The government has recently made absolute amends in the policies involving the payments or remittance given to a Non Resident or a Foreign Agency with money travelling from the Indian Economy. With these revised rules and sections the face of 15CA and 15CB and hence we get to see new taxation procedure for such transactions.
By following the current rule, a person or an institution is liable to submit the 15CA online for availing the transaction facility. And, 15CB is here for safeguarding your easy tax deductions as per the IT norms for the NRs and Foreign Investors.
Going by the earlier law, there was a need for a furnished certificate issued under the specified guidelines of RBI for making remittance to NRs and Foreign Companies. The certifications were demanded because there would be no tax deduction if the NRs were to receive payments without prior paperwork.
Hence, for the better monitoring and tax deduction under the Income-tax guidelines, it was collectively decided that all the transactions must be tracked with the help of e-filling of such certificates.
Presently, the 15CA and 15CB are functioning as the two consecutive undertakings in the form of e-Forms(15Ca) and a certified proof (15CB) validated by the Chartered Accountants for simplifying taxations.
But, the primary question here is why do we need these laws at all? What is the usage of 15CA and 15CB?
15CA is an undertaking made by remitters which serve as a record of all the chargeable taxes levied over the money handed over to the NRC. To clarify it further the form is a written and documented legal proof of the taxability of the Indian currency travelling out of the nation via NRs and Foreign Companies.
The revised rules declare it mandatory as a duty is cast on dealers or banks when the payments are made along with these forms. The step safeguards simplified taxation proceedings for both the ends. The paperwork can be easily obtained and given to the authorities as proof of tax clearance.
The form needs to be signed by the Chartered Accountants. The structure provides a certificate for the proper charging of taxes and duties levied over the payments. The form 15CA is filled by taking information mentioned in 15CB. There are instances where NRs and the payers were faced with double taxation; hence the law was made for stopping such occurring and a safe taxation method.
UNDERSTANDING THE BASIC ACT
Section 195, Income Tax Act, 1961, clearly mentions that every Indian Citizen, making any transaction of Indian money to the Indians living outside the country. They are liable to take away TDS from the payment issued, provided the transaction comes under the category of ‘Chargeable Taxation’, Income Tax Law. The mandation of submitting 15CA and 15CB are a legal step taken for instilling the revised act.
The form 15CA must be submitted for every transaction made to NOn-Indian agencies or NRs. The virtual form is generally filled online and can be done quickly. There are some instances where a certificate follows the filling of this form from Chartered Accountants in the form of 15CB. The fundamental idea behind was to collect the taxes at the primal stage as it is rather difficult to collect taxes from the NRs at later stages.
The Income Tax department recently reconsidered some of the parameters governing the submission and content of these two forms and made some amends valid from 1st April 2016. Below mentioned is a list of all the major amends:
- All the transaction not falling under RBIs approval category will not be needing the undertaking and certification given as these two forms.
- All the payments falling under the criterion of 37BB, which does not mandate the filling of 15CA and 15CB are further increased from 28 to 33, including the import transactions as well.
- 15CB formsare now only needed by NRs when the remittance exceeds five lakhs and is held taxable.
- Whenever an Indian makes payments or remits to NRs, the banks or the agencies involved must check whether the tax was covered or not.
- Presently there are 34 different payments for which you don’t need to submit the two forms. This section includes several transactions such as investments in equity-money, in loan-security amount, loans, packages or bookings or Airlines, business travels, real-estate shares, pilgrimage, medicare, family maintenance and savings and other transactions below five lakhs.