The provisions of Income Tax Act, 1961 require every person making a payment to a Non-Resident or to a foreign company to submit the details of remittance to jurisdictional income tax officer in Form 15CA with regard to compliance of provisions relating to a tax deduction and such form is required to be produced before the banker while making foreign remittance. Additionally when such remittance is chargeable to tax in India and the value of which exceeds Rs. 5 lakhs in a year, a person making the payment is also required to obtain a certificate from Chartered Accountant (CA) in Form 15 CB along with form 15 CA.
Form 15 CA & 15 CB means for the tax authorities to collect information in respect of payment which is chargeable to tax in the hands of Non-Resident recipients.
- The provisions of section 195 can be said to be the parent section which requires submission of information in relation to any payment made to a Non-Resident, whether or not chargeable to tax in India.
- Rule 37BB of Income Tax Rules,1962 provides for applicability and exemptions for the requirement of filing form 15 CA and form 15 CB
What Is Form 15 CA & Form 15 CB
- Form 15 CA – It is a declaration form to be filled by the person making a payment to non-resident whether such payment is chargeable to income tax or not. Without form 15 CA, the banks shall not make any remittance to Non-Resident irrespective of the amount involved except when the nature of payment falls under any of 33 categories of transactions specified under Rule 37BB. Form 15CA is required to be prepared by the person making foreign remittance and it is submitted to its jurisdictional tax officer through its web-account available on the e-filing website of the income tax department.
- Form 15 CB – Where the value of remittance exceeds Rs. 5 lakhs and the payment is chargeable to tax under provisions of the Income-tax Act, the payer is required to obtain a certificate from CA) where the CA examines the Payment with regard to changeability provisions under Section 5 and 9 of the Income Tax Act along with the provisions of Double Tax Avoidance Agreements (DTAA) 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.
- If the remittance value is more than INR 5 Lakhs and 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) then form 15 CA – Part B and Form 15 CB is not required to be submitted
- If the remittance value is more than INR 5 Lakhs, then form 15 CA – Part C and Form 15 CB is required to be submitted
- If the remittance value is less than INR 5 lakhs, then only form 15 CA – Part A is required to be submitted
- If the remittance is not taxable in India and is a part of the exemption list then no form is required to be submitted
- If the remittance is not taxable in India and is not a part of the exemption list then only Form 15 CA – Part D is required to be submitted
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Parts Of Form 15 CA
Form 15 CA 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 and such remittance is chargeable to tax under provisions of Income tax Act.
- PART D: – Where the remittance is not chargeable to tax under Domestic law.
Mandatory Details For Filing Of Form
- Details of Remitter
– Name of the Remitter
– Address of the Remitter
– PAN of the Remitter
– Principal Place of Business
– E-mail Address and Phone No. of Remitter
– Status of the Remitter (Firm/ Company/ Other)
– Digital Signature of Remitter for submission of Form 15CA (Since now the Form needs to be filed electronically)
- Details of Remittee
– Name and Status of the Remittee
– Address of the Remittee
– Principal Place of Business
– Country of the Remittee
- Details of Remittance
– Country to which the Remittance is made
– Amount of Remittance in Indian Currency
– Proposed Date of Remittance
– Nature of Remittance as per Agreement (Invoice Copy)
– Bank Details of Remitter
– Name and Bank of Remitter
– Name of Branch of the Bank
– BSR Code of the Bank
- Documents required for DTAA Benefit
– Tax Residency Certificate (TRC) from the Remittee (Tax Registration of the Country in which remittee is registered).
– Form 10F duly filled by the Authorized person of the remittee (Self Declaration).
– No PE (Permanent Establishment) declaration. This is mandatory if the Income is a Business Income.
Implications Of Amendments In Finance Act 2020
After amendment brought in through Finance Act 2020, in case of dividend payout by a domestic company to its individual Non-Resident shareholders are taxable and hence will require submission of Form 15 CA and obtaining of Form 15 CB from CA.
Remittances Not Requiring Submission Of Form
- An Individual is not required to furnish the information in Form 15CA and 15CB for remittance which requires no RBI approval.
- List of payments (33 items) mentioned in Rule 37BB which does not require compliances and reporting through the submission of 15CA and 15CB. Those nature of remittance are as under:
|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 the 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 the 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.|
Challenges In Filing & Submission Of The Form
Form 15 CA and Form CB come with inherent limitations as follows: –
- Approximately 50 fields to be entered by the user manually
- A separate form for each remittance
- Exhaustive validations by the government resulting in repetition/corrections
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The varied challenges faced due to manual intervention can be eliminated by a well-designed automated solution.
Key features to look out are as under: –
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- Productivity – Reduced processing time due to the elimination of manual intervention
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- Reliability – 24/7 operational solution
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