitter's status
- Bank details of remitter like name of the bank, name of bank branch and BSR code of the bank.
- Details of the remittee like the main business place, address and country
- Details of remittance like remittance amount in Indian currency, the currency used for the remittance, destination country of remittance and the proposed date of remittance.
In relation to submitting forms 15 CA and 15 CB, PIOs/NRIs/OCIs generally look for competent and experienced chartered accountants or tax consultants to help them with form submission and other related procedures. ADCA, or Anil D'Souza and Associates, is a top chartered accounting firm in Bangalore with a remarkable track record of serving clients in tax implementation and compliance. ADCA offers full-fledged services to various OCIs, PIOs and NRIs, along with Indian residents and Expatriates. In regards to forms 15 CA and CB, ADCA assists and advises its NRI clients on varied requirements, which include:
- Information that the clients must submit in their A2 forms.
- Foreign exchange regulations like limits on the remittance of money from NRO accounts.
- Prepare and properly file Form 15 CA and CB on the Income Tax Department web portal.
- Helping clients in tax calculation if any form of tax is payable on the remitted amount.
- Help with tax payments if anything is due on the remittance amount.
Besides providing expert advisory services in relation to form 15 CA and CB, ADCA also offers other ancillary and incidental support services.
Is 15CA required for transfer from NRO to NRE?
Yes, it is mandatory for a remitter transferring funds from an NRO account to an NRE account to submit Form 15 CA along with form 15 CB to the bank branch.
Is it crucial to file form 15 CB?
It is not always necessary to submit form 15 CB, and it is an event-based form that the remitter needs to submit when remitted amount to the NRI is more than Rs. 5 lakh in a financial year. In that case, an accountant certificate is needed in form 15 CB under Section 288 of the IT Act of 1961.
What method is used to verify form 15 CB?
The DSC method or Digital Signature Certificate is used to verify form 15 CB online, and the Chartered accountant's DSC is entered into the e-filing site. No specific deadline exists to submit form 15 CB; however, it is necessary to submit the form before the amount remittance.