Understanding Forms 15CA and 15CB: Essential for Foreign Money Transfers from India

Introduction

If you're planning to transfer money outside India or your parents are considering helping you by transferring funds, you've likely come across the terms "Form 15CA" and "Form 15CB." These documents play a crucial role in foreign transfers. Let’s explore what these forms are, why they're important, and how they impact your money transfers.

What are Forms 15CA and 15CB?

Forms 15CA and 15CB are necessary documents when sending money abroad. They’re particularly relevant for residents of India, although NRIs (Non-Resident Indians) also need to be aware of their implications.

Form 15CA

Form 15CA is signed by the individual sending money abroad. This form details the transaction and the purpose of the transfer. The Reserve Bank of India (RBI) assigns specific codes for each type of transaction, which must be mentioned in the form. Additionally, the sender must confirm if any Tax Deducted at Source (TDS) is applicable and whether it has been paid. Only the net amount after taxes can be transferred abroad.

For instance, there are transactions where no TDS is applicable, such as sending money abroad for children's education or medical treatment up to a certain limit. However, if you are sending money for purposes like a foreign trip, TDS must be paid.

Form 15CB

Form 15CB is issued by a chartered accountant (CA). The CA verifies the declaration made in Form 15CA with supporting documents and certifies it. This verification is crucial to ensure individuals do not miss declare their transactions. Both forms 15CA and 15CB must be submitted to the bank, which will then release the funds for transfer.

Why Are Forms 15CA and 15CB Important for NRIs?

For NRIs, Forms 15CA and 15CB are essential when transferring money from an NRO (Non-Resident Ordinary) account to a foreign account. If the money is in an NRE (Non-Resident External) account, you typically do not need to submit these forms, as it is considered foreign income. However, when transferring money from an NRO account to a foreign account, you must declare that all applicable taxes have been paid.

For instance, if you sold a property in India, the proceeds should go into your NRO account. Before transferring this money to your NRE or foreign account, you need to submit Forms 15CA and 15CB to the bank.

Key Considerations

1. Always Submit Forms 15CA and 15CB: Even if the bank doesn't ask for them initially, ensure you submit these forms. This can prevent potential issues later.

2. Accurate Declaration: Misdeclaring the purpose or details in these forms can lead to penalties, prosecutions, and even charges of money laundering.

3. Prohibited Purposes: Some purposes, such as buying lottery tickets, are prohibited by FEMA (Foreign Exchange Management Act). Thus, accurate declaration is essential.

Detailed Breakdown of Form 15CA

Form 15CA is essentially a declaration of the remitter's intention to transfer funds abroad. It contains the following sections:

• Part A: For payments below ?5 lakh during the financial year. No certificate from an accountant is required.
• Part B: For payments exceeding ?5 lakh, and an order/certificate from the Assessing Officer is obtained.
• Part C: For payments exceeding ?5 lakh, and a certificate in Form 15CB from an accountant is obtained.
• Part D: For payments not chargeable to tax under the Income Tax Act.

Detailed Breakdown of Form 15CB

Form 15CB is a certificate issued by a chartered accountant, and it includes:

• Details of the remitter, remittee, and the nature of the remittance.
• Tax residency status of the remittee.
• Rate of TDS applicable.
• A certification that the provisions of the Double Taxation Avoidance Agreement (DTAA) are considered.

How to Fill Forms 15CA and 15CB

Step-by-Step Guide to Filling Form 15CA

1. Log in to the Income Tax Department's e-filing portal.

2. Navigate to the ‘e-File’ tab and select ‘Prepare and Submit Online Form (Other than ITR)’.

3. Choose Form 15CA and select the appropriate part (A, B, C, or D).

4. Fill in the required details, including remitter and remittee details, nature of remittance, and tax applicable.

5. Submit the form and generate the acknowledgement receipt.

Step-by-Step Guide to Obtaining and Filling Form 15CB

1. Consult a chartered accountant to obtain Form 15CB.

2. Provide necessary documents to the CA, including details of the remittance, agreement/invoice, and tax residency certificate of the remittee.

3. The CA will verify the details, calculate the applicable taxes, and issue the certificate.

4. Log in to the Income Tax Department's e-filing portal, upload the certificate, and link it to Form 15CA.

Common Scenarios Requiring Forms 15CA and 15CB

• Supporting Family Abroad: If you are transferring money to support family members abroad for education or medical expenses.
• Property Sales: When selling property in India and transferring the proceeds to a foreign account.

• Business Transactions: For business payments like royalties, interest, or technical services.

Potential Issues and How to Avoid Them

1. Incorrect Information: Ensure all details are correct to avoid penalties.

2. Delays: Submitting forms late can delay your transactions.

3. Non-Compliance: Always comply with FEMA regulations to avoid legal issues.

Conclusion

In conclusion, Forms 15CA and 15CB are crucial for transferring money from India to abroad. They ensure that taxes have been paid and that the purpose of the transfer is lawful. Since these forms are now issued online, all records are maintained with the Income Tax Department and possibly shared with the RBI, making it easy for authorities to verify transactions.

That's all about Forms 15CA and 15CB. I hope this comprehensive guide has provided you with a clear understanding of when and why you need to submit these forms.

About the Author

CA Arun Tiwari, a Chartered Accountant and former EY employee, serves as the Chief Consultant of the NRI Desk and Influencer Desk at AKT Associates. He specializes in offering consultancy services tailored for NRIs and is dedicated to creating educational content to raise awareness within the NRI community.