Form 15CA: A Quick Guide on Declaration of Remitter

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Form 15CA: A Quick Guide on Declaration of Remitter

While making foreign remittances from India, there are a few practices that one must follow, in order to stay tax compliant. 

One of the most significant steps in this process is to make an online filing of Form 15CA. That said, most taxpayers are puzzled and keep asking questions like:

1) Do all foreign remitters need to submit this form? 

2) Does the Income-tax department make exceptions? 

3) What is the latest update regarding form 15CA of income tax? 

In this blog, you will find the most relevant answers to everything associated with Form 15CA.

What is Form 15CA? An overview

As per Section 195 of the Income Tax Act, 1961, any income that arises out of business transactions of a foreign resident, will have tax implications.

The residential status of the payee is determined as per Section 6 of the Act. Hence, with respect to foreign transactions, there is a special emphasis that is being laid on Form 15CA by banks and financial institutions. 

Form 15CA is used by the Income-tax department to track such foreign remittances and ascertain whether the tax liabilities are being met prior to the money leaving the country. 

With the Income Tax Department scaling up its vigilance in tracking foreign remittances to identify tax liabilities, banks have become more cautious in the remittance process by ensuring that Form 15CA & Form 15CB (if applicable) are filed before transferring funds out of India.

The individual sending money outside India, to pay to a foreign company or an NRI, is called a remitter. 

Before remitting money, he or she needs to file Form 15CA, stating that the taxes liable on the amount being remitted, have been deducted by him or her. Therefore, Forms 15CA is a declaration, on behalf of the remitter, that makes the whole process of foreign remittance transparent and tax compliant. 

Does Form 15CA Have Parts or Sections?

Form 15CA is more than a few blanks and spaces that can be filed out at one go. It needs careful consideration to identify the relevant sections and if not filed in accurately, there might be grave consequences. Listed below are the different parts that a remitter needs to go through.

• Part A

This is the section that needs to be filed if the remitter is extending an annual sum of remittance of Rs. 5 lakhs or less to an NRI recipient.

• Part B

This section needs to be filed for payments that exceed an amount of Rs. 5 lakhs in the current FY. The filing of the form is preceded by the acquirement of a certificate issued by an Assessing Officer.

• Part C

In case the amount exceeds 5 lakhs for a given financial year, the associated information needs to be entered in Section C of Form 15CA. This can only be done after the Tax Determination Certificate is obtained.

• Part D

If the payments are not categorized under the revised subsection of 37BB and are not taxable, information regarding these payments need to be entered in Part D of Form 15CA. Some of the remittances that fall under this section are governed by the LRS or the Liberalized Remittance Scheme.

Why Form 15CA is important?

Form 15CA of income tax is a significant element in the process of foreign remittance. The same holds true for Form 15CB if it is applicable in a particular transaction. 

Both the forms are important because they give a clear picture to the Income-tax department about the source of remittance, the purpose, the tax liabilities, and help to track any kind of misconduct. 

These rules have been made more stringent, in order to prohibit fraudulent activities, that are often involved under the act of foreign remittances.

There are a number of consequences that a remitter faces if he or she does not file Form 15CA and Form 15CB before remitting money to a non-resident. 

Under the Income Tax Act of 1961, the remitter will face high penalty charges. In case inaccurate or inadequate information is provided in any of the forms, it will also attract a penalty.

This is precisely why filing Form 15CA for foreign remittance is of paramount significance.

How to file Form 15CA?

There may be cases in which Form 15CB is not applicable but it is important to note that even in such scenarios, it is mandatory to file Form 15CA. 

The very term, compliance, is something that often makes people nervous and jittery. 

However, filing Form 15CA is primarily done to keep oneself tax compliant. 

Moreover, the Income Tax department has made filing of Form 15CA much more convenient by creating an online submission facility. 

To begin with, one needs to furnish all the relevant information on the online portal and then take a printout of the same, as proof of submission. 

This copy needs to be handed over to the bank as proof of the fact that the tax department has issued a green signal in terms of tax clearance.

Form 15CA Online Filling Guidelines

• The first step in this process is to locate the forms on the official e-filing website of the Income Tax portal https://www.incometaxindia.gov.in/pages/downloads/most-used-forms.aspx
• The next step is to log in with the correct credentials if you are already registered. If you are not registered yet, you have to click on the ‘Register’ option and move on to filling in the details that are required to complete the process of registration.
• Once successfully registered, log in to the page and click on the e-file option. After clicking, you will receive a drop-down list.
• Click on the option, ‘Prepare and submit Online Form’.
• The next step is to select Form 15CA from the list and click on the Continue tab.
• After submission, you will find a pop-up window with the relevant part of Form 15CA.
• Depending upon the type of payment that you are making, you will have to select the relevant sections.  
• The online portal gives you the relaxation to save this information with a ‘Save Draft’ option, in case, you are unable to fill the entire form at one go.
• When you come to the end of the form after completion, you can click on ‘Submit’.
• After submission, you will receive a ‘Success’ message if you have been successful in submitting the form.
• You will also receive a confirmation of the same on your registered email address.

Form 15CA: Requirements from Clients

Listed below are the details that are required from the clients to file Form 15CA:

• Remitter Details

• Name of the remitter
• Address of the remitter
• The primary business address of the remitter
• PAN details of the remitter
• Remitter’s Email Address & Contact Details
• Remitter’s Status (Individual/Firm/Company/Other)

 

• Remittee Details

• Name of the remittee
• Address of the remittee
• The primary business address of the remitter
• Country of the remittee

 

• Remittance Details

• Name of the country to which remittance is being made
• Remittance Amount in INR
• Remittance currency
• Remittance type as per the agreement (client will be asked to provide a copy of the invoice as proof)
• Remittance date as proposed.

 

• Remitter Bank Details

• Remitter’s bank name
• Branch name of the bank
• BSR Code of the bank

 

• Other Essential Details

• Signing person’s designation
• Name of the signing person’s father

 

The following documents are required to be provided by the remittee:

1. The Authorized Person of the remittee needs to upload a duly filed Form 10F.
2. A Tax Residency Certificate
3. A No PE (Permanent Establishment) Certificate. 

How to revise Form 15CA Online?

In an untoward situation, if you need to rectify or revise the submitted details on Form 15CA for income tax, you can make the necessary changes within 7 days of submission.

The first step is to log in to the portal and view Form 15CA by clicking on ‘My Account. For 7 days from the date of submission, there will be a ‘Withdraw Form 15CA’ option under the status column. 

You can withdraw the form and submit a fresh one within 7 days of the first submission.

Conclusion

It goes without saying that remembering and registering all the intricacies of tax compliance, with regard to Form 15CA and CB, could be a daunting task for even the most frequent remitter. 

This is primarily because all the rules and regulations are interlinked in various ways and only certified professionals, with relevant industry expertise, will be able to guide you through the entire process of compliance. 

At Alfred Jordan, there is an entire team of experts, dedicated to simplifying the complicated procedures and making your foreign remittances as seamless as it gets. 

Having catered to NRIs and foreign remitters across a multitude of countries, they can assist the process and find the most convenient options that benefit you and meet your requirements.

They can be contacted at contact@AlfredJordan.com or at +91 83370 76567.

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