Form 15CA/15CB for remittance under USD 1 million
NRIs, PIOs, and foreign nationals – Foreign Remittances and Tax Implications
This notification, FEMA 13 (R)/2016-RB, issued by the Reserve Bank of India on April 1, 2016, governs the remittance of assets outside India under the Foreign Exchange Management Act (FEMA), 1999. The regulations provide a framework for NRIs, PIOs, and foreign nationals to remit assets from India under specific conditions, ensuring compliance with FEMA and tax obligations. Here’s a summary of RBI key provisions for NRIs, PIOs, and foreign nationals to remit assets from India under specific conditions.
Specified RBI Conditions for USD 1 Million Scheme Funds Transfer held in Non-Resident Ordinary under FEMA Regulations: By adhering to these following steps, the repatriation process under the USD 1 million scheme remains compliant with FEMA and tax regulations.
- Funds held in Non-Resident Ordinary (NRO) accounts can be repatriated up to USD 1 million per financial year. For the purpose of Repatriation is allowed for any bona fide purpose, provided compliance with regulations and taxes. What is the eligibility Conditions:
- The funds must belong to the account holder.
- Taxes applicable to the repatriated amount must be paid in full.
- Documentation and necessary approvals must be obtained.
- Foreign Exchange Management (Remittance of Assets) Regulations, 2016,” regulations are called the “Remittance of asset: Refers to the remittance of funds representing various assets such as bank deposits, insurance claims, securities, immovable property, etc.
- Prohibition on Remittance: Remittance of assets outside India is prohibited unless permitted under the provisions of FEMA or the regulations made thereunder.
- Permission for Remittance in Certain Cases:
- Citizens of foreign states, NRIs, and PIOs may remit up to USD 1 million per year under certain conditions, such as for inheritance, retirement, or settlement.
- NRIs or PIOs may also remit funds from NRO accounts, subject to documentary evidence.
- Remittance of assets of Indian companies under liquidation is allowed with compliance with applicable rules and certificates from auditors.
- Permission for Remittance by Indian Entities: Indian entities can remit contributions towards provident or pension funds for expatriate staff.
- Closure of Branch/Liaison Offices: Branches of foreign entities can remit assets upon closure or winding-up, subject to supporting documentation like auditor certificates, no pending legal issues, and compliance with regulations.
- Reserve Bank’s Prior Permission: The RBI’s prior permission is required for remittances exceeding USD 1 million per year or when a remittance might cause hardship.
- Payment of Taxes: Any transaction involving the remittance of assets is subject to applicable tax laws in India.
Form 15CA/15CB for remittance under the USD 1 million scheme
Section 195: Tax must be deducted for any taxable sum remitted to a non-resident under the Income Tax Act. Banks verify whether taxes are paid before processing the remittance. If taxes are unpaid, a CA certification or Assessing Officer’s approval is required. The clarification regarding Form 15CA/15CB for remittance under the USD 1 million scheme and its scenarios is well-detailed.
Purpose of Form 15CA
- A declaration by the remitter to collect information about payments taxable in the hands of the non-resident recipient.
- Serves as a tool for the Income Tax Department to track foreign remittances and determine tax liabilities.
- Mandatory for Banks: Authorized dealers/banks must ensure Form 15CA is submitted before processing the remittance and forward it to the Income Tax Department.
Mandatory Information for Filing
- Details of Remitter: Name, PAN, address, principal business place, contact details, etc.
- Details of Remittee: Name, status, address, country, business details, etc.
- Remittance Information: Amount, currency, purpose, date, and agreement details.
- Supporting Documents: Form 10F, tax residency certificate, no PE declaration, etc.
Applicability of Form 15CA
- Taxable and Non-Taxable Payments: Applicable for payments made to non-residents or foreign companies, even if not taxable.
- When Not Required:
- For specified payments under Rule 37BB.
- If remittance is within RBI limits under FEMA.
Types of Form 15CA
- Part A: For taxable remittances ≤ INR 5 lakhs in a financial year.
- Part B: For taxable remittances > INR 5 lakhs with an AO certificate (u/s 195 or 197).
- Part C: For taxable remittances > INR 5 lakhs requiring Form 15CB from a CA.
- Part D: For remittances not taxable under the IT Act.
Role & Purpose of Form 15CB CA Certification:
- A certificate issued by a CA ensuring compliance with the Double Taxation Avoidance Agreement (DTAA) and Indian tax laws. Includes details like tax rates, withholding tax, and applicability of DTAA benefits.
- CAs are responsible for verifying the tax compliance status before certifying Form 15CB. The certification ensures the source and remittance of funds comply with Income Tax Act and FEMA. & CA UDIN Requirement for Authenticity. CA Ensure all supporting documents such as Form 15CA, tax challans, and source of funds are accurate and aligned with the remittance purpose.
- Applicability:
- Required for taxable remittances exceeding INR 5 lakhs.
- Not required when:
- Remittance is non-taxable.
- AO certificate under sections 197, 195(2), or 195(3) is obtained.
- Remittance does not exceed ₹5 lakhs in a financial year.
List of Payments Where Forms 15CA/15CB Are Not Required:
Exceptions: There are 28 types of foreign remittances listed under Rule 37BB where Forms 15CA and 15CB are not required. Examples include investments abroad, business travel, education expenses, family maintenance, personal gifts, and more (refer to the RBI purpose codes provided).
Procedure for Filing Forms Online
- Form 15CA: Log in to the e-filing portal and select the appropriate part (A, B, C, or D) based on remittance type and amount. Enter remitter and remittee details, verify, and submit.
- Form 15CB: Add a CA in the portal and share details. The CA uploads the certificate; remitter approves it in their account.
- USD 1 Million Scheme: Under FEMA regulations, funds held in Non-Resident Ordinary (NRO) accounts can be repatriated up to USD 1 million per financial year for any bonafide purpose, subject to payment of applicable taxes.
- Chartered Accountant’s Role: UDIN Requirement: The CA must generate a Unique Document Identification Number (UDIN) for the Form 15CB using the ICAI UDIN portal (udin.icai.org). The UDIN must be mentioned below the CA’s signature and membership number on Form 15CB. This ensures traceability and authenticity of the CA’s certification. The Unique Document Identification Number (UDIN) must be generated via the ICAI UDIN portal (icai.org).
- The UDIN should be mentioned below:
- The CA’s signature.
- The CA’s membership number.
- Purpose of UDIN: Ensures traceability and authenticity of the certification. Prevents misuse of the certification and safeguards the CA’s credibility.
Scenario 1: Remittance under Part A, B, or D of Form 15CA:
- Form 15CB: Not mandatory as per Income Tax Act rules. : Bank’s Requirement: Despite the exemption from 15CB, banks may have an internal policy requiring a CA certificate (on the CA’s letterhead) to confirm: The source of funds. & That applicable taxes have been paid on the NRO funds being remitted.
- The CA certificate is not in the standard 15CB format. It acts as a safeguard for the bank to ensure compliance with tax rules.
Scenario 2: Remittance under Part C of Form 15CA:
- Form 15CB: Mandatory for Part C remittances. Part C applies when the remittance amount exceeds ₹5,00,000 in a financial year and is chargeable to tax.
- Additional Documentation: Form 15CA (Part C) and 15CB & Other supporting documents as required by the bank or RBI.
Banks Prospective under 15CA and 15CB Compliance:
Banks often impose stricter compliance requirements (e.g., CA certificates in Scenario 1) than mandated by the Income Tax Act to avoid procedural risks. For remittances under Part C of 15CA, the standard compliance of Form 15CB with UDIN is essential.