What’s Form 15CA and 15CB?
Mr Fund resided in India and was one of the idle rich in his society. He wanted to remit money to his bank account in Geneva for setting up a second business there. Having been under an income tax scrutiny previously, he is now more cautious about remitting funds abroad.
Fund wanted to diversify his funds rather than keeping it idle. He had couple of his friends in Geneva, took few trips there to study the nature of business that he should set up to double up his investment value. He finally decided to set up a retail outlet for wine and bread. He visited his friend who is a consultant to seek advice about the same.
When a resident of India wants to remit money abroad, a certificate should be obtained from a practicing chartered accountant in Form 15CB and a copy of the same should be submitted to the bank from where such remittance is made.
Form 15CB is a certificate given by a chartered accountant in practice. This certificate has been prescribed under Section 195 of the Income Tax Act and is an alternate channel of obtaining tax clearance apart from Certificate from Assessing Officer U/s 195(2) regarding the chargeability of foreign remittance to tax.
There is a list of prescribed items mentioned as per the income tax rules for which there is no need for reporting in FORM 15CA and 15CB. Some of the examples are – Indian investment abroad -in equity capital (shares), Indian investment abroad -in debt securities, payment- for operating expenses of Indian shipping companies operating abroad, remittance towards business travel, travel for pilgrimage, travel for medical treatment etc.
Form 15CB is the Tax Determination Certificate where the issuing CA examines the remittance having regard to chargeability provisions under Sections of Income tax Act along with provisions of Double Tax Avoidance Agreements with the recipient’s residence country. It is in the interest of the assessee to have a tax determination in Form 15CB from a CA, since non-resident taxation involves various issues such as interpreting Double Tax Avoidance Agreement, place of accrual of income for chargeability of tax etc.
Form 15CA is a declaration made by the remitter and is used as for collecting information in respect of payments which are chargeable to tax in the hands of recipient non-resident. This information is utilized by the Income tax Department to independently track the foreign remittances and their nature to determine their tax liability. When remittance is made through banks and authorised dealers, they are responsible to submit this form to income tax authorities on behalf of their customers.
Form 15CA to be filled up if the remittance is chargeable to tax and does not exceed Rs 50,000 and the aggregate of such remittances made during the financial year does not exceed Rs 2,50,000.
Things to be filled in Form 15CA –
1) Particulars such as name of the remitter, address, PAN, principal place of business, e-mail, address and phone no. of remitter status of the remitter.
2) Details of remittee such as name, status, address, country of the (country to which remittance is made), principal place of the business
3) Amount of remittance made & TDS deducted thereon
4) Purpose of remittance
5) Proposed date of remittance
6) Amount of remittance
7) Bank details of the remittee
8) Home currency of the remittee
9) Other such details to be filled
10) Certificate number and membership number of the chartered accountant who has issued Form 15CB in relation to the remittance.
There are list of remittance that are permitted such as payment for advertising charges, bandwidth charges, repatriation of money, AMC (Annual Maintenance Charges), consulting charges etc.
As Mr Fund is remitting his own money to another foreign account, he should obtain Form 15CB and Form 15CA. Also the amount which he is remitting is not a taxable foreign remittance as it is used for his own business purpose. It is only for repatriation of his funds from India to his Geneva account. He should have paid taxes for his income in India though or else once again if his case comes up for scrutiny, he might be served a notice.