Understanding Form 15CA and 15CB: Your Guide to Foreign Remittance Compliance

Form 15CA

Understanding Form 15CA and 15CB: Your Guide to Foreign Remittance Compliance

Form 15CA

In today’s globally connected business landscape, cross-border payments have become routine for individuals and enterprises alike. However, these transactions are subject to tax scrutiny to ensure compliance with Indian tax laws. To monitor and regulate such foreign remittances, the Income Tax Department mandates the submission of Form 15CA and Form 15CB in specified cases.

These forms act as key instruments for tracking payments to non-residents and ensuring that the correct tax has been deducted at source (TDS), wherever applicable. Moreover, recent trends show that the department has been issuing notices under Section 133(6) and Section 148A based on the information declared in these forms—making it all the more important for taxpayers to understand and comply with the related provisions.

Legal Framework Governing Foreign Remittances

Two main legal provisions govern the compliance related to foreign remittances:

  • Section 195(6) of the Income Tax Act, 1961: Mandates that any person making a payment to a non-resident must furnish information about the transaction, regardless of whether it is taxable.

  • Rule 37BB of the Income Tax Rules, 1962: Details the procedure, forms, and exemptions applicable to such transactions.

What is Form 15CA?

Form 15CA is a declaration submitted by a resident remitter before sending any payment to a non-resident or foreign entity. The form is filed online with the Income Tax Department and must be submitted to the Authorized Dealer (generally the remitting bank) prior to initiating the remittance.

Purpose of Form 15CA

  • To ensure tax deduction at source (TDS) on payments made to non-residents, where applicable.

  • To provide transparency and traceability of foreign remittances.

  • To act as a compliance checkpoint before money leaves India.

Four Parts of Form 15CA

PartApplicability
Part ATaxable remittance not exceeding ₹5 lakh in a financial year
Part BTaxable remittance exceeding ₹5 lakh, and a certificate/order under Section 195(2), 195(3), or 197 is obtained
Part CTaxable remittance exceeding ₹5 lakh, and a Form 15CB (CA certificate) is obtained
Part DRemittance not chargeable to tax under the Income Tax Act

What is Form 15CB?

Form 15CB is a certificate issued by a Chartered Accountant (CA), confirming that the proposed remittance complies with the provisions of the Income Tax Act and relevant Double Taxation Avoidance Agreements (DTAAs).

This form is mandatory before filing Part C of Form 15CA—when the remittance exceeds ₹5 lakh and is taxable.

Key Details in Form 15CB

  • Details of the remitter and beneficiary

  • Nature and purpose of the remittance

  • Currency and amount of remittance

  • Applicability of tax under Indian law

  • Relevant DTAA provisions, if any

  • Rate and amount of TDS deducted

When is Form 15CB Not Required?

You do not need Form 15CB if:

  • The remittance is not taxable under the Income Tax Act.

  • The remittance is ≤ ₹5 lakh during the financial year.

  • A lower/nil TDS certificate has been issued by the Assessing Officer.

Transactions Exempted from Filing Forms 15CA and 15CB

To reduce the compliance burden, Rule 37BB exempts certain transactions from the requirement to file Form 15CA/15CB.

No Filing Required For:

  • Remittances by individuals that do not require RBI approval

  • 33 specified categories of transactions such as:

    • Imports of goods

    • Travel expenses

    • Tuition and education fees

    • Investments abroad

A complete list of exempted categories is available on the Income Tax Department’s website.

Filing Procedure for Form 15CA/15CB

Follow these steps to submit the forms:

  1. Log in to the Income Tax e-Filing Portal.

  2. Go to: e-File > Income Tax Forms > File Income Tax Forms.

  3. Select the applicable form: 15CA or 15CB.

  4. Fill in the relevant details and validate using Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

  5. Submit the acknowledgment copy to your Authorized Dealer (Bank) before processing the remittance.

Penalties for Non-Compliance

Non-filing or incorrect filing of these forms can lead to:

  • Penalty under Section 271-I: ₹1,00,000 for failure to furnish Form 15CA/CB or for providing incorrect information.

  • Bank refusal to process the remittance in absence of proper documentation.

Practical Tips for Hassle-Free Compliance

  • Always consult a Chartered Accountant for high-value or complex remittances.

  • Maintain records such as invoices, agreements, and Tax Residency Certificates (TRC).

  • Use the latest utility and follow updated guidelines from the Income Tax portal.

Read More: ITR Filing 2025: A Step-by-Step Guide and Important Deadlines

In the evolving regulatory environment, understanding the compliance requirements related to foreign remittances is crucial. Filing Form 15CA and Form 15CB accurately helps avoid penalties, ensures smooth cross-border transactions, and keeps your tax affairs in order. When in doubt, seek professional advice to stay compliant and reduce the risk of scrutiny.

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NRI Taxation in India: Myths, Realities & Benefits of Filing Tax Returns

NRI

NRI Taxation in India: Myths, Realities & Benefits of Filing Tax Returns

NRI

No, NRIs Are Not Exempt from Income Tax in India

A widely circulated misconception on social media claims that from April 1, 2025, all Non-Resident Indians (NRIs) will be exempt from paying income tax in India if their Indian income is below ₹12 lakhs. This is completely inaccurate.

The zero-tax benefit for income up to ₹12 lakhs introduced in the Union Budget 2025 is exclusively for Resident Individuals who opt for the New Tax Regime. It is not applicable to NRIs, Hindu Undivided Families (HUFs), or non-resident taxpayers.

What Has Actually Changed?

Under the New Tax Regime, effective from April 1, 2025, resident individuals earning up to ₹12 lakhs annually can avail a rebate of ₹60,000 under Section 87A, effectively reducing their tax liability to zero. However, this rebate is not available to NRIs.

On the contrary, NRIs will now be required to file their Income Tax Return (ITR) in India if their total Indian income exceeds ₹4 lakhs in a financial year starting April 1, 2025. Until FY 2024–25, this threshold was ₹3 lakhs under the new regime.

When Is an NRI Required to File a Tax Return in India?

As per Indian tax laws:

  • NRIs must file a return if their total taxable income in India exceeds ₹4 lakhs from FY 2025–26 onward (₹3 lakhs for FY 2024–25).

  • They are taxed only on income earned or accrued in India, not on their global income.

Common Reasons NRIs Avoid Filing Tax Returns

Despite being liable, many NRIs fail to file returns due to:

  • Misunderstanding the legal requirement.

  • Perception of income being too small.

  • Dependence on Tax Deducted at Source (TDS) as full and final tax.

  • Lack of time or documentation.

  • Belief that TDS eliminates the need for return filing.

Why NRIs Should File Their Tax Returns in India

Even if not mandatorily required, filing a return offers several benefits:

✅ Claim Refund for Excess TDS

Most of an NRI’s income in India — including interest on NRO accounts, dividends, rental income, and capital gains — is subject to TDS at flat rates. Often, the actual tax liability is lower than the TDS deducted. Filing a return is the only way to claim a refund for such excess deduction.

✅ Avoid Future Tax Notices or Litigation

Non-filing may lead to scrutiny assessments, reopening of cases, or notices for source of funds (especially in property transactions). Filing a return prevents avoidable litigation and establishes a clear record with the Income Tax Department.

✅ Helpful for Overseas Tax Reporting

Indian tax returns act as a supporting document while reporting Indian income in the home country. This ensures compliance with global tax laws and transparency.

✅ Claim Foreign Tax Credit (FTC)

Filing a return enables NRIs to claim credit in their home country for taxes paid in India, thus avoiding double taxation.

NRI

✅ Ease of Financial Transactions and Loan Processing

Having a regular tax filing history in India is helpful when applying for loans, buying property, or conducting high-value transactions in India.

Read More: Preparing for a GST Department Audit: Key Steps and Focus Areas

It is important to stay informed and compliant, especially with evolving tax laws. The new rebate of ₹60,000 under Section 87A is a welcome move—but it benefits only Resident Individuals, not NRIs.

Regardless of income thresholds, NRIs are strongly advised to file their Income Tax Return in India to claim refunds, stay compliant, and avoid potential legal complications in the future.

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Unlock Foreign Tax Credits: A Step-by-Step Guide for Indian Residents

Foreign Tax Credits

Unlock Foreign Tax Credits: A Step-by-Step Guide for Indian Residents

Foreign Tax Credits

Indian residents who earn income from overseas often find themselves facing double taxation—once in the country where the income is earned and again in India, where they are tax residents. To address this, the Indian Income-tax Act provides for Foreign Tax Credit (FTC), which allows taxpayers to claim credit for taxes paid abroad against their Indian tax liability.

🔍 What Is Foreign Tax Credit (FTC)?

Foreign Tax Credit is a tax relief mechanism that allows Indian residents to claim a credit for foreign taxes paid on income that is also taxed in India. It ensures that the same income is not taxed twice due to overlapping tax jurisdictions.

📜 Legal Provisions Governing FTC

  • Section 90 / 90A: FTC is allowed when India has a Double Taxation Avoidance Agreement (DTAA) with the foreign country or specified territory.

  • Section 91: Even in cases where no DTAA exists, FTC can be claimed unilaterally under this section.

  • Rule 128 of Income-tax Rules: This rule governs the manner of computation, conditions, and procedural requirements for claiming FTC.

🌍 Eligibility to Claim FTC

  • The taxpayer must be a resident of India.

  • Foreign income must also be taxable in India.

  • Foreign taxes must have been actually paid or deducted.

  • FTC is allowed only in the year in which the foreign income is offered to tax in India.

🧮 How Is FTC Calculated?

  • FTC is computed source-wise and country-wise.

  • The credit is restricted to the lower of:

    • Tax payable in India on the foreign income, or

    • Foreign tax paid on that income.

Example:

ParticularsAmount (INR)
Doubly taxed income50,00,000
Tax paid in foreign country7,50,000
Tax payable in India on same income15,00,000
Eligible FTC7,50,000

FTC is not available against interest, fee, or penalty payable under the Indian tax laws.

🔄 Treatment of Disputed Foreign Taxes

If foreign taxes are under dispute, FTC can be claimed in the year the dispute is finally settled and taxes are paid, provided:

  • Evidence of settlement and payment is furnished,

  • A declaration is submitted that no refund of such taxes has been or will be claimed,

  • This must be done within six months from the end of the month of settlement.

🔁 Foreign Tax Refunds & Adjustments

If you receive a foreign tax refund after having claimed FTC in India, you must:

  • Revise the Indian return for the year FTC was originally claimed,

  • Submit a revised Form 67 within the prescribed time,

  • This applies whether the refund is due to a carry-back of losses or a revision in average tax rate.

💱 Currency Conversion for FTC

Foreign taxes paid must be converted to INR using the telegraphic transfer buying rate of the last day of the month preceding the month of tax payment.

🇺🇸 Special Note on USA Taxes under India-USA DTAA

Only Federal taxes paid in the USA qualify for FTC in India. The following do not qualify:

  • State income taxes,

  • Social Security taxes,

  • Personal holding company tax,

  • Accumulated earnings tax.

📄 Documents Required to Claim FTC

As per Rule 128, the following must be furnished:

  1. Form 67, which includes:

    • Details of foreign income offered to tax,

    • Taxes paid or deducted abroad.

  2. One of the following documents:

    • Certificate from foreign tax authority,

    • Certificate from deductor,

    • Self-signed declaration by the taxpayer,

      • Accompanied by bank challan/acknowledgment or payment proof.

📅 Form 67 Filing Deadline

Form 67 must be filed:

  • On or before the end of the relevant assessment year, and

  • Along with the original (u/s 139(1)) or belated (u/s 139(4)) return of income.

In case of updated returns (u/s 139(8A)), Form 67 must be filed before filing the updated return.

Foreign Tax Credits

🌐 OECD Guidelines: Methods to Avoid Double Taxation

The OECD Model Tax Convention outlines two main methods to relieve double taxation:

  1. Exemption Method (Article 23A): Income is taxed only in one country.

  2. Credit Method (Article 23B): Taxes paid abroad are credited against domestic tax liability.

India typically follows the Credit Method, aligning with Article 23B in most of its DTAAs.

Read More: New Tax Regime: A 7-Point Checklist for Taxpayers Filing ITR

✅ Key Takeaways

  • FTC prevents double taxation on foreign income taxed in India.

  • Separate computation is required for each income source and country.

  • Timely and accurate filing of Form 67 is crucial to claim FTC.

  • Keep a close watch on any subsequent foreign tax refunds and revise returns if needed.

provisions can significantly optimize your tax outgo. Ensure documentation is complete and deadlines are met to fully benefit from the foreign tax credit mechanism.

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