Form 15CA under Income Tax Act
Form 15CA is an important form under the Indian Income Tax Act, 1 of 961. The form intents to facilitate proper taxation of foreign remittances. Be you an individual or a company making payment to non-residents, it is important to understand form 15CA under income tax act for compliance purposes. This blog will cover its purpose, form, filing procedure, and exemption.
What is Form 15CA?
Form 15CA is a certificate of remitter (payer) regarding any payment to a non-resident. It assists the Income Tax Department in monitoring foreign remittances and requires payment of tax, if required, at the source (TDS). Form 15CA is required to be submitted before the outward remittance of funds and is frequently supported by Form 15CB in some cases.
Purpose of Form 15CA
The main function of Form 15CA is to facilitate compliance with the Indian Income Tax Act of 1961. Under Section 195 about the deduction of tax at source (TDS) on payment to non-residents. Below are the main goals of Form 15CA:
- Foreign Remittances Tracking
The Income Tax Department is assisted with tracking every foreign remittance through Form 15CA. This ensures that the transactions are transparent and accounted for.
- Avoidance of Tax Evasion
The form helps stop tax evasion by requiring taxpayers to report payments made to non-residents. It also lets tax be deducted at the source whenever it is due.
- Adherence to Section 195
Part 195 of the Income Tax Act says that TDS must be added to payments made to people who do not live in India if those payments are tax-due in India. This is what people who send money to India have to do.
- RBI Compliance Documentation
RBI also needs Form 15CA for certain types of foreign transfers to make sure that the payments follow RBI rules.
- Taxability Verification
Form 15CB is usually used with the help of a Chartered Accountant to figure out if the payment is tax-deductible in India and if the right amount of TDS has been taken out.
Form 15CA Parts
Form 15CA is split into four components depending on the nature and size of the remittance:
- Part A: For remittances of up to ₹5 lakhs in a financial year. No certificate from a Chartered Accountant (CA) is needed.
- Part B: For remittances over ₹5 lakhs for which a tax order or certificate from the Assessing Officer has been received.
- Part C: For remittances over ₹5 lakhs without a tax order but with Form 15CB from a CA.
- Part D: For tax-exempt remittances under the Income Tax Act.
When is Form 15CA Mandatory?
According to Rule 37BB of the Income Tax Rules, Form 15CA needs to be submitted in the majority of instances involving payments to non-residents. Exceptions include:
- Remittances were not subject to Reserve Bank of India (RBI) approval.
- Specific types of remittances (e.g., education fees or travel costs).
Role of Form 15CA
Form 15CB is a certificate signed by a CA that confirms the remittance is tax-deductible. It becomes compulsory to file Part C of Form 15CA when:
- The remittance amount is more than ₹5 lakhs.
- No order or certificate under tax has been received from the Assessing Officer.
- The nature of the payment, rates of TDS applicable, and Double Taxation Avoidance Agreement provisions, if any, are viewed by the CA.
Procedure to Submit Form 15CA
Form 15CA submission is done by these steps:
- Login: Log in to the e-filing website with your PAN/TAN login details.
- Choose Form: Go to “e-File” > “File Forms” > “Form 15CA.”
- Enter Details: Enter the remitter details, remittee details, nature of payment, and TDS deductions.
- Attach Documents: In the case of Part C filings, upload the Form 15CB acknowledgment number.
- Verify: Utilize a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) for e-verification.
- Submit: File the form online before the remittance initiation.
- Penalties for Non-Compliance
- Not filing or wrong filing of Form 15CA may lead to penalties of ₹10,000 per case. This highlights the necessity of correct and timely submission.
Key Exemptions
You are not required to file Form 15CA for:
- Payments are eligible under designated exemption codes by RBI.
- Remittances of a personal nature, like gifts or donations, without RBI approval.
Get Started with TaxDunia
Form 15CA is a crucial tool in making sure that taxpayers are compliant with foreign transaction tax laws in India. The filing process and requirements of this form help taxpayers escape penalties and ensure fair financial reporting. For complicated cases involving huge amounts or provisions of DTAA, always approach a Chartered Accountant to make sure that reporting is as correct as possible. To get the best of the available services, reach out to TaxDunia. Our dedicated professionals provide real time update and comprehensive support to the clients.
