1. Why Form 15CA?
Form 15CA is a Declaration of Remitter and is 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. Authorised Dealers/ Banks are now becoming more vigilant in ensuring that such Forms are received by them before remittance is effected since now as per revised Rule 37BB a duty is casted on them to furnish Form 15CA received from remitter, to an income-tax authority for the purposes of any proceedings under the Income-tax Act.
2. Whether Form 15CA has to be submitted in all cases since the Bankers demand it invariably?
In this regards the attention is invited to the Headings of the Form which provides as under:
“Information to be furnished for payments, chargeable to tax, to a non-resident not being a company, or to a foreign company”
“(To be filled up if the remittance is chargeable to tax and does not exceed fifty thousand rupees and the aggregate of such remittances made during the financial year does not exceed two lakh fifty thousand rupees)”
(Underlined for emphasis)
As can be seen from above the Form clearly states that it needs to be filled only if the remittance is chargeable to tax in India. Therefore on the first blush it appears crystal clear that Form 15CA is not required to be filled if the remittance/ payment to non-resident are not chargeable to tax. However the confusion has been created to Banks since a list As per Income Tax (Fourteenth Amendment) Rules, 2013, No reporting in Form 15CA and 15CB is to be made in case of the following nature of foreign remittances w.e.f 01.10.2013 has been provided in Rule 37BB.
SPECIFIED LIST
Sl. No. Purpose code as per RBI Nature of Payment (3)
1 S0001 Indian investment abroad -in equity capital (shares)
2 S0002 Indian investment abroad -in debt securities
3 S0003 Indian investment abroad -in branches and wholly owned subsidiaries
4 S0004 Indian investment abroad -in subsidiaries and associates
5 S0005 Indian investment abroad -in real estate
6 S0011 Loans extended to Non-Residents
7 S0202 Payment- for operating expenses of Indian shipping companies operating abroad.
8 S0208 Operating expenses of Indian Airlines companies operating abroad
9 S0212 Booking of passages abroad -Airlines companies
10 S0301 Remittance towards business travel.
11 S0302 Travel under basic travel quota (BTQ)
12 S0303 Travel for pilgrimage
13 S0304 Travel for medical treatment
14 S0305 Travel for education (including fees, hostel expenses etc.)
15 S0401 Postal services
16 S0501 Construction of projects abroad by Indian companies including import of goods at project site
17 S0602 Freight insurance – relating to import and export of goods
18 S1011 Payments for maintenance of offices abroad
19 S1201 Maintenance of Indian embassies abroad
20 S1 202 Remittances by foreign embassies in India
21 S1301 Remittance by non-residents towards family maintenance and-savings
22 S1302 Remittance towards personal gifts and donations
23 S1303 Remittance towards donations to religious and charitable institutions abroad
24 S1304 Remittance towards grants and donations to other Governmentsand charitable institutions established by the Governments.
25 S1305 Contributions or donations by the Government to international institutions
26 S1306 Remittance towards payment or refund of taxes.
27 S1501 Refunds or rebates or reduction in invoice value on account of exports
28 S1503 Payments by residents for international bidding”.
Therefore no Form 15CA and 15CB are required in the abovementioned 28 nature of foreign remittances.
3. What stand customer can take if Bank demand Form 15CA but service is not taxable?
In such cases, the possible recourse is to submit a declaration in form of a note to Bank stating the nature of remittance and reason as to why it is not chargeable to tax and consequently exempted from the submission of Form 15CA.
4. Why Form 15CB?
The answer is Form 15CB. Chargeability can be ascertained and certified by obtaining the Certificate from a Chartered Accountant in Form no. 15CB. 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.
Perusal of Form 15CB makes it clear that there is no condition or exemption to obtain such certificate when the remittance is not chargeable to tax. In fact this Form 15CB is the Tax Determination Certificate where the Issuer CA examines the remittance having regard to chargeability provisions under Section 5 and 9 of Income tax Act along with provisions of Double tax Avoidance Agreements with the Recipient’s Residence Country. Therefore in my opinion, it is advisable to obtain 15CB even in cases where 15CA is not mandated. Though there is no penal provision prescribed in the Act if such Certificates in Form 15CB and Declaration in Form 15CA are not obtained, but it is in the interest of Assessee 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.
5. Once it is ascertained that Form 15CA and 15CB have to be made then one should ascertain the part of Form 15CA to be filled by the assessee, by reading the following extracts of Amended Rule 37BB;
Rule 37BB. (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or salary or any other sum chargeable to tax under the provisions of the Act, shall furnish the following, namely:
(i) the information in Part A of Form No.15CA, if the amount of payment does not exceed fifty thousand rupees and the aggregate of such payments made during the financial year does not exceed two lakh fifty thousand rupees;
(ii) the information in Part B of Form No.15CA for payments other than the payments referred in clause (i)
6. Information to be required from the client :
A. Details of Remitter
1. Name of the Remitter
2. Address of the Remitter
3. PAN of the Remitter
4. Principal Place of Business of the Remitter
5. E-Mail Address and Phone No. Of Remitter
6. Status of the Remitter (Firm/Company/Other)
B. Details of Remittee
1. Name and Status of the Remittee
2. Address of the Remittee
3. Country of the Remittee (Country to Which Remittance Is Made)
4. Principal Place of the Business of the Remittee
C. Details of the Remittance
1. Country to Which Remittance Is Made
2. Currency in Which Remittance Is Made
3. Amount of Remittance in Indian Currency
4. Proposed Date of Remittance
5. Nature of Remittance as Per Agreement (Invoice Copy to Be Asked From Client)
D Bank Details of the Remitter
1. Name of Bank of the Remitter
2. Name of Branch of the Bank
3. BSR Code of the Bank
E. Others
1. Father’s Name of the Signing Person
2. Designation Of The Signing Person
F a. Form 10f Duly Filled By the Authorised Person Of The Remittee.
b. Tax Residency Certificate From The Remittee (Tax Registration Of The Country In Which Remittee Is Registered)
c. Certificate That The Remittee Does Not Have Any Permanent Establishment In India. This Is Mandatory If The Income Is A Business Income And Not Chargeable To Tax As Per DTAA If There Is No P.E In India.
This Is Required If Any Benefit Under DTAA Is Taken, Whether By Way Of Lower Rate Of Deduction Of Tax At Source Or No Deduction Of Tax At Source As Per DTAA.
This Is Required If Any Benefit Under DTAA Is Taken, Whether By Way Of Lower Rate Of Deduction Of Tax At Source Or No Deduction Of Tax At Source As Per DTAA.
7. What are the impacts of new Rule (applicable from 1st October, 2013)?
a. Department added 28 types of payments for which no information is required to be furnished at all.
b. Form 15CB is not required where Part A of Form 15CA is to be filled in, i.e., in case of small payments.
c. In case of other payments, it appears that either an order or a certificate of the Assessing Officer u/s. 197/195(2)/195(3) must be obtained, or a certificate of the Chartered Accountant should be obtained.
d. Sub-rule (2) of the revised Rule 37BB mandates that Form 15CA shall be furnished to the authorised dealer prior to remitting the payment.
e. The revised Rule 37BB casts a duty on the authorised dealer to furnish Form 15CA submitted by the remitter to an income-tax authority for the purposes of any proceedings under the Income-tax Act.
f. The revised Forms state that in the absence of the PAN of the recipient, provisions of section 206AA shall apply.
g. The revised Form 15CB requires detailed enumeration of the taxability of the amount under the Income-tax Act, without giving any effect to the DTAA. Where DTAA provisions are sought to be applied, the details of the Tax Residency Certificate, applicable DTAA and its relevant article, as also tax liability under the DTAA are to be furnished. The nature of remittance is divided as — for royalties, FTS, interest, dividend; on account of business income; on account of short-term and long-term capital gains; and any other remittance.
Form 15CA is a Declaration of Remitter and is 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. Authorised Dealers/ Banks are now becoming more vigilant in ensuring that such Forms are received by them before remittance is effected since now as per revised Rule 37BB a duty is casted on them to furnish Form 15CA received from remitter, to an income-tax authority for the purposes of any proceedings under the Income-tax Act.
2. Whether Form 15CA has to be submitted in all cases since the Bankers demand it invariably?
In this regards the attention is invited to the Headings of the Form which provides as under:
“Information to be furnished for payments, chargeable to tax, to a non-resident not being a company, or to a foreign company”
“(To be filled up if the remittance is chargeable to tax and does not exceed fifty thousand rupees and the aggregate of such remittances made during the financial year does not exceed two lakh fifty thousand rupees)”
(Underlined for emphasis)
As can be seen from above the Form clearly states that it needs to be filled only if the remittance is chargeable to tax in India. Therefore on the first blush it appears crystal clear that Form 15CA is not required to be filled if the remittance/ payment to non-resident are not chargeable to tax. However the confusion has been created to Banks since a list As per Income Tax (Fourteenth Amendment) Rules, 2013, No reporting in Form 15CA and 15CB is to be made in case of the following nature of foreign remittances w.e.f 01.10.2013 has been provided in Rule 37BB.
SPECIFIED LIST
Sl. No. Purpose code as per RBI Nature of Payment (3)
1 S0001 Indian investment abroad -in equity capital (shares)
2 S0002 Indian investment abroad -in debt securities
3 S0003 Indian investment abroad -in branches and wholly owned subsidiaries
4 S0004 Indian investment abroad -in subsidiaries and associates
5 S0005 Indian investment abroad -in real estate
6 S0011 Loans extended to Non-Residents
7 S0202 Payment- for operating expenses of Indian shipping companies operating abroad.
8 S0208 Operating expenses of Indian Airlines companies operating abroad
9 S0212 Booking of passages abroad -Airlines companies
10 S0301 Remittance towards business travel.
11 S0302 Travel under basic travel quota (BTQ)
12 S0303 Travel for pilgrimage
13 S0304 Travel for medical treatment
14 S0305 Travel for education (including fees, hostel expenses etc.)
15 S0401 Postal services
16 S0501 Construction of projects abroad by Indian companies including import of goods at project site
17 S0602 Freight insurance – relating to import and export of goods
18 S1011 Payments for maintenance of offices abroad
19 S1201 Maintenance of Indian embassies abroad
20 S1 202 Remittances by foreign embassies in India
21 S1301 Remittance by non-residents towards family maintenance and-savings
22 S1302 Remittance towards personal gifts and donations
23 S1303 Remittance towards donations to religious and charitable institutions abroad
24 S1304 Remittance towards grants and donations to other Governmentsand charitable institutions established by the Governments.
25 S1305 Contributions or donations by the Government to international institutions
26 S1306 Remittance towards payment or refund of taxes.
27 S1501 Refunds or rebates or reduction in invoice value on account of exports
28 S1503 Payments by residents for international bidding”.
Therefore no Form 15CA and 15CB are required in the abovementioned 28 nature of foreign remittances.
3. What stand customer can take if Bank demand Form 15CA but service is not taxable?
In such cases, the possible recourse is to submit a declaration in form of a note to Bank stating the nature of remittance and reason as to why it is not chargeable to tax and consequently exempted from the submission of Form 15CA.
4. Why Form 15CB?
The answer is Form 15CB. Chargeability can be ascertained and certified by obtaining the Certificate from a Chartered Accountant in Form no. 15CB. 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.
Perusal of Form 15CB makes it clear that there is no condition or exemption to obtain such certificate when the remittance is not chargeable to tax. In fact this Form 15CB is the Tax Determination Certificate where the Issuer CA examines the remittance having regard to chargeability provisions under Section 5 and 9 of Income tax Act along with provisions of Double tax Avoidance Agreements with the Recipient’s Residence Country. Therefore in my opinion, it is advisable to obtain 15CB even in cases where 15CA is not mandated. Though there is no penal provision prescribed in the Act if such Certificates in Form 15CB and Declaration in Form 15CA are not obtained, but it is in the interest of Assessee 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.
5. Once it is ascertained that Form 15CA and 15CB have to be made then one should ascertain the part of Form 15CA to be filled by the assessee, by reading the following extracts of Amended Rule 37BB;
Rule 37BB. (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or salary or any other sum chargeable to tax under the provisions of the Act, shall furnish the following, namely:
(i) the information in Part A of Form No.15CA, if the amount of payment does not exceed fifty thousand rupees and the aggregate of such payments made during the financial year does not exceed two lakh fifty thousand rupees;
(ii) the information in Part B of Form No.15CA for payments other than the payments referred in clause (i)
6. Information to be required from the client :
A. Details of Remitter
1. Name of the Remitter
2. Address of the Remitter
3. PAN of the Remitter
4. Principal Place of Business of the Remitter
5. E-Mail Address and Phone No. Of Remitter
6. Status of the Remitter (Firm/Company/Other)
B. Details of Remittee
1. Name and Status of the Remittee
2. Address of the Remittee
3. Country of the Remittee (Country to Which Remittance Is Made)
4. Principal Place of the Business of the Remittee
C. Details of the Remittance
1. Country to Which Remittance Is Made
2. Currency in Which Remittance Is Made
3. Amount of Remittance in Indian Currency
4. Proposed Date of Remittance
5. Nature of Remittance as Per Agreement (Invoice Copy to Be Asked From Client)
D Bank Details of the Remitter
1. Name of Bank of the Remitter
2. Name of Branch of the Bank
3. BSR Code of the Bank
E. Others
1. Father’s Name of the Signing Person
2. Designation Of The Signing Person
F a. Form 10f Duly Filled By the Authorised Person Of The Remittee.
b. Tax Residency Certificate From The Remittee (Tax Registration Of The Country In Which Remittee Is Registered)
c. Certificate That The Remittee Does Not Have Any Permanent Establishment In India. This Is Mandatory If The Income Is A Business Income And Not Chargeable To Tax As Per DTAA If There Is No P.E In India.
This Is Required If Any Benefit Under DTAA Is Taken, Whether By Way Of Lower Rate Of Deduction Of Tax At Source Or No Deduction Of Tax At Source As Per DTAA.
This Is Required If Any Benefit Under DTAA Is Taken, Whether By Way Of Lower Rate Of Deduction Of Tax At Source Or No Deduction Of Tax At Source As Per DTAA.
7. What are the impacts of new Rule (applicable from 1st October, 2013)?
a. Department added 28 types of payments for which no information is required to be furnished at all.
b. Form 15CB is not required where Part A of Form 15CA is to be filled in, i.e., in case of small payments.
c. In case of other payments, it appears that either an order or a certificate of the Assessing Officer u/s. 197/195(2)/195(3) must be obtained, or a certificate of the Chartered Accountant should be obtained.
d. Sub-rule (2) of the revised Rule 37BB mandates that Form 15CA shall be furnished to the authorised dealer prior to remitting the payment.
e. The revised Rule 37BB casts a duty on the authorised dealer to furnish Form 15CA submitted by the remitter to an income-tax authority for the purposes of any proceedings under the Income-tax Act.
f. The revised Forms state that in the absence of the PAN of the recipient, provisions of section 206AA shall apply.
g. The revised Form 15CB requires detailed enumeration of the taxability of the amount under the Income-tax Act, without giving any effect to the DTAA. Where DTAA provisions are sought to be applied, the details of the Tax Residency Certificate, applicable DTAA and its relevant article, as also tax liability under the DTAA are to be furnished. The nature of remittance is divided as — for royalties, FTS, interest, dividend; on account of business income; on account of short-term and long-term capital gains; and any other remittance.
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