15CA/CB Required If Payment to foreign Branch of Indian bank
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Whether 15CA/CB compliance required in case Payment to foreign bank branch of an Indian banka case study
Common scenario involving payment of interest on the buyer’s credit to the foreign branch of an Indian bank and whether Form 15CA/CB compliance is necessary.
Query: Ind Co. imported goods from entity in Hongkong. & Ind Co. obtained funding (i.e Trade/ buyer’s credit against imports) from “Singapore Branch of ABC Bank India (‘ABC Singapore’). Ind Co. is making payment of interest on buyer’s credit to ABC Singapore
Case Summary
- Importer: Indian Company (Ind Co.)
- Creditor: Singapore Branch of ABC Bank India (ABC Singapore)
- Transaction: Payment of interest on buyer’s credit facility
- Query: Is Form 15CA/CB filing required u/s 195(6) read with Rule 37BB?
Whether 15CA/CB compliance is required for the payment made by Ind Co. to ABC Singapore?
Legal Position- payment of interest on the buyer’s credit to the foreign branch of an Indian bank
Payments to Foreign Branches of Indian Banks under TDS & Form 15CA/15CB compliance:
An Indian entity makes a payment (e.g., interest) to the Abu Dhabi branch of State Bank of India (SBI). following Taxability situation are mention here under Although the branch is located outside India, SBI is an Indian resident company under the Income Tax Act, 1961. A foreign branch of an Indian bank is not a separate legal or taxable entity — it is simply an extension of the Indian head office. Therefore, payment to SBI’s foreign branch is effectively payment to a resident. Section 195 (TDS on payments to non-residents) does not apply since the payee (SBI) is a resident.
Form 15CA / 15CB Compliance : Foreign Branch of an Indian Bank
Rule 37BB of the Income Tax Rules applies only when a remittance is made to a non-resident or to a foreign company. Since the remittance is to a resident entity (SBI), Form 15CA and 15CB are not required.
- As per RBI guidelines, a foreign branch of an Indian bank is not a separate legal person — it is considered an extension of the Indian entity, hence resident in India under Indian tax laws.
- Therefore, payments made to such a foreign branch are considered payments to a resident.
Section 195(6) and Rule 37BB
- Compliance u/s 195 applies only to remittances to non-residents.
- Hence, if the payee is a resident, no Form 15CA/CB is required.
Practical Reality
- Despite the legal position, banks often insist on a CA certificate or Form 15CB, for internal compliance and audit purposes, especially where:
- Payment is being remitted abroad;
- Interest or other charges are involved;
- There is a concern about withholding tax obligations u/s 195 if the branch is mistakenly treated as non-resident.
Our Recommendation
- No 15CA/CB is required, since the Singapore Branch is an extension of a resident bank. Practically, prepare a CA certificate or a declaration stating:
- That ABC Singapore is a branch of a resident bank (ABC Bank India);
- Payment is being made to a resident;
- Therefore, Section 195 does not apply.
- If the bank still insists, you may optionally file Form 15CA, Part D (for payments not chargeable to tax in India), although this is a conservative approach.
Sample Language for CA Declaration (Optional)
“This is to certify that the interest payment being made by M/s [Ind Co.] to ABC Bank, Singapore Branch, pertains to a loan facility availed from a foreign branch of ABC Bank India, a resident bank. Since the payment is made to a branch of a resident entity, the remittance is not chargeable to tax in India and is not subject to the provisions of section 195 of the Income Tax Act, 1961.”
Conclusion—Summary Table
| Particulars | Details |
|---|---|
| Payee | Abu Dhabi Branch of SBI |
| Tax Residency | Resident (SBI India) |
| Applicable Section | Not covered under Section 195 |
| TDS Requirement | Not applicable |
| Form 15CA / 15CB | Not required |
| Reason | Payment to a resident entity, not to a non-resident |
Where ABC Singapore is regarded to be a branch of ABC India, payment made to ABC Singapore will be treated at par with payments being made to an Indian Bank (resident in India). A foreign branch of an Indian bank is regarded to be an extension of the Indian bank itself and not a separate foreign entity. When payment is being made to a resident, no compliance u/s 195(6) is required. However, Bank insist for certificate
Form 15CA/CB is not required in this case as the payment is being made to a resident bank’s foreign branch. However, due to conservative banking practice, be ready to furnish a CA declaration or file Part D of Form 15CA if insisted by the bank.