Taxation & Compliance
Posted on Feb 28, 2025
Tax laws apply when sending money abroad from India, and the government has put in place severe compliance mechanisms to track foreign remittances. The Income Tax Act of 1961 mandates two important forms for this process: Form 15CA and Form 15CB.
These forms ensure that any taxable foreign remittance is accurately recorded and that the required Tax Deducted at Source (TDS) is paid prior to sending the money abroad. Banks and financial institutions demand these papers before making certain payments to non-residents or international businesses.
For example, if an Indian company pays a foreign consultant for professional services, it must decide whether TDS applies and then file Form 15CA (and, in some situations, Form 15CB, which is certified by a Chartered Accountant).
Meaning of Form 15CA
Form 15CA is an online declaration submitted to the Income Tax Department by anyone who makes a taxable payment in India. It ensures that tax deducted at source(TDS) is collected prior to sending funds outside of the country.
Why is Form 15CA Required?
The goal of this form is to keep track of foreign remittances and guarantee that taxes on such payments are appropriately deducted and deposited with the Indian government. It also allows international firms to obtain tax credits in their home country by demonstrating that taxes were deducted in India.
Example:
An Indian company employs a US-based software developer for project work and pays him $8,000. Because this payment is subject to Section 195 of the Income Tax Act, the corporation must calculate the TDS and file Form 15CA before completing the deposit.
Meaning of Form 15CB
Form 15CB is a certificate provided by a Chartered Accountant (CA) stating that the tax deduction at source (TDS) was computed correctly and that the remittance complies with the Double Taxation Avoidance Agreement (DTAA) and the Income Tax Act.
This form is only necessary for remittances over ₹5 lakh that are taxed in India. Before issuing this certificate, the CA considers the nature of the payment, the appropriate tax rates, and any relevant exemptions.
Why is Form 15CB Needed?
To confirm whether TDS applies and at what rate.
To ensure compliance with DTAA provisions (if applicable).
To verify that all necessary tax deductions have been made before sending the payment abroad.
Example:
A manufacturing company in India pays ₹10 lakh to a German supplier for technical consultancy. Since this amount exceeds ₹5 lakh, the company must first obtain Form 15CB from a CA, certifying the TDS rate and compliance, before filing Form 15CA (Part C).
Who is Required to File Form 15CA and 15CB?
Any individual, corporation, or entity sending a remittance (payment) to a non-resident outside India must assess whether Form 15CA and/or Form 15CB are required.
When is Form 15CA required?
To make a payment to a non-resident, an Indian resident must file Form 15CA.
The payment is taxable in India under the Income Tax Act of 1961.
The remittance is processed by a bank or financial institution, which requires this paperwork prior to processing the transfer.
When is Form 15CB required?
Foreign remittances reach ₹5 lakh in a fiscal year.
The payment is taxable in India, falling under Section 195 of the Income Tax Act.
The Assessing Officer has not granted a lower TDS rate certificate under Sections 195(2), 195(3), or 197.
Who Does Not Need to Fill Out These Forms?
If the remittance is not taxable, Forms 15CA and 15CB may be unnecessary.
Payments mentioned in Rule 37BB of the Income Tax Rules are exempt from Forms 15CA and 15B.
What Are the Different Parts of Form 15CA?
Form 15CA is broken into four sections (A, B, C, and D) based on the remittance amount and taxation status.
1. Part A – For Small Taxable Remittances (Up to ₹5 Lakh)
Used when the total foreign remittance in a financial year is ₹5 lakh or less.
The payer must file only Form 15CA (Form 15CB is not needed).
2. Part B – For Payments With an AO Certificate
Used when the remitter has a certificate from the Assessing Officer (AO) under Sections 195(2), 195(3), or 197, allowing a lower TDS deduction.
Requires supporting documents proving the lower tax rate eligibility.
3. Part C – For Taxable Remittances Above ₹5 Lakh
Used when the total remittance exceeds ₹5 lakh in a financial year.
Requires Form 15CB to be obtained from a Chartered Accountant (CA) before filing Form 15CA.
4. Part D – For Non-Taxable Remittances
Used when the payment is NOT taxable in India.
Filing this part informs the Income Tax Department that the remittance is exempt from tax.
What are the exemptions from filing Forms 15CA and 15CB?
Under Rule 37BB of the Income Tax Rules, the Income Tax Department has designated some international payments as exempt from Form 15CA or 15CB requirements. This includes:
1. Educational and travel payments
Tuition and accommodation expenditures when studying abroad.
Travel expenses include business trips, medical treatment, and personal travel.
Pilgrimage tours (Hajj, Umrah, and other religious journeys).
2. Business and Corporate Transactions.
Operating expenses for Indian enterprises doing business abroad.
Indian embassies make payments for their maintenance.
Refunds and rebates on export invoices.
3. Government and Charity Payments
Donations to overseas religious and charitable organisations.
Contributions of the Indian government to foreign organisations.
Payments to foreign embassies in India.
How to Fill out Form 15CA Online?
Using the Income Tax e-filing platform, you can easily file Form 15CA online. Follow these steps to finish the form:
Step 1: Log into the e-Filing Portal.
Visit the Income Tax e-filing website at www.incometax.gov.in.
Log in using your Permanent Account Number (PAN) and password.
Step 2: Go to the Form 15CA section.
Then select "e-File" > "Income Tax Forms" > "File Income Tax Forms" .
Search for and choose Form 15CA.
Step 3: Select the appropriate part based on your remittance type and amount (see to previous section).
Step 4: Fill up the required details.
Remitter Information (your name, PAN, residence, and bank information).
Details about the remittance recipient (name, address, and country).
Remittance Details (amount, currency, and purpose).
Tax information (TDS rates, DTAA requirements, and applicable exemptions).
Step 5: Review and submit.
Double-check the information you entered.
Submit the form and keep the acknowledgement receipt for your records.
How to Fill out Form 15CB Online?
Form 15CB must be completed by a Chartered Accountant (CA) before submitting Form 15CA (Part C). The process includes the following steps:
Step 1: Add a CA to the Taxpayer Portal.
The taxpayer logs onto the Income Tax e-filing Portal.
Add the CA's membership number to "My Chartered Accountant (CA)" and authorise them to file Form 15CB.
Step 2: CA prepares and files Form 15CB.
The CA logs into the Income Tax Portal and selects Form 15CB.
The following information is provided:
Remitter and remittee information.
Nature and purpose of the remittance.
TDS rate and compliance with DTAA.
Surcharges and exemptions may apply.
Step 3: CA digitally signs and submits the form.
The CA digitally signatures (DSC) and sends Form 15CB.
The taxpayer receives a confirmation notice.
Step 4: The taxpayer files Form 15CA (Part C).
After submitting Form 15CB, the taxpayer signs in to complete Form 15CA (Part C).
Documents Required to File Forms 15CA and 15CB
For Form 15CA-
PAN and Aadhaar number of the remitter.
Bank information for the remitter (including branch and BSR code).
Details about the recipient (remittee): name, nationality, address, and business type.
Payment information: amount, currency, and purpose of remittance.
TDS deduction information, if appropriate.
For Form 15CB (provided by a CA), includes-
A certificate of TDS deduction, if appropriate-
Tax Residency Certificate (TRC) of the receiver (if claiming DTAA benefits).
Form 10F (Declaration of DTAA Benefits).
A copy of the invoice or payment arrangement.
Non-compliance penalties
Failure to complete Forms 15CA and 15CB, or submitting false information, can have serious implications, including financial penalties and legal action.
1. Penalty for not filing Forms 15CA and 15CB.
Under Section 271-I of the Income Tax Act, the penalty for not or wrongly filing Form 15CA or Form 15CB is ₹1 lakh per default.
2. Penalty for providing incorrect or misleading information.
If a taxpayer gives fraudulent or erroneous information, they could face:
Additional tax liability due to incorrect TDS deduction.
Sections 201 and 40(a)(i) impose interest and penalties for failing to deduct TDS.
In exceptional situations, the Income Tax Act may be used for prosecution.
3. Rejected Remittance by the Bank.
Most banks will not process overseas transactions unless Forms 15CA and 15CB have been properly filed. This can cause payment delays and business disruptions.
Common Mistakes To Avoid
Avoiding frequent errors when filing Forms 15CA and 15CB will help you avoid penalties and transaction delays.
1. Filing the incorrect part of Form 15CA
Solution: Determine if Parts A, B, C, or D apply based on the remittance amount and taxability.
2. Not obtaining Form 15CB. When Required
If the remittance exceeds ₹5 lakh, Form 15CB is required (unless exempt).
Solution: Always consult a CA to determine whether Form 15CB is required.
3. Entering incorrect TDS details
Incorrect TDS rate or exemption claims might lead to compliance concerns.
Solution: Before filing the forms, verify the TDS rates under Section 195 and the DTAA rules.
4. Delayed Filings Lead to Bank Rejections
If Forms 15CA and 15CB are not submitted on time, banks may refuse to process overseas payments.
Solution: Ensure that the forms are submitted on time before commencing remittance.
Frequently Asked Questions (FAQs)
1. Can I file Form 15CA manually?
No, Form 15CA must be filed online through the Income Tax e-filing portal.
2. Can Form 15CB be used multiple times?
No, Form 15CB is valid only for a single transaction. If multiple remittances are made, a new Form 15CB is required for each transaction.
3. What happens if I submit the wrong Form 15CA?
If you submit the wrong form, banks may reject the remittance, and the Income Tax Department may impose penalties. You can withdraw and resubmit Form 15CA with correct details.
4. Can a freelancer receiving foreign payments use Form 15CA?
No, Form 15CA is only for payments sent abroad, not for receiving money.
5. Does every international payment require TDS deduction?
No, TDS is only required if the remittance is taxable in India. If exempt under DTAA or Rule 37BB, Form 15CA (Part D) should be filed instead.
