What is Form 15CA and 15CB? - Meaning & Why It is Required?

Today, most of the financial transactions are borderless due to the web-like inter-connected world. Whether it involves investing in foreign markets, getting education or healthcare abroad, or supporting families overseas, Indians normally remit money to other countries. In order to make smooth and compliant remittances, the Indian Income Tax Department has recently introduced two forms: Form 15CA and Form 15CB. In this blog, we shall get into the details of these forms, including their meaning and the cases with which they are required.

Understanding Form 15CA

Form 15CA is a declaration to be furnished by the remitter who is a resident Indian to the Income Tax Department before remitting any money to a non-resident or foreign company. The basic declaration to be made in this form is to inform the tax authorities that there is an impending payment and to claim that the remittance is not liable to have tax deducted at source under section 195 of the Income Tax Act.

Important points of Form 15CA

• Compulsion of Remittances: Though not all remittances call for the Form 15CA, it is to be done compulsorily for payments over specified limits to non-residents.
• Declaration Regarding Tax Liability: The declaration of TDS liability of the remittance will be made through the form.
• Various Types of Remittances: It covers several types of remittances, including those made toward investments in shares, mutual funds, debt securities, and other securities, as well as education expenses, medical treatment, and maintenance of non-resident close relatives.
• Online and Offline Submission: Form 15CA can be submitted online in an electronic form via the e-filing portal of the Income Tax Department, or offline.

When is Form 15CA Required?

Remittances in excess of specified limits: Exact limit varies and changes from time to time. For accurate information refer to the latest guidelines on income tax. Payments to non-residents or foreign companies: The person making a remittance is only required to know if the receiver of the remittance is a non-resident individual or a foreign company

Understanding Form 15CB

Form 15CB is another formality, stricter in nature, and it applies in some cases. Form 15CB is given by a Chartered Accountant, certifying that the remittance to be made is in accordance with the Income Tax Act and the DTAA between India and the country of the recipient.

Facts about Form 15CB

• Required in case of remittances more than Rs. 5 Lakh: Form 15CB is generally necessary where in a financial year the amount of remittance exceeds Rs. 5 lakh.
• Certificate by Chartered Accountant: The form has to be appropriately certified by a CA who is holding valid registration with the Income Tax Department.
• Compliance with Indian Income Tax Law: The CA has to certify that the remittance is in compliance with Indian law on income tax and relevant provisions of DTAA, if applicable.

Difference between Form 15CA and 15CB

1. Purpose: Form 15CA is a declaration by the remitter, whereas Form 15CB is a certificate issued by a CA. Mandatoriness: Form 15CA is mandatory for certain remittances, whereas Form 15CB is only mandatory when the remittance exceeds Rs. 5 lakh and a CA's certificate is required.
2. Contents: Basically, Form 15CA comprises details regarding the remittance, but Form 15CB comprises detailed analysis for tax implications.

Importance of Form 15CA and 15CB

Form 15CA and Form 15CB (if required) have to be filed at the end of every quarter. There are many reasons which are quite compelling to do this:

• Remittance Without Problems: Smooth functioning of foreign remittance through banks and thereby avoids inconvenience and problems during the remittance process.
• Tax Compliance: It proves your tax compliance with Indian tax laws and reduces the chances of any tax scrutiny.
• Avoiding Penalty: Non-compliance of these forms results in payment of penalty and interest.

Additional Considerations

• Specific Exemptions: Specify types of remittances exempt from the requirements of and15CA and 15CB given the complete list of such exemptions available in the latest income tax regulations.
• Timely Filing: It is filed before remitting the amount. For 15CB, the certificate has to be obtained before, or at the time of, remittance.
• Take Professional Help: If remittance is a complicated case for you or you are baffled by the requirement, then consult a tax professional.

Understanding the Consequences of Non-Compliance

Not furnishing Form 15CA or 15CB, if required, is liable to have some serious consequences as follows:

1. Penalties: The Income Tax Department may impose penalties upon the remitter.
2. Interest Charges: There could be a charge of interest upon the tax amount that is unpaid.
3. On Delayed or Blocked Remittance: The remittance may get delayed or even blocked by the banking authorities.

Case Studies and Examples

To Explain the applicability of Form 15CA and 15CB, the following examples be taken in the following cases:

• Case 1: Investment in Foreign Securities: A person who has invested in foreign securities more than Rs. 5 lakh would have to furnish both Form 15CA and Form 15CB.
• Case 2: Fee payment for education abroad: A parent remitting money for the education of his child studying in a foreign country may require to provide Form 15CA such localized, in case the amount remitted exceeds certain limits.
• Case 3: Medical Treatment abroad: Form 15CA would be required for payment for medical treatment in another country, in case it is over certain threshold limits.