Earlier, the person making a remittance to Non-Resident was required to furnish a certificate in specified format circulated by RBI.
Basic purpose was to collect the taxes at a stage when the remittance is made as it may not be possible to collect the tax from the Non-Resident at a later stage.
Thus to monitor and track the transactions in an efficient manner, it was proposed to introduce e-filling of information in the certificates.
Section 195 of Income tax act, 1961 mandates the deduction of Income tax from payments made to Non Resident. The person making the remittance to non – resident needs to furnish an undertaking (in form 15CA) accompanied by a Chartered Accountants Certificate in Form 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 need to be deducted and form 15CA and 15CB are the declaration for the same.
A person making the remittance (a payment) to a Non Resident or a Foreign Company has to submit the form 15CA. This form is submitted online. In some cases, 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 remittance with regard to chargeability provisions under Section 5 and 9 of the Income Tax Act along with the provisions of Double Tax Avoidance Agreements.
In form 15CB, A 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.
Upload of Form 15CB is mandatory prior to filling Part C of Form 15CA. To prefill the details in Part C of form 15CA, the Acknowledgement Number of e- verified form 15CB should be verified.
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:
|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.|
Section 5 > Section 9 > DTAA i) Received or i) is deemed to i) Exemption form Tax Deemed to be Accrue or Arise ii) Lower Tax Rate Received ii) Accrues or arise
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.|
5. Documents required for Form 15CA and 15CB:-
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.