Form 15CA & 15CB

CA Jugal Gala

DVS Advisors LLPIndia-Singapore-London-Dubai-Malaysia-Africa

www.dvsca.com

Credits and AcknowledgmentsJugal Gala

Bharathi Priya R D

Presentation Schema

Purpose and Rationale Overview

Parts and Contents of Form 15CA

Procedure for Filing Form 15CA

Withdrawal of Form 15CA

Procedure for filing Form 15CA

Form 15CB and its Contents

Procedure for Filing Form 15CB

Exemptions from Filing

Authorised Dealer and Form

15CCPenal Provisions

Caveats, Suggestions and Practical Aspects

Purpose

Any person responsible for paying to a non-resident including a foreign company

Any sum whether or not chargeable to tax under the provisions of Income Tax Act

Shall furnish such information in Form 15CA and Form 15CB (only Part C) - Rule 37BB

Rationale

Tool for collecting information in relation to income chargeable to tax in the hands of non-resident

Effective Information Processing System which may be utilised by the Income Tax Department(“ITD”) to track foreign remittances

Based on the details, ITD can initiate any proceedings under Income-tax act

Overview

• Assessee (the remitter) has to submit this form mandatorily• Authorised Dealer (“AD”) need this form before they make any

remittance to the non-resident on behalf of the assesseeForm 15CA

• An Accountant must certify the correctness of details present in Part C of Form 15CA

• Before filing Form 15CA, this form, duly certified by an Accountant, must be filed

Form 15CB

Parts of Form 15CA

Form 15CA

Part A

If remittance is chargeable totax and the payment oraggregate of such paymentsduring the financial year(“FY”) is =< Rs. 5 lakhs

Part B

If remittance is chargeableto tax and payment oraggregate of suchpayments during the FY is> Rs. 5 lakhs and alower/no withholdingcertificate has been issued

Part C

If remittance is chargeableto tax and payment oraggregate of such paymentsduring the FY is > Rs. 5 lakhsand a certificate in Form15CB has been obtained

Part D

If remittance isnot chargeableto tax

Contents of Form 15CA

Details of Remitter Details of Remittee Details of Remittance Bank details of the Remitter

1. Name2. PAN (if available)3. TAN (if available)4. Address, email,phone number5. Principal place ofbusiness and warddetails (For Part C)6. Status (Company/Firm/ Individual, etc.)7. Residential status

1. Name2. PAN (if available)3. Address, email,phone number4. Status (For Part C)4. Principal place ofbusiness (For Part C)4. Country ofRemittee

1.Amount payable beforeTDS in Indian currency &in foreign currency (ForPart B & C)2.Aggregate amount ofremittances (includingproposed) during the FY3.Proposed Date ofremittance4.Nature of remittance5.Purpose code as per RBI6.Amount and rate of TDS7.Date of deduction

1.Name and branchof the bank2.BSR code of thebank (only for Part B& C)

Additional Contents (For Part B & C)

Details of Assessing Officer (“AO”) (Part B&C)

Details of Order / Certificate issued (Part B & C)

Details of Accountant (Part C)

1. Name of AO2. Designation of AO

1. Section under which order/certificate has been issued2.Date of Order/Certificate3.Order / Certificate number

1.Name of the Accountant2.Name of the Proprietorship/ firm of the accountant3.Address4.Registration Number5.Date of Certificate6.Certificate Number

Part C contains Section B which gets automatically filled in onceacknowledgement number of Form 15CB is keyed in

Part D, relating to any sum not chargeable to tax, only contains thebasic details of remitter, remittee, remittance and bank

Procedure for filing Form 15CA

Log on to E-filing portal @ www.incometaxindiaefiling.gov.in

Contd…

Click on ‘e-File’ tab and select ‘Income Tax Forms’

Contd…Select “Form 15CA” and click “Prepare & Submit Online”

Contd…

Select the type of ‘Form 15CA’ whether Part A, B, C or D To fill Part C of Form 15CA, the acknowledgment numberof e-Filed Form 15CB will be required

Details in Form 15CA can be saved and re-used later

Withdrawal of Form 15CAForm 15CA can be withdrawn within 7 days of submission of Form 15CA

After logging on income tax portal, View Forms – Form 15CA, Click “Withdraw Form 15CA” link, a confirmation page shall appear, then click ‘confirm withdrawal’

After withdrawal, status of Form 15CB shall be changed from “consumed” to “withdrawn” (under professional login –View Form 15CB)

Form 15CB

Form certified by an accountant

That the appropriate amount of tax has been paid

While making proposed remittance to a non-resident

Contents of Form 15CB

1. Name and2. Address ofthe beneficiaryof remittance

1.Country to which remittance is made and itsCurrency2.Amount payable in foreign and Indian currency3.Proposed date of Remittance4. Nature of remittance as per agreement / document5. Grossed up remittance (explained in example later)6.Amount of TDS in foreign and Indian currency7.Rate of TDS as per Income Tax Act or as per DTAA8.Actual amount of remittance after TDS in foreigncurrency9.Date of deduction of tax at source

1.Name and branch ofthe bank2.BSR code of the bank

Details of Remitter Details of RemittanceBank details of the

Remitter

Contd..

Details of Taxability as per Income Tax Act Details of Applicability of DTAA

1.Taxability under the provisions of Incometax Act (without considering DTAA)2.Is remittance is chargeable to taxIf yes,(a) the relevant section of the Act underwhich the remittance is covered(b) the amount of income chargeable to tax(c) the tax liability(d) basis of determining taxable income andtax liabilityIf no – reasons

1.If income is chargeable to tax in India and anyrelief is claimed under DTAAIf yes,2.whether Tax Residency Certificate (“TRC”) isobtained from the recipient of remittance3.Relevant DTAA and corresponding article4.Taxable income as per DTAA and tax liability asper DTAA in Indian Rs.5. Nature of remittance (explained in next slide)

Nature of Remittance

In case of other remittances, specify nature of remittance If taxable in India as per DTAA - rate of TDS required to be deducted in terms of such article of the applicable DTAA

If not taxable in India as per DTAA - furnish brief reasons, specifying relevant article of DTAA

If remittance is on account of capital gains

Amount of long term capital gains and short term capital gains Basis of arriving at taxable income

If remittance is on account of business incomeIf it is liable to tax in India, the basis of arriving at the rate of

deduction of taxIf not liable to tax -furnish brief reasons, specifying relevant

article of DTAA

If the remittance is for royalties, fee for technical services, interest, dividend, etc,(not connected with permanent establishment)

Article of DTAA % of TDS required to be deducted in terms of such article of the applicable DTAA

Definition of Accountant – Sec 288(2)A Chartered Accountant, being a member of Institute of CharteredAccountants of India, who holds a valid certificate of practice (COP)

But does not include

In case of a company, a person disqualified from being an auditor as per Companies Act

In any other case,i. The assessee himself or the members in case of assessee being AOP, HUF or Firmii. In case of trust or institution, the author or trustee or any person making substantial contributioniii. In case of any other person other than i and ii, a person competent to verify the returniv. Any relative of person referred to in point i, ii & iii abovev. An officer or employee of the assesseevi. An individual who is a partner or who is in employment of an officer or employee of the assesseevii. An individual who or his relative or partner –

• Holds interest/security in the assessee, provided relative can hold upto Rs.1,00,000• Is indebted to the assessee, provided relative can be indebted upto Rs. 1,00,000• Has given guarantee or provided security to the assessee for a 3rd party, provided relative may guarantee or

provide security for amount upto Rs. 1,00,000viii. A person, directly or indirectly having business relationship with the assessee of the specified natureix. A person convicted for offence involving fraud and a period of 10 years has not elapsed from date of conviction

Example on Grossed Up Remittance

Particulars Amount (in Rs.)

Amount payable to non-resident (net of tax) 100

Tax rate applicable (Assumed) 20%

Gross-up income: 100 * 100 / (100-20) 125

Tax payable (Rs.125*20%) 25

Procedure for Filing Form 15CB- Accountant has to log-in using his professional user ID and password

- Click e-file and type PAN of assessee and accountant’s PAN- Select Form 15CB and upload XML file

Form 15CB needs to be digitally signed – Download ‘ITD e-filing DSC Management Utility’ from the abovementioned link, generate signature file and follow the instructions, attach the generated signature file as above

To prepare XML file, download Form 15CB from www.incometaxindiaefiling.gov.in/downloads/ - Other Form Preparation Software – Form 15CB - Fill in the required details and generate XML

Exemptions from Filing of Form 15CA / 15CB – Rule 37BB(3)

Filing of Form 15CA / 15CB is not required if

Remittance for current account transaction, not chargeable to income tax, made by an Individual whichdoes not require prior approval from RBI or

Remittance, not chargeable to income tax, is of the nature of specified list of items

Specified List of Items (For Exemption)

S.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

10 S0104 Intermediary trade

11 S0190 Imports below Rs.5,00,000 - (For use by Exchange Control Department (ECD) offices)

Contd..S.No Purpose Code as per

RBINature of Payment

12 S0202 Payment for operating expenses of Indian shipping companies operatingabroad

13 S0208 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.)

20 S0401 Postal services

21 S0501 Construction of projects abroad by Indian companies including import ofgoods at project site

22 S0602 Freight insurance - relating to import and export of goods

Contd..S.No Purpose Code as per

RBINature of Payment

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 andcharitable 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

Authorised Dealer

• Printout of the said form shall be submitted to the AD, priorto remitting the payment – Rule 37BB(4)

If Form 15CA is furnished electronically and digitally signed

• Signed printout of the said form shall be submitted to theAD, prior to remitting the payment – Rule 37BB(4)

If Form 15CA is furnished electronically and not digitally signed

• Acknowledgement of Form 15CB filedForm 15CB - Rule 37BB (6)

An income-tax authority may require the AD to furnish the signed printout of Form No.15CA for purpose of any proceedings – Rule 37BB (5)

Form 15CC – Rule 37BB(7)AD should furnish all details of remittances made

In quarterly statement for each quarter of the financial year electronically with digital signature

To the Principal Director General of Income-tax (DGIT) (Systems) or the person authorised by such person

Within fifteen days from the end of the quarter

Authorised Dealer means a person authorised by RBI to deal in foreign exchange or foreignsecurities, as a money changer or off-shore banking unit or any other manner as deemed fit

Contents of Form 15CC

Name and address of the AD

PAN number of the AD

Name and PAN of the remitter

Name and PAN of the remittee

Amount of Remittance

Date of remittance

Country to which remittance is made and Purpose Code

Penal Provisions

• Penalty of Rs. 1,00,000 (no specified section however, it is mentioned in an official document issued by ITD titled

“Penalties under Income-tax Act”)

Default in relation to Form 15CA/15CB

• Penalty of Rs.10,000 for each incorrect form certifiedWhere an Accountant furnishes

incorrect information in Form 15CB (Sec 271J)

Caveats

Form 15CA/15CB shall be required for reimbursement of expenses or payment on account of cost sharing

Transfer from NRO to NRE account would mandate Form 15CA/15CB

Payment towards imports, freight insurance, etc. may be chargeable to tax (on account of PE or otherwise), thus, Form 15CA/15CB shall be required

Form 15CA/15CB shall be required even if payment is considered to be at arms’ length

Digital Signature should be made optional for filing of Form 15CA for all types of Parts (A, B, C and D)

AD should be more aware in terms of requirement and non-requirement of Form 15CA and 15CB

In case there is no requirement of Form 15CA and 15CB to be furnished by AD Bank, it is advised to submit a self declaration (on letterhead if a company) the details about remittance and the reason why it is not taxable in India

Suggestions and Practical Aspects

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