Foreign Remittance – Form 15CA & 15CB
Overview
Forms 15CA and 15CB are important documents used to track foreign remittances and determine the nature of tax liability.
Form 15CA is a declaration of remittance and is filed by a person who intends to make remittance.
Form 15CB is a type of certification where a Chartered Accountant (CA) certifies the details of the payment, TDS rate, TDS deduction, and other details of nature and purpose of remittance.
At Tax Baniya, we provide comprehensive services for Filing of Forms 15CA-15CB, which are important tools for collecting information concerning payments in respect of incomes chargeable to tax in the hands of non-resident recipients
At Tax Baniya, we provide comprehensive services for Filing of Forms 15CA-15CB, which are important tools for collecting information concerning payments in respect of incomes chargeable to tax in the hands of non-resident recipients
Our Service
- Consultation and guidance on the need for Form 15CA and Form 15CB.
- Filing of Form 15CA and / or Form 15CB.
- Expert support through Email, phone & chat during the business hours.
- Filing of your taxes if needed would be a separate service
Who Should Buy?
- Any person who is making a payment to Non-Residents or to a Foreign Company.
- Any person who is required to file declaration form of the Foreign remittance made outside India.
- Remittance / repatriation of money by NRI from their Saving / NRO account to NRE/Foreign overseas bank account
Applicability of Forms 15CA
Form 15CA is applicable for remittances made to a foreign company or a non-resident, by a remitter who can be a foreign company/ domestic company/ resident/non-resident and its has four section as below, any one will be applicable at a time:
- Part A – If remittance or the aggregate of such remittances is chargeable to tax and does not exceed 5 lakh rupees during the financial year
- Part B – If remittance is chargeable to tax and the remittance or the aggregate of such remittances, exceeds 5 lakh rupees during the financial year and an order / certificate u/s 195(2) / 195(3) / 197 has been obtained from the AO
- Part C – If remittance is chargeable to tax and the remittance or the aggregate of such remittances, exceeds 5 lakh rupees during the financial year and a certificate in Form No. 15CB from an accountant has been obtained
Part D – If remittance is not chargeable to tax
Applicability of Forms 15CB
Form 15CB is required to be filed by a CA when –
- If remittance is chargeable to tax and the remittance or the aggregate of such remittances, exceeds 5 lakh rupees during the financial year and an order / certificate u/s 195(2) / 195(3) / 197 has been obtained from the AO along with Part B for Form 15CA
- If remittance is chargeable to tax and the remittance or the aggregate of such remittances, exceeds 5 lakh rupees during the financial year and a certificate in Form No. 15CB from an accountant has been obtained along with Part C for Form 15CA
Simple Pricing
Only Form 15CA
Form 15CA & From 15CB
Lowder TDS Deduction Certificate
Remittance / Repartiation of money by NRI from NRO Account to NRE/Foreign Account
Remittance of money from India (Indian NRO Bank Account) to NRE/Foreign Bank is a common & frequent requirement of NRIs. Their money is held in their Indian NRO Bank Accounts, which they wish to remit to NRE/Foreign Bank as per their need.
- Generally, NRIs accumulate their money in their NRO account in India, in saving or fixed deposit account. They accumulate this money out of the funds they remit from their foreign account. In many cases, NRIs earn this money on their investments in India (rental or interest income).
- NRIs also receive money in their NRO account from the sale of their property or mutual funds or in India.
- In many cases, NRIs received money as Gift from their close relatives in India.
- In all scenarios, when money accumulates in Indian NRO Bank Account, Since, NRIs need money abroad, they wish to remit NRO account money from India to Foreign account abroad.
- NRIs also plan to remit funds from NRO to NRE account to earn similar return without the exposure of Indian Taxation. Also, remittance from NRE account to Foreign account can be done anytime very conveniently.
- Now, when NRIs wish to remit their NRO account money to NRE account or Foreign Account, the banker in India demand certain paper formalities. Of these requisite documents, two main documents are Form 15CA and Form 15CB (By Chartered Accountants).
- Here, TDS is not applicable, as this is remittance by NRIs from their own account to own account.
How to check the TDS is applicable or not on foreign payments?
Check the provision of income tax act whether Income is taxable in India or Not. If taxable Check the applicable tax rate.
The rate of tax deduction u/s 195 shall be either of the below rates, whichever is beneficial to you:
- Specified in the Double Taxation Avoidance Agreements between India and the country of the payee,
- Specified in the Income Tax Act.
The following are the rates as per Income Tax Act:
20%
20%
20%
20%
15%
20%
Fees for Technical Services (FTS) or Royalty
FTS Definition as per Income Tax and As per DTAA is crucial so it need to be checked
FTS and concept of Make Available
India’s DTAA with various countries ( US and UK are main amongst them- US DTAA calls it “Fees for Included Services”) treats a payment for a service as Fees for Technical Service only when it is “for the rendering of any technical or consultancy services” AND such services :
- are either linked with enjoyment of some rights etc. for which a separate royalty is being paid or
- make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design.
This is the 2nd clause i.e. condition of make available, which is relevant for our discussion here. Following aspects emerge from this concept of “make available”.
- Mere provision of technical services is not enough to attract article of FTS in these DTAA.
- It additionally requires that the service provider should also make his technical knowledge, experience, skill, know-how etc., known to the recipient of the service, so as to equip him to independently perform the technical function himself in future, without the help of the service provider.
- Payment of consideration would be regarded as ‘fee for technical’ under relevant DTAA only if the twin test of rendering services and making technical knowledge available at the same time is satisfied.
Business Income
TDS only when the recipient has a Business Connection/Permanent Establishment (PE) in India
Permanent establishments (PEs) are generally understood to be fixed places of business that are established in India from where business is wholly or partly carried on.
However, this does not necessarily refer only to brick and mortar offices but rather the idea of PE, is to identify establishments that carry out significant operations or that have significant presence in India beyond their domestic residence.
Permanent establishments can be of the following types:
- Fixed place PE – The location of a business must be fixed and should be consistent for a reasonable amount of time. A reasonable amount of consistency and regularity is required. The location must be available to the foreign entity. A proper commercial activity must be carried out from such a set location
- Service PE – If a foreign enterprise delivers services (other than Fees for technical services) in India through workers or other persons for a period of time that exceeds a threshold limit, a Service PE exists.
- Subsidiary PE – The mere presence of a subsidiary company in India does not automatically make it a PE of the parent company. To make a subsidiary a PE, the parent company’s operations must be conducted through the subsidiary company, as defined by the other PE provisions.
PEs will be taxed on the income that is considered attributable to India i.e. where the income was earned directly or indirectly through Indian business connections or through using Indian resources.
30%
Surcharges and education cess must be added to the rates provided by the Act at the relevant rate. There is no need to add a surcharge or education cess if the payment is done according to DTAA rates.
Further, if the payee doesn’t have a PAN then rate could be rate as per the law in force or 20% whichever is higher.
TDS will be deducted at the lower of Income tax rate defined by the government or DTAA agreement but if anyone want to claim benefit of DTAA then he need to produce Tax residency Certificate (TRC) alonwith form 10F.
Form 10F is a self-declaration required to be submitted by non-resident taxpayers as a covering of Tax Residency Certificate. It enables non-residents to get relief on TDS on income accruing from India. Under the Income Tax Act, a non-resident entity or individual is not eligible to assert the benefits of the tax treaty, unless they furnish a valid tax residency certificate obtained from their country of residence.
Form 10F need to be filed online, either having “PAN” or ‘Non-Residents not holding and not required to have PAN’ category
F.A.Qs
on Form 15CA & Form 15CB
DTAA is an agreement between the 2 countries. This agreement provides a benefit that the income is taxed once. The assessee has to file form 10F and self-declaration to the person responsible for deducting tax.
As per section 195 where the payee does not have a valid PAN then the TDS rate is the rate prescribed under chapter XVII B or 20% whichever is higher.
TDS on purchase of immovable property from non-resident is deducted in section 195. When immovable property is purchased from non-resident then TDS is deducted on capital gains, not on the sale prices.
Section 194J for resident payee and Section 195 for non-resident payee
If the main income is from dance performance then income is shown in the profession and if main income is other than dance performance then income is shown in other sources.
Tax residency certificate is required from the resident country tax authorities to claim relief under DTAA
Yes, TAN is necessary to deduct TDS. You must apply for the TAN.
The following details must be there in TRC
- Name of assessee
- Status of assessee
- Nationality of assessee
- Residential status
- Period for which the certificate is applicable
- Address of applicant for the period for which the certificate is applicable
Tax Identification Number of taxpayer