Form 15CB under Income Tax Act
Form 15CB is an important form in the case of international transactions related to India. This is needed for payments above ₹5 lakhs in a year to non-residents (not a company) or foreign companies. The payment is liable to tax, and no certificate from the Assessing Officer (AO) under sections 195 or 197 of the Income Tax Act has been issued. The form is a certificate of tax determination, and the CA signs it to confirm that all the rules of the tax laws have been followed. It lists the details of the payment, including the rate of TDS and the deduction. This article discusses all the details about form 15CB under the income tax act.
Who Can Use Form 15CB?
Form 15CB may be submitted by a Chartered Accountant registered on the Income Tax e-filing portal. The CA has to be authorised by the taxpayer to validate the information in Form 15CB. The form is normally mandatory for every remittance which satisfies the specified criteria, so it is an event-based document.
Applicability
This form can be applied in the following circumstances:
- Payment Exceeds ₹5 Lakh: The form is needed when the total of payments to a foreign or non-resident company is more than ₹5 lakhs in a financial year and is subject to tax.
- No Certificate from AO: It is needed when no certificate from the Assessing Officer under sections 195 or 197 of the Income Tax Act has been received.
- Taxable Payments: The form is needed for taxable payments to foreign or non-resident companies.
When Is Form 15CB Not Necessary?
Form 15CB is not necessary in the below-given circumstances:
- Non-Taxable Remittances: If the remittance is not taxable in India.
- Payments Less Than ₹5 Lakh: When the total of payments is less than ₹5 lakh during a financial year.
- Certificate from AO Obtained: If a certificate from the Assessing Officer under sections 195 or 197 has been procured.
- Specific Exemptions: For specific payments described under Rule 37BB of the Income Tax Rules, in which no details are needed to be submitted.
Filing Procedure
The filing procedure of Form 15CB has the following procedures:
- Registration
The Chartered Accountant is required to register on the e-filing website of the Income Tax.
- Assignment
The assessee has to authorize the CA to certify the information in Form 15CB.
- Mode of Filing
Form 15CB may be filed both electronically and offline using the Offline Utility for Statutory Forms.
- Verification
The form is to be e-verified through a Digital Signature Certificate (DSC) enrolled with the e-filing portal.
- Timing
No specific time limit exists for filing the form, the same must be filed before the remittance.
Importance of Form 15CB under Income Tax Act
The following are some essential reasons emphasizing the significance of Form 15CB:
1. Tax Compliance and Verification
- Purpose: Form 15CB is a tax determination certificate, whereby the CA authenticates the information of the remittance, including TDS rate and deduction, and ensures that the relevant tax legislations have been followed.
- Compliance: It ensures that withholding tax requirements on foreign payments have been correctly calculated under the DTAA between India and the remitting country.
2. Avoidance of Tax Disputes and Penalties
- Evidence of Compliance: The certificate granted by the CA acts as evidence that the payment complies with tax laws governing such payments to avoid tax disputes or penalty issues.
- Legal Protection: With the receipt of Form 15CB, taxpayers become protected from any legal issues relating to non-adherence to tax regulations.
3. Mandatory for Form 15CA (Part C)
- Requirement: The e-verified Form 15CB acknowledgement number needs to prefill the information in Part C of Form 15CA and is a mandatory requirement prior to filling out Form 15CA.
- Streamlined Process: This helps ensure a smooth process for foreign remittance reporting and ensures timely collection of taxes.
4. Tracking Foreign Remittances
- Information System: Form 15CB is part of a good information processing system that assists the Income Tax Department in monitoring foreign remittances and calculating possible tax liabilities.
- Transparency: It increases transparency in foreign transactions so that all payments are reported and taxed accordingly.
5. Threshold and Applicability
- Threshold: Form 15CB is necessary for remittances of more than ₹5lahksh in a year to non-residents or foreign companies, where the remittance is taxable and no certificate from the Assessing Officer has been obtained.
- Applicability: It is necessary for the purpose of ensuring that the tax on foreign remittances is deducted as per the provisions of the Income Tax Act, including provisions of the DTAA if applicable.
Get Started with TaxDunia
In summary, Form 15CB is a critical form for tax compliance in international transactions involving India. It is a certificate issued by a Chartered Accountant that confirms the tax effect and compliance with the law for payments over ₹5 lakhs. People and businesses need to know what Form 15CB is for, how to file it, and what its limitations are. Reach out to TaxDunia to ensure easy compliance.
