Importance of Filing Form 15CA and Form 15CB

Remittance of money outside India is subject to certain compliances under RBI regulations and Income Tax Act. One such important compliance is filing Form 15CA and Form 15 CB. In this article, we will discuss Form 15 CA and 15 CB, particulars of the forms, why it is important to file these forms and when it is required to file them.

 

 What is Form 15CA?

Form 15CA is an online declaration made by the person remitting the money wherein he states that he has deducted the tax from any payments made to the Non- Resident.

The purpose of Form 15 CA is to ensure that the tax on such amount is deposited with the Government before making the remittance to the Non-Resident.

Contents of Form 15CA:

Form 15CA comprises four sections or parts based on different conditions of remittances. The remitter is required to file the correct information in the relevant section regarding the made payments. These parts are as followed-

• Part-A: The remitter is to be filled in case the remittances made are less than or equal to Rupees 5 Lakh in a particular financial year to the non-resident.

• Part-B: It is filed when the made remittances are above Rupees 5 Lakh. The information is filled in this part after a certificate as per Section 197, or the Assessing Officer issued an order under section 195 Sub-section (2) or (3).

• Part-C: In a case where remittances exceed Rupees 5 Lakh in a particular financial year, related information is to be furnished in this part of Form 15CA. It must be done only after obtaining Form 15CB or Tax Determination Certificate under Section 288 Sub-section (2) from an authorized chartered accountant. NRI Taxation in India

• Part-D: Any payments are made by the remitter in a particular fiscal year that is not taxable as per the IT Act or that are not provided in Rule 37BB must be furnished in this part.

What is Form 15CB?

It is an online certificate issued by a Practicing Chartered Accountant.

The purpose of Form 15 CB is to ensure that the provisions of the Double Taxation Avoidance Agreement and the Income Tax Act have been complied with while computing tax to be deducted before remitting money outside India.

When Form 15CA and Form 15CB is required

Form 15CA and 15CB is required in the following cases:

A. In case of Transfer/Remittance of money from Indian Bank to Foreign Bank Account

B. In case of Transfer of money from NRO to NRE Account

C. In case of Transfer of money from NRO to Foreign Bank Account

Information to be furnished in Form 15CB:

The remitter is required to file the following details in Form 15CB-

• Details of the remitter: Name, address, PAN, principal place of business, phone number, e-mail address, the status of the remitter’s business, either company or firm or other.

• Bank details of the remitter: Bank name, Branch details, BSR Code, bank statements.

• Details of the remittee: Name, address, the status of the business, nationality, business portfolio, passport details.

• Details regarding the remittances: Amount of remittance in Indian currency, principal place of remittance, the country in which the payment is made, currency in which payment was made, nature of remittance as per the agreement, proposed date of the payment.

• Other necessary details: Name of authorized signing person, their father’s name, designation of the authorized person.

The taxation department revised its rules and regulations regarding the preparation and filing of Form 15CA and 15CB. These regulations came into effect from 1st April 2016. Here are the significant changes:

A. Any remittance by an individual that does not require approval by the Reserve Bank of India (RBI) will not require filing Form 15CA and 15 CB.

B. As mentioned in Rule 37BB of the Income Tax Rules, the list of payments does not require the filing of Form 15 CA and Form 15 CB. There are about 33 types of such payments on the list.

Accordingly, in the following cases, there is no requirement of filing form 15CA and 15CB

1. Indian investment abroad -in equity capital (shares)

2. Indian investment abroad -in debt securities

3. Indian investment abroad-in branches and wholly-owned subsidiaries

4. Indian investment abroad -in subsidiaries and associates

5. Indian investment abroad -in real estate

6. Loans extended to Non-Residents

7. Advance payment against imports

8. Payment towards imports- settlement of an invoice

9. Imports by diplomatic missions

10. Intermediary trade

11. Imports below Rs.5,00,000 (For use by ECD offices)

12. Payment for operating expenses of Indian shipping companies operating abroad.

13. Operating expenses of Indian Airlines companies operating abroad

14. Booking of passages abroad -Airlines companies

15. Remittance towards business travel.

16. Travel under basic travel quota (BTQ)

17. Travel for pilgrimage

18. Travel for medical treatment

19. Travel for education (including fees, hostel expenses, etc.)

20. Postal Services

21. Construction of projects abroad by Indian companies, including import of goods at the project site

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

23. Payments for maintenance of offices abroad

24. Maintenance of Indian embassies abroad

25. Remittances by foreign embassies in India

26. Remittance by non-residents towards family maintenance and savings

27. Remittance towards personal gifts and donations

28. Remittance towards donations to religious and charitable institutions abroad

29. Remittance towards grants and donations to other Governments and charitable institutions established by the Governments.

30. Contributions or donations by the Government to international institutions

31. Remittance towards payment or refund of taxes.

32. Refunds or rebates or reduction in invoice value on account of exports

33. Payments by residents for international bidding.

C. Form 15CB is required only when remittances above Rupees 5 Lakhs and taxable are made to a non-resident.

What type of remittances are allowed to be made by filing Form 15CA and 15CB

Normally, the following types of credits are allowed to be remitted.

a) Salary credited in the bank account can be remitted.

b) Interest on FDR credited in the bank account can be remitted.

c) The principal portion of FDR credited in a bank account can be remitted.

d) Proceeds from the sale of immovable property credited in a bank account can be remitted.

e) Proceeds from the sale of shares, mutual funds credited in a bank account can be remitted.

f) Rental Income credited in a bank account can be remitted.

Note: In case one Income is taxable and the other Income is exempt, different parts of Form 15CA must be filled, and accordingly, two forms 15CA and 2 Form 15CB, are required. Thus, for example, in remittance of interest on FDR and the Principal portion of FDR, normally, the AD Banker asks for two different forms 15CA and 15CB. This is also because RBI codes change with the nature of remittance. Faceless Income tax

Can Form 15CA and Form 15CB uploaded on the portal can be Revised or Cancelled?

There is no scope for revisions of Forms once filed. It can only be revoked or withdrawn.

It may be noted that Form 15CB cannot be withdrawn, if filed, independently.

However, Form 15CA can be withdrawn within seven days from the submission date through the link available on the online account of the assessee on the Income Tax Portal.

Also, if Form 15CA has been filed after mentioning the acknowledgment number of Form 15CB filed, then in such case, if Form 15CA is withdrawn, automatically, Form 15CB will also be withdrawn.

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What are the consequences for non-filing of Form 15CA and Form 15CB?

If any assesse, who is required to file the relevant Form, fails to do so or file an incorrect form, then penalty upto Rs 1 lac may be imposed u/s 271 of the Income Tax Act, 1961

What are the Deductions and Exemptions available to NRI under Income Tax?

NRIs are a major contributor to Indian GDP in terms of bringing foreign remittance to India every year. They are also the brand ambassador of India. Tax treatment of NRIs in India are at par with that of Resident with some differences.

 

In this write-up, we would be discussing the NRI tax in India.

While determining NRI Tax in India, the first question which comes to mind of every NRI is about the treatment of their foreign income, i.e. whether foreign income is taxable in India?

The answer will depend upon facts and on case to case basis.

Generally, NRIs are not liable to pay taxes on income earned outside India, but there may be instances where foreign income is taxable in India.

Residents in India are liable to pay taxes on their global income. But in the case of a Non-Resident Indian (NRI) or Resident but Not Ordinary Resident (RNOR), income earned by them abroad is not taxable in India. However, any income generated through their investments inside India will be taxed as per the Indian Tax rules and regulations. 

Therefore, residential status is a very important factor to determine NRI Taxation in India.

NRI Tax Return Filing

The due date for filing an NRI Tax return in India is 31st July of every year. Any non-residents whose annual gross income is above Rs. 2.5 Lakh in a particular financial year is required to file their tax return in India on or before the due date. The following are the categories of income liable to be taxed-

1. Income earned from a business setup in India.
2. Any capital gains from selling the assets such as shares, mutual funds, etc. situated in India.
3. Income accrued as salary or from a profession based in India.
4. Income from house property or rental property.
5. Income from other sources such as interest on bank accounts or NRO deposits, gifts, dividends etc.

 Deductions and Exemptions available to NRI while computing their tax liability:

Like Residents, Non-Resident Indians are also entitled to certain exemptions and deductions per the Income Tax Act. Same are provided as under:

1. Any Income accrued or arise in the NRE account is exempted in the case of NRI.
2. Payment made against children's tuition fee: Any payment is made to a school, college or educational institution within India, as tuition fees for full-time education of any two children.
3. Premium paid for life insurance: In this case, the insurance policy must be in the name of the NRI or their spouse or children. Also, the premium paid should be less than 10% of the total sum assured in the policy, or else it is liable for tax in India.
4. Unit-Linked Insurance Plan (ULIP): For a deduction under Section 80C, life insurance covers are sold along with ULIP. It helps in maximizing the tax benefits to the NRIs.
5. Investments made in Equity Linked Savings Scheme (ELSS): This has emerged as one of the best options to claim deductions of up to Rs in recent years. 1.5 Lakh in taxes. 
6. Repayments made against loan principal for purchase of house property: A deduction on repayment of loan taken for purchasing or making a house property is allowed in the tax computation.
7. Deduction on income from house property: NRIs can easily claim a deduction on incomes accrued from house property in India. They can claim deductions while paying property taxes and on the home loan interests. 
8. Deductions provided under Section 80D: A deduction is allowed on the premium paid for a health insurance policy.
9. Deductions under Section 80E: NRIs can claim a deduction on interests paid against an education loan. However, it cannot be claimed on the principal sum amount of the loan.
10. Deductions under Section 80G of Income Tax Act: Deduction can also be claimed on any donations made for a social cause by the NRI in India.
11. Deductions under Section 80 TTA: Any income accrued as interest on the savings bank account can be claimed for deductions. Faceless assessment income tax

Deductions not allowed to NRI: 

Some sections of the Income Tax Act, 1961 also provide conditions under which NRIs' deductions are not allowed while filing Income tax in India. These are as follows-

1. Investments under Section 80C: Any income generated through the following sources are liable to taxes and not deductions-
2. Investments in PPF after their NRI status are not allowed.
3. Investments made in the National Savings Certificate (NSC).
4. Investments made in Senior Citizen Savings Scheme.
5. Investments in a five-year post-office deposit scheme. 
6. Investments under Section 80CCG: Any deduction on the investment made in the Rajiv Gandhi Equity Savings Scheme (RGESS) is not allowed 
7. Deductions under Section 80DD and 80DDB to differently-abled persons: NRIs are not allowed for any deductions on maintenance and medical treatment of any differently-abled person dependent on them. 
8. Deduction under Section 80U for differently-abled persons: If the taxpayer is himself suffering from a disability, even then not allowed.
9. Exemption from income through the sale of property: Any long term capital gain on property is subject to be taxable. No exemption is provided to NRIs in this case.

Accordingly, all the factors above are important in determining the applicability of NRI Taxation in India.