Form 15CA - 5 essential facts one must know.

The need for cross-border transactions and payments to non-residents has become increasingly common nowadays as businesses are expanding globally. Such payments may attract tax obligations, and to ensure compliance, the Indian Income Tax Department requires the submission of Form 15CA and 15CB.

In this article, we will explore the key aspects of Form 15CA in facilitating international payments.

 

1. What is Form 15CA?

Form 15CA is a declaration form mandated by Section 195 of the Indian Income Tax Act. It applies to individuals or entities making payments to non-residents or foreign companies, where the sum is subject to income tax.

2. Parts of Form 15CA:

The information required for payment to non-residents or foreign companies is divided into four parts: 

a) Part A: Applicable when the remittance or aggregate remittances during the financial year do not exceed INR 5 lakh.

b) Part B: Applicable when the remittance or aggregate remittances during the financial year exceed INR 5 lakh, and an order/certificate under Section 195(2)/(3)/197 of the Income Tax Act has been obtained.

c) Part C: Applicable when the remittance or aggregate remittances during the financial year exceed INR 5 lakh, and a certificate in Form 15CB from a Chartered Accountant has been obtained.

d) Part D: Applicable when the remittance is not chargeable to tax under the Income Tax Act.

 

3. Who needs to file Form 15CA?

As per Rule 37BB, any person responsible for making payments to non-residents or foreign companies must furnish the required information in Form 15CA. This responsibility lies with the individual or entity making the payment.

 

4. Mandatory submission of Form 15CB:

Form 15CB is not mandatory for all cases. It is an event-based form that needs to be filled only if the remittance or aggregate remittance amount exceeds INR 5 lakh during a financial year and requires a certificate from a Chartered Accountant.

  

5. Cases where Form 15CA is not required:

Form 15CA is not required for certain transactions, as specified in sub-rule (3) of Rule 37BB. These include remittances made by individuals that do not require prior approval from the Reserve Bank of India (RBI) and remittances falling under the specified purposes code defined by the RBI.

 

        By providing the necessary details before remittance, this form facilitates  transparency and accountability in cross-border transactions. As businesses continue to engage in global operations, understanding and adhering to the requirements of Form 15CA is quite important.



https://www.incometax.gov.in/iec/foportal/help/statutory-forms/popular-forms/form-15ca-faq