When it comes to international money transfers from India, tax compliance becomes an important factor. The Income Tax Department requires specific declarations to ensure that taxes are properly deducted and reported on foreign remittances. This is where 15CA and 15CB forms come into the picture. For many taxpayers, these forms may appear complicated, but with a clear understanding, they become easy to handle.
What is Form 15CA?
Form 15CA is a declaration by an individual or entity making a payment to a non-resident. It serves the purpose of registering that tax has already been deducted at source (TDS) where necessary, prior to remission of money to foreign countries. In simple terms, it is a channel through which information on foreign remittance is received and compliance with the Income Tax Act achieved.
The form 15CA consists of different parts as per nature of the remittance and whether certificate signed by a Chartered Accountant (CA) is needed or not. Although smaller amounts do not demand a lot of information, higher amounts need verification that would bring attention Form 15CB.
What is Form 15CB?
Form 15CB is a certificate recorded by a Chartered Accountant. It acts as a certification that the remittance complies with Indian tax laws and, if applicable, Double Taxation Avoidance Agreements (DTAA) in case applicable. The CA can check on the payment particularities, tax rates, and the collection of taxes and make certification on whether the latter are properly deducted.
Briefly, Form 15CB provides professional assurance by a Chartered Accountant, while the taxpayer declares the transaction to the government via Form 15CA. The combination allows them to co-create a transparent cross-border payments process.
Why Are 15CA and 15CB Important?
Multiple checks are set up to avoid tax evasion in cases of international transactions. Through 15CA and 15CB, the taxpayers make sure that the department of income tax has proper records of money flowing out of India. They are also cushioned against penalties that may come their way by obeying the law. These forms are required in most cases because they are mandatory even for the banks which normally process the foreign remittances.
Situations Where 15CA and 15CB Are Required
All the remittances do not take both forms where amounts or transactions are small or fall within the exemptions provided in the Income Tax Act and then Form 15CA can be used. But in larger sum or when there are tax implications, then Form 15CB must be issued first by a qualified Chartered Accountant. After it is issued, the details on Form 15CB are used in filling in the Form 15CA before it is submitted.
Filing Process
- The taxpayer approaches a CA for certification and obtains Form 15CB.
- Using the details provided in Form 15CB, the taxpayer fills in and submits Form 15CA online through the Income Tax portal.
- The bank verifies both forms before processing the foreign remittance.
This structured process ensures accountability at every stage.
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Also Read: Form 15CA & 15CB: Simplifying International Payments