ACCOUNTING & TAXATION
Nowadays Form 15CA and 15CB are of a lot importance. We professional atleast have to issue one Form 15CB every day and form 15CA is also to be made by the professional on behalf of the client.
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. In the modern times, the system for selection of cases into scrutiny have reduced drastically and without scrutiny there was no check to ensure that taxable foreign remittances have been made after deduction of tax or not. Therefore, the remittance channel i.e. Banks have been directed to obtain Form 15CA and 15CB before making any remittance. 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 and also the revised FEMA Guidelines cast duty on the banks to ascertain the Tax Liability in each case of remittance. As per the revised RBI Guidelines, The RBI in this regard will not issue any guidelines with respect to deduction of tax at source on foreign remittances. Therefore the Banks are urging the remitters to provide such Form 15CA and 15CB even in case of Import purchases.
Here is an attempt to make a comprehensive check list/procedure for effective furnishing of Form 15CA and 15CB.
Requirements for Making Form 15CA and Form 15CB
Step 1: Ascertain whether Form 15CA and CB are actually required to be made.
As per Rule 37BB of Income Tax Rules, No reporting in Form 15CA and 15CB is to be made in case of the following nature of foreign remittances:
|Sl.No.||Purpose code as per RBI||Nature of Payment|
|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||S0101||Advance payment against imports|
|8||S0102||Payment towards imports – settlement of invoice|
|9||S0103||Imports by diplomatic missions|
|11||S0190||Imports below Rs.5,00,000 – (For use by ECD offices)|
|12||SO202||Payment for operating expenses of Indian shipping companies operating abroad|
|13||SO208||Operating expenses of Indian Airlines companies operating abroad|
|14||S0212||Booking of passages abroad – Airlines companies|
|15||S0301||Remittance towards business travel|
|16||S0302||Travel under basic travel quota (BTQ)|
|17||S0303||Travel for pilgrimage|
|18||S0304||Travel for medical treatment|
|19||S0305||Travel for education (including fees, hostel expenses etc.)|
|21||S0501||Construction of projects abroad by Indian companies including import of goods at project site|
|22||S0602||Freight insurance – relating to import and export of goods|
|23||S1011||Payments for maintenance of offices abroad|
|24||S1201||Maintenance of Indian embassies abroad|
|25||S1202||Remittances by foreign embassies in India|
|26||S1301||Remittance by non-residents towards family maintenance and savings|
|27||S1302||Remittance towards personal gifts and donations|
|28||S1303||Remittance towards donations to religious and charitable institutions abroad|
|29||S1304||Remittance towards grants and donations to other Governments and charitable institutions established by the Governments|
|30||S1305||Contributions or donations by the Government to international institutions|
|31||S1306||Remittance towards payment or refund of taxes|
|32||S1501||Refunds or rebates or reduction in invoice value on account of exports|
|33||S1503||Payments by residents for international bidding.|
Therefore, no Form 15CA and 15CB are required in the abovementioned 33 nature of foreign remittances.
Step 2: Ascertain the part of Form 15CA to be filled by assessee
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;
(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 or the aggregate of such payments, as the case may be, made during the financial year does not exceed five lakh rupees
(ii) for payments other than the payments referred in clause (i), the information, —
(a) in Part B of Form No.15CA after obtaining, —
(I) a certificate from the Assessing Officer under section 197; or
(II) an order from the Assessing Officer under sub-section (2) or sub-section (3) of section 195;
(b) in Part C of Form No.15CA after obtaining a certificate in Form No. 15CB from an accountant as defined in the Explanation below sub-section (2) of section 288.
(2) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum which is not chargeable under the provisions of the Act, shall furnish the information in Part D of Form No.15CA.
Step 3: Information to be required from the client
A. Details of Remitter
- Name of the Remitter
- Address of the Remitter
- PAN of the Remitter
- Principal Place of Business of the Remitter
- E-Mail Address and Phone No. Of Remitter
- Status of the Remitter (Firm/Company/Other)
B. Details of Remittee
- Name and Status of the Remittee
- Address of the Remittee
- Country of the Remittee (Country to Which Remittance Is Made)
- Principal Place of the Business of the Remittee
C. Details of the Remittance
- Country to Which Remittance Is Made
- Currency in Which Remittance Is Made
- Amount of Remittance in Indian Currency
- Proposed Date of Remittance
- Nature of Remittance as Per Agreement (Invoice Copy to Be Asked From Client)
D. Bank Details of the Remitter
- Name of Bank of the Remitter
- Name of Branch of the Bank
- BSR Code of the Bank
- Father’s Name of the Signing Person
- Designation of The Signing Person
F. Documentary evidence required as under:
- Form 10f Duly Filled by the Authorised Person of The Remittee.
- Tax Residency Certificate from The Remittee (Tax Registration of The Country in Which Remittee Is Registered)
- 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.