When it comes to filing taxes, it is not only individuals who need to ensure that all the proper procedures are followed and forms are submitted. When a person makes any payment or remit any money to non-resident, the bank will need to check whether the tax was paid or not. Making payments outside India requires certain compliances. One such compliance is to submit Form 15CA and 15CBinstitutions have rules that must be followed, which helps the income tax department to determine the taxable amounts of NRI’s. Foreign remittances have tax implications, which may be missed out inadvertently by taxpayers. As per section 195 of the Income Tax Act, tax is required to be deducted for any sum which is taxable under the Income Tax Act. So, when a person desires to make any payment or remit any money to non-resident, the bank will require checking whether the tax was paid or not. If not paid, it will be checked if it is certified by the Chartered accountant or the Assessing Officer.
Defining Form 15CA
Form 15CA is a declaration of remitter used as a tool for collecting information in respect of payments which are chargeable to tax in the hands of recipient non-resident. This is starting of an effective information processing system which may be utilized by the Income tax Department to independently track the foreign remittances and their nature to determine tax liability. Authorized Dealers / Banks are now becoming more vigilant in ensuring that such Forms are received by them before remittance is affected, since now as per the revised Rule 37BB, a duty is casted on them to furnish Form 15CA (received from the remitter) to an income-tax authority for the purpose of any proceedings under the Income tax Act. Income Tax Department has now created online facility to file information. After that, proof of online submission should be printed out. This copy is required to be given to the Bank as a proof of tax clearance from the tax department. This form helps Income Tax Department in tracking foreign remittances & their taxability. As per Rule 37BB, it is a duty of authorized dealers /banks to ensure that such forms are received by them from the remitter.
Defining Form 15CB
Form 15 CB is required to be signed by a Chartered Accountant. This is a kind of certification regarding rates and right kind of tax paid by you. Certain details are required from Form 15CB at the time of filing Form 15CA. Chargeability can be ascertained and certified by obtaining a certificate known as Form 15CB from a Chartered Accountant. This certificate has been prescribed under section 195(6) of the Income Tax Act and is an alternate channel of obtaining tax clearance apart from certificate from Assessing Officer.
Changes in the requirement of filling the forms:
Below mentioned are the changes in the requirement of filling the forms:
- No Form 15CA and 15CB will be required to be furnished by an individual for remittance which does not require RBI approval under its Liberalized Remittance Scheme (LRS).
- The list of payments of specified nature under Rule 37 BB where submission of Forms 15CA and 15CB is not required has been expanded from 28 to 33.
- A CA certificate (Form No. 15CB in this case) will be required to be furnished only in case of payments made to non-residents which are chargeable to tax and the amount of payment during the year exceeds INR 5 lakhs.
List of payments where Form 15CA / 15CB is not required
There are 33 types of foreign remittances where you do not require any submission of Form 15CA or Form 15CB as mentioned below:
|Nature of Payment|
|Indian investment abroad -in equity capital (shares)|
|Indian investment abroad -in debt securities|
|Indian investment abroad-in branches and wholly owned subsidiaries|
|Indian investment abroad -in subsidiaries and associates|
|Indian investment abroad -in real estate|
|Loans extended to Non-Residents|
|Advance payment against imports|
|Payment towards imports-settlement of invoice|
|Imports by diplomatic missions|
|Imports below Rs.5,00,000-(For use by ECD offices)|
|Payment- for operating expenses of Indian shipping companies operating abroad.|
|Operating expenses of Indian Airlines companies operating abroad|
|Booking of passages abroad -Airlines companies|
|Remittance towards business travel.|
|Travel under basic travel quota (BTQ)|
|Travel for pilgrimage|
|Travel for medical treatment|
|Travel for education (including fees, hostel expenses etc.)|
|Construction of projects abroad by Indian companies including import of goods at project site|
|Freight insurance – relating to import and export of goods|
|Payments for maintenance of offices abroad|
|Maintenance of Indian embassies abroad|
|Remittances by foreign embassies in India|
|Remittance by non-residents towards family maintenance and savings|
|Remittance towards personal gifts and donations|
|Remittance towards donations to religious and charitable institutions abroad|
|Remittance towards grants and donations to other Governments and charitable institutions established by the Governments.|
|Contributions or donations by the Government to international institutions|
|Remittance towards payment or refund of taxes.|
|Refunds or rebates or reduction in invoice value on account of exports|
|Payments by residents for international bidding.|
Thus the Form 15CA is required to be filed online with the tax department. It is advisable to obtain 15CB even in cases where 15CA is not mandated. It is also in the interest of assesse to have a tax determination in Form 15CB from a CA, since non-resident taxation involves various complex issues and the consequences of non-deduction are severe.
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