Any person resident in India who is making a foreign remittance is required to comply with provisions of Income Tax Act in India. Such provisions are governed under Section 195 of the Income Tax Act, 1961 (“the Act”).
Effective April 1, 2106 such provisions have been amended to provide that the person responsible for paying any sum, whether chargeable to tax or not, to a non-resident shall be required to furnish the information of the sum paid. Thus, now as per the amended provisions of the Act, any person making foreign remittance is required to furnish the prescribed information to income tax authorities even through the said income is not chargeable to tax in India. However, there are few exceptions to the said rule.
The information required to be furnish by the person has been prescribed in Rule 37BB of the Income Tax Rules, 1962. The said Rule provides in case of foreign payment, the person making the payment is required to furnish Form 15CA and 15CB subject to certain exceptions. Form 15CB is a certificate issued by a Chartered Accountant as regards to rate of tax to be deducted on foreign payment. Form 15CA is a Form required to be filed by the person making payment to a non resident. The summary of documentation requirement for foreign remittance along with the exceptions is given hereunder:

  1. As per provisions of Section 195 of the Act, foreign remittance is required to be reported irrespective of the fact whether it is chargeable to tax or not except in following two scenarios:
  • When remittance is made by an individual and it does not require prior approval of the RBI due to liberalized remittance Scheme;
  • When remittance is covered under specified list given as Annexure A.
  1. Reporting requirement of Form 15CA and 15CB:

In cases other than the exceptions reported under Sr. No 1(a) and 1(b) above, the reporting requirement under Form 15CA and 15CB is given as under:

S.No. Particulars Form 15CA Form 15CB
1. Small value taxable payments less than Rs 5 lakhs in a financial year Part A of Form 15CA is to be filed online Not required
2. Small value taxable payments less than Rs 5 lakhs in a financial year – with lower withholding order/ certificates from Indian Tax Authority u/s 195 and 197 of the Act Part B of Form 15CA is to be filed online Not required
3. High value taxable payments (full reporting in a detailed form) Part C of Form 15CA is to be filed online Form 15CB required to be filed online
4. Payments not taxable under the ITL (other than those mentioned as “exempt payments” under Sr.  No. 1 above) Part D of Form 15CA required to be file d online. Not required

 

Annexure A
 

                List of Specified payments for which Form 15CA and Form 15CB is not required

 

Sl. No. Purpose code as per RBI Nature of payment
1 S0001 Indian investment abroad – in equity capital (shares)
2 S0002 Indian investment abroad – in debt securities
3 S0003 Indian investment abroad – in branches and wholly owned subsidiaries
4 S0004 Indian investment abroad – in subsidiaries and associates
5 S0005 Indian investment abroad – in real estate
6 S0011 Loans extended to Non-Residents
7 S0101 Advance payment against imports
8 S0102 Payment towards imports – settlement of invoice
9 S0103 Imports by diplomatic missions
10 S0104 Intermediary trade
11 S0190 Imports below Rs.5,00,000 – (For use by ECD offices)
12 SO202 Payment for operating expenses of Indian shipping companies operating abroad
13 SO208 Operating expenses of Indian Airlines companies operating abroad
14 S0212 Booking of passages abroad – Airlines companies
15 S0301 Remittance towards business travel
16 S0302 Travel under basic travel quota (BTQ)
17 S0303 Travel for pilgrimage
18 S0304 Travel for medical treatment
19 S0305 Travel for education (including fees, hostel expenses etc.)
20 S0401 Postal services
21 S0501 Construction of projects abroad by Indian companies including import of goods at project site
22 S0602 Freight insurance – relating to import and export of goods
23 S1011 Payments for maintenance of offices abroad
24 S1201 Maintenance of Indian embassies abroad
25 S1202 Remittances by foreign embassies in India
26 S1301 Remittance by non-residents towards family maintenance and savings
27 S1302 Remittance towards personal gifts and donations
28 S1303 Remittance towards donations to religious and charitable institutions abroad
29 S1304 Remittance towards grants and donations to other Governments and charitable institutions established by the Governments
30 S1305 Contributions or donations by the Government to international institutions
31 S1306 Remittance towards payment or refund of taxes
32 S1501 Refunds or rebates or reduction in invoice value on account of exports
33 S1503 Payments by residents for international bidding.