A person making remittance to a Non-resident needs to file online forms with the Income tax authority before sending the fund abroad in Form 15CA and 15CB.
As per the Section 195 of The Income tax Act, every person liable for making any payment to non-residents, shall deduct TDS from the payments made to non-residents. If such sum is chargeable to Income tax then the withholding tax need to be deducted and form 15CA and 15CB are the declaration for the same.
General documents required for filing form 15CA and 15CB are:
- Agreement copy
- Tax Residency Certificate
- No PE certificate
- Form 10F filled
Charges – Rs 2000/- only.
To understand about form 15CA and 15CB better, categorising them as follows:
1. Transaction is not chargeable to tax in India and the transaction is among 33 listed items – No documents are required for form 15CA and 15CB to be filed.
2. Transaction is not chargeable to tax in India and does not belong to 33 listed – Part D of Form 15CA.
3. Transaction is chargeable to tax in India and does not exceed Rs 5 lakh in a year – Part A of Form 15CA.
4. Transaction is chargeable to tax in India and lower tax deduction certificate is taken – Part B of Form 15CA.
5. Transaction is chargeable to tax in India and exceeds INR 5 lakhs in a year – Part C of Form 15CA and Form 15CB.
Form 15ca and 15cb not required for 33 types of payments:
Nature of Payment for Foreign remittance includes – Indian investment abroad -in equity capital (shares), debt securities, branches and wholly owned subsidiaries, real estate and loans to Non residents. It also includes relating to imports, travelling and for operating expenses of airlines and shipping.
This further includes international bidding, maintenance of offices, embassies, family or gifts/donations.