Form 15CA/CB : if Transfer of Shares & No capital gains

Whether Form 15CA/CB required when Transfer of Shares & No capital gains

Exemption from Filing of Form 15CA/CB

31 categories of foreign remittances that are exempt from the requirement of filing Form 15CA & Form 15CB under Rule 37BB of the Income-tax Rules, 1962.

Sl. No.                              Nature of Payment

1 Indian investment abroad — in equity capital (shares) 2 Indian investment abroad — in debt securities

3 Indian investment abroad — in branches and wholly owned subsidiaries

4 Indian investment abroad — in subsidiaries and associates

5 Remittance towards fully repatriable investments in India by NRIs/PIOs

6 Remittance towards non-repatriable investments in India by NRIs/PIOs

7 Remittance towards portfolio investment by NRIs/PIOs

8 Remittance for loans extended to NRIs

9 Donations to charitable/religious institutions abroad

10 Remittance by individuals under the Liberalized Remittance Scheme (LRS) up to ₹7,00,000 per financial year (as amended)

11 Travel for education (including fees, hostel, maintenance, etc.)

12 Travel for medical treatment

13 Travel for attending conferences, training, etc.

14 Travel for religious purposes

15 Travel for business or tourism 31 Exemption from Filing of Form 15CA/CB SI. No. Nature of Payment

16 Payments for imports by Indian companies

17 Operating expenses of Indian shipping companies abroad

18 Remittance of interest on loans and overdrafts by NRIs

19 Payments made under operating lease agreements (other than towards royalty, FTS, interest, etc.)

20 Payments for subscriptions to magazines, periodicals, journals, etc.

21 Payments towards internet services, bandwidth, email services, etc.

22 Remittance towards payment of fees to testing agencies or accreditation boards

23 Remittance by embassies/consulates/high commissions

24 Remittance towards refund of taxes

25 Remittance towards payment to international bodies like IMF, World Bank, etc.

26 Remittance for shipping freight (not involving royalty/FTS)

27 Payments for software purchased off-the-shelf (not involving copyright/license)

28 Remittance for use of satellite transponders where royalty is not involved

29 Remittance for news subscription services

30 Remittance under FEMA compounding orders

31 Remittance towards wages/salaries to foreign employees (not taxable in India)

The above exemptions are issued by the CBDT and aim to ease compliance for specified low-risk or recurring transactions.

Key Highlights of the Exemption List:

• Investments and Remittances Abroad (Sl. No. 1 to 4) : Indian investments abroad in equity, debt securities, branches, subsidiaries, or associates.
• NRI/PIO Transactions (Sl. No. 5 to 8) : Remittances by NRIs/PIOs, whether repatriable or non-repatriable. Portfolio investments and loans to NRIs.
• LRS and Personal Remittances (Sl. No. 9 to 15) : LRS up to ₹7,00,000 per financial year (above this, 15CA/CB is required). Personal travel, education, medical treatment, donations, business, and religious trips.
• Corporate and Commercial Payments (Sl. No. 16 to 22) : Import payments, shipping operations, interest remittances by NRIs. Operating lease payments, online services (magazines, internet, testing agencies).
• Institutional and Governmental Remittances (Sl. No. 23 to 25) : Payments by embassies, tax refunds, and to international bodies like IMF/World Bank.
• Other Specific Exemptions (Sl. No. 26 to 31): Freight, off-the-shelf software (no royalty), satellite usage (no royalty), news services. FEMA compounding order payments. Salaries to foreign employees (not taxable in India).
• Form 15CA/CB is still required if the remittance involves taxable income under the Income Tax Act or exceeds the LRS threshold of ₹7 lakh per FY (in individual cases).
• Chartered Accountant certificate (Form 15CB) is mandatory for taxable remittances exceeding ₹5 lakh in a financial year.

Section 271-I – Penalty for Non-Filing or Inaccurate Filing of Form 15CA/CB

• Applicability: On remitter (payer of the foreign remittance).

• Trigger: Fails to furnish required information under Section 195(6) (i.e., fails to file Form 15CA/CB). & Furnishes inaccurate information in such forms.

• Quantum of Penalty: ₹ 1,00,000 per default.

• Nature: Discretionary; Assessing Officer may impose it after considering the facts.

• Note: There is no provision for reasonable cause defense under this section, so due diligence is crucial.

Section 271J – Penalty on Professionals for Incorrect Certificates

• Applicability: On accountants or professionals (usually Chartered Accountants) who issue certificates or reports like Form 15CB.

• Trigger: Furnishing of incorrect information in any report or certificate under the Income Tax Act. Detected during scrutiny by the AO or Commissioner (Appeals).

• Quantum of Penalty: ₹ 10,000 per incorrect certificate.

• Scope: This aims to hold professionals accountable for negligent or misleading certification, including incorrect DTAA application, misclassification of payments, wrong withholding tax opinions, etc.

Form 15CA/CB Compliance Tips

Whether Form 15CA/CB required when Transfer of Shares & No capital gains

Transfer of Shares Case Summary

Question:  A US company had acquired shares in an Indian company in Dec 2021.  In April 2025, the US company sells part of such shares to another non-resident (UK entity) for the same price at which the shares were acquired. As per the capital gain computation, the resultant figure will not result in any tax payable situation in India.

• Seller: US Company (non-resident)
• Buyer: UK Entity (non-resident)
• Asset: Shares in an Indian Company
• Acquisition Price = Sale Price → No capital gains

Whether to file Form 15CA/CB despite no tax liability in India & Whether it is advisable to file Form 15CA/CB in view of provisions of section 195 read with Rule 37BB, even if  the transaction is NOT resulting in any capital gain? & If yes, whether Part B/C/D of Form 15CA should be filed?

Solution

Legal Position under Income Tax on Whether Form 15CA/CB Required When Transfer of Shares & No Capital Gains:

• Section 195(6) (Income-tax Act, 1961): Any person responsible for paying to a non-resident any sum whether or not chargeable under the Act, shall furnish the prescribed information.
• Rule 37BB (Income-tax Rules, 1962): Requires filing of Form 15CA for any remittance to a non-resident and Form 15CB when the remittance is taxable and exceeds ₹5 lakh, unless specifically exempted. However, Form 15CA is not required if the remittance is covered under the exempt list (which this case is not, since transfer of shares is not on the exemption list).

Applicability in This Case

• Is the transaction chargeable to tax in India?
  • Yes, under Section 9(1)(i) of the Income-tax Act, any transfer of a capital asset situated in India (i.e., shares of an Indian company) is deemed to be income accruing in India.
  • Even if no capital gain arises due to no appreciation, the transaction is still chargeable — this is critical.
• Is TDS required?
  • Since no income arises, no actual TDS is required. But compliance with Form 15CA/CB is still triggered.
• Which Part of Form 15CA applies?
  • Part C should be filed, along with Form 15CB issued by a chartered accountant, because:
    • The transaction is chargeable to tax in India.
    • The amount exceeds ₹5 lakh.
    • A certificate from AO under Section 197 has not been obtained.
• What if no Form 15CA/CB is filed?
  • Non-filing can attract a penalty under Section 271-I (up to ₹1 lakh).
  • If the remitter/bank is involved and fails to ensure compliance, they may also face scrutiny.

Our recommended action in this case :

• Obtain a CA Certificate (Form 15CB): Explaining why the amount is not taxable due to absence of gains.
• File Part C of Form 15CA: Based on Form 15CB.
• Alternatively, consider obtaining a Nil/Lower TDS certificate under Section 197 from the AO to shift compliance to Part B (less complex).
• Document everything. Maintain documentation to support the computation of no capital gain, including acquisition and sale agreements, bank remittance trail, and valuation (if any).

Conclusion

Even though no tax is payable, the transaction is technically chargeable to tax under the Act. Hence, Form 15CA (Part C) and Form 15CB are required. To reduce complexity or risk, applying for a lower or NIL TDS certificate from the assessing officer is a safer and more practical route.