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Form 15CA and 15CB Explained: Everything You Need for Foreign Remittances
The revenues sent out of India through international remittance will be monitored under the Income tax Act to make sure that the correct level of tax has been paid before they leave the country. Form 15CA and 15CB play an important role in complying with these legislations. The two forms are required declarations and certificates to confirm if tax has been deducted from amounts being sent abroad to non-residents. Not knowing or understanding the requirements for these two forms often means people are penalised, delayed in processing transactions or, receive greater scrutiny by their banks or the tax authorities.
This guide will discuss Form 15CA and 15CB in a simple, useable and organised manner to assist individuals, businesses, and NRIs (Non-Resident Indians) to confidently comply with the regulations surrounding the foreign remittances.
Understanding Foreign Remittances and Tax Compliance
Any payment made by a resident to a non-resident may attract tax implications under Indian law. As per Section 195 of the Income Tax Act, 1961, tax must be deducted at source (TDS) on any sum that is chargeable to tax in India when paid to a non-resident.
Banks act as the first compliance checkpoint. Before processing a foreign remittance, the bank verifies whether:
- Tax has been deducted and paid, or
- A valid certification confirms that tax is not applicable
This verification is done through Form 15CA and Form 15CB. Without these forms, banks will not process most taxable foreign remittances.
What Is Form 15CA?
Form 15CA is a declaration submitted online by the person making the foreign remittance. It provides transaction-level details and confirms the tax position of the payment.
Key Details Covered in Form 15CA
- Name and PAN of the remitter
- Name and address of the non-resident recipient
- Country of residence of the recipient
- Purpose of remittance using RBI purpose codes
- Amount of remittance
- TDS rate and amount deducted, if applicable
The remitter must confirm that only the net amount after tax deduction is being transferred abroad.
Purpose Codes in Form 15CA
The Reserve Bank of India (RBI) has assigned specific purpose codes for different types of remittances such as:
- Education fees
- Medical treatment
- Professional services
- Software subscriptions
- Advertising payments
Correct selection of the purpose code is critical, as errors may result in rejection or future tax notices.
Different Parts of Form 15CA
Part 15CA is divided into multiple parts by the value and type of the remittance:
- Remittances < ₹ 5 lakhs (during financial year)
- All taxable remittances s ₹ 5 lakhs + Form 15CB
- Remittances subject to Lower Tax Rates or a Tax Exemption under the DTAA
- Non-Taxable remittances that fall within the allowable Exemptions prescribed.
Determining the appropriate section will help ensure that you are in compliance and avoid creating unneeded documents.
What is Form 15CB?
Form 15CB is a certificate issued by a Chartered Accountant (CA). It indicates whether or not the foreign remittance is taxable and all necessary documentation was reviewed with respect to Indian Tax Laws.
Role of the Chartered Accountant
The CA verifies:
- Nature of the remittance
- Applicable provisions of the Income Tax Act
- DTAA applicability, if any
- Correct TDS rate
- Whether tax has been deducted correctly
After verification, the CA digitally signs Form 15CB, which is then referenced while filing Form 15CA.
Why Form 15CA and 15CB Are Important
The importance of Form 15CA and 15CB lies in preventing tax leakage and ensuring transparent reporting of cross-border payments.
Key Benefits
- Ensures compliance with Indian tax laws
- Prevents under-reporting or misclassification of payments
- Reduces litigation and future tax disputes
- Enables smooth processing of foreign remittances by banks
Without these forms, remittances can be delayed or blocked entirely.
Applicability of Form 15CA and 15CB for NRIs
For Non-Resident Indians (NRIs), the requirement depends on the type of bank account used.
NRE Account
- Funds are considered foreign income
- No Form 15CA or 15CB is required for outward remittance
NRO Account
- Funds may include income earned in India
- Forms 15CA and 15CB are mandatory to confirm taxes are paid
When transferring money from an NRO account to a foreign account, these forms become essential.
Remittances Where Form 15CA and 15CB Are Not Required
There are 28 categories of foreign remittances where submission of Form 15CA or 15CB is not required under Rule 37BB.
Common Exempted Transactions
- Travel expenses
- Education fees (within prescribed limits)
- Medical treatment abroad
- Investments abroad
- Payments to foreign embassies
These exemptions reduce the compliance burden for routine personal transactions.
Threshold Limit and Form 15CA
If the aggregate foreign remittance does not exceed ₹5 lakh in a financial year, Form 15CB is not required. Instead:
- Form 15CA (Part A) is sufficient
- Some references also mention Form 15CA for reporting low-value remittances
Once the threshold is crossed, Form 15CB becomes mandatory.
Do’s for Form 15CA and 15CB
Following best practices ensures error-free compliance:
- Obtain Form 15CB if cumulative remittances exceed ₹5 lakh
- Pay special attention to payments for:
- Online advertising (Google, Facebook, etc.)
- Software purchases or subscriptions
- Domain registration and website hosting
- Collect Tax Residency Certificate (TRC) and Tax Identification Number (TIN) from the recipient to claim DTAA benefits
- Submit Form 10F before generating Form 15CA and 15CB
Correct documentation safeguards against disallowance of DTAA benefits.
Don’ts for Form 15CA and 15CB
Avoiding common mistakes reduces future complications:
- Do not report exempt remittances covered under Rule 37BB
- Do not confuse fee for technical services with business income
- Do not deduct TDS when income is not taxable; instead, approach the Assessing Officer with income computation
- Do not misclassify the purpose code
Accurate classification is essential to avoid litigation.
Penalties for Non-Compliance
Failure to furnish Form 15CA or Form 15CB when required attracts penalties under Section 271I of the Income Tax Act.
Penalty Details
- ₹1,00,000 for failure to submit the required form
- Penalty applies even for incorrect or incomplete information
Strict penalties make timely and accurate filing non-negotiable.
Conclusion
Forms 15CA and 15CB are essential compliance documents used by individuals and companies sending money from India to other countries. These forms ensure that all applicable Indian taxes have been deducted and that there is transparency in cross-border payments as well as that the correct exemption has been claimed if applicable. Individuals, business owners and non-resident Indians can use Form 15CA/CB in order to reduce their risk of penalties, delays or disputes over whether or not taxes are due on a particular transaction. It is possible to make the process of sending money from India simpler if you plan well, maintain proper documentation, and seek assistance from an accounting professional in completing Form 15CA/CB.
