Form 15CA & 15CB: Complete Guide to Cross-Border Remittance Compliance

This article is part of our Complete Guide to Profit Repatriation & Cross-Border Payments from India. Here we dive deep into the Form 15CA and 15CB requirements that every foreign company must navigate before sending money out of India.

Why Form 15CA and 15CB Matter for Foreign Companies

Every rupee that leaves India as a payment to a non-resident passes through a dual compliance gate: the Income Tax Department's Form 15CA/15CB framework and the authorized dealer bank's verification process. Get either wrong, and the remittance gets blocked at the bank level — sometimes for weeks.

The system was designed to ensure that tax is properly deducted at source under Section 195 of the Income Tax Act before any payment reaches a non-resident. In practice, it creates a documentation bottleneck that foreign companies must plan for well in advance of each outbound payment.

During FY 2024-25, Indian banks processed over USD 32 billion in cross-border remittances subject to the 15CA/15CB framework. The Income Tax Department uses this data to track tax leakage on payments to non-residents, making compliance both a legal obligation and a practical necessity.

Understanding the Legal Framework

Section 195 of the Income Tax Act

Section 195 requires any person making a payment to a non-resident (other than salary) to deduct tax at source (TDS) if the payment is chargeable to tax in India. The critical phrase is "chargeable to tax" — this means TDS applies not just when income is clearly taxable, but whenever there is a reasonable basis for treating the payment as Indian-source income.

There is no threshold exemption for Section 195. Unlike domestic TDS provisions where certain thresholds apply (e.g., INR 30,000 for professional fees under Section 194J), Section 195 applies to the first rupee of any taxable payment to a non-resident.

Rule 37BB — The Procedural Backbone

Rule 37BB of the Income Tax Rules, 1962, prescribes the procedure for furnishing information about payments to non-residents. This rule was substantially amended in 2013 and further refined in subsequent years, creating the current four-part Form 15CA structure and the Form 15CB certification requirement.

The rule also specifies 33 categories of payments that are exempt from the Form 15CA/15CB requirement entirely, including payments for imports (which was a major relief when added to the exemption list).

The Four Parts of Form 15CA Explained

Form 15CA is not a single form — it is a four-part classification system, and the part you file depends on the nature and amount of your remittance. Filing the wrong part is a common error that can delay your payment and attract scrutiny.

Part A: Remittances Up to INR 5 Lakh

Part A applies when the remittance, or aggregate of remittances, does not exceed INR 5 lakh during the financial year. This is a self-declaration by the remitter and does not require a Chartered Accountant's certificate. The remitter provides basic details including the name and address of the recipient, the country of remittance, and the nature of the payment.

Key point: The INR 5 lakh threshold is cumulative for the entire financial year, not per transaction. If you made a remittance of INR 3 lakh in April and another of INR 3 lakh in September, the second remittance pushes the aggregate above INR 5 lakh, requiring Part C (with Form 15CB) rather than Part A.

Part B: Remittances with AO Order/Certificate

Part B applies when remittances exceed INR 5 lakh during the financial year and the remitter has obtained an order or certificate from the Assessing Officer under Section 195(2), Section 195(3), or Section 197 of the Income Tax Act. These orders typically specify a lower or nil TDS rate based on the specific facts of the case.

In practice, obtaining an AO order takes 4-8 weeks and requires a detailed application with supporting documentation. This route is useful for recurring payments of the same nature where you want certainty on the TDS rate applicable.

Part C: Remittances with Form 15CB Certificate

Part C is the most commonly filed part for foreign companies. It applies when remittances exceed INR 5 lakh during the financial year and the remitter has obtained a Form 15CB certificate from a Chartered Accountant. The CA certifies the nature of the payment, the applicable TDS rate (whether under the Income Tax Act or under a Double Tax Avoidance Agreement), and confirms that tax has been properly deducted.

The CA's certificate in Form 15CB must specify:

• Nature of the remittance and the applicable section of the Income Tax Act
• Whether the remittance is subject to tax in India and the relevant rate
• Whether a DTAA applies and the treaty rate, if lower than the domestic rate
• Details of tax deducted at source, including TAN, challan details, and amount
• Whether a Tax Residency Certificate (TRC) and Form 10F have been obtained from the recipient

Part D: Remittances Not Chargeable to Tax

Part D applies when the remittance is not chargeable to tax under the Income Tax Act. This includes payments that fall outside the scope of Indian taxation — for example, payments for the import of goods (which are not "income" under the Act), or payments that are exempt under a specific provision.

Even though no tax is payable, the remitter must still file Part D as an information return. Many companies mistakenly assume that if no tax is due, no filing is required. This is incorrect — the bank will still require a 15CA acknowledgment before processing the remittance.

Form 15CB: The CA Certification Process

Form 15CB is the Chartered Accountant's certificate that accompanies Part C of Form 15CA. It is the most documentation-intensive element of the cross-border remittance process and the one that causes the most delays for foreign companies.

What the CA Certifies

The CA must certify specific facts about the remittance, not merely rubber-stamp the company's declaration. The certification covers:

• Nature of payment: Whether it is dividend, interest, royalty, fees for technical services, business profits, or another category
• Taxability assessment: Whether the payment is taxable in India under the Income Tax Act
• DTAA applicability: If a tax treaty exists with the recipient's country, whether the treaty rate is lower than the domestic rate
• TDS compliance: Confirmation that the correct amount of TDS has been deducted and deposited with the government
• Supporting documentation: That the TRC, Form 10F, and other treaty-related documents are in order

Documents Required for Form 15CB

To issue Form 15CB, the CA will typically require the following documents from the company:

• Copy of the invoice or agreement for the payment
• Board resolution authorizing the remittance
• Tax Residency Certificate (TRC) of the non-resident recipient
• Form 10F completed by the non-resident recipient
• No Permanent Establishment (PE) declaration from the non-resident
• Copy of the relevant DTAA provisions, if claiming treaty benefits
• TDS challan showing tax deposited with the government
• PAN of the non-resident (or Tax Identification Number if PAN is not available)

Timeline and Cost

A CA typically takes 1-3 working days to review documents and issue Form 15CB, assuming all documentation is in order. The professional fees range from INR 3,000 to INR 15,000 per certificate, depending on the complexity of the transaction and the city.

For companies with monthly or quarterly recurring payments, the cost adds up quickly. Some firms negotiate annual retainer arrangements with their CA for 15CB certifications, which can reduce the per-certificate cost by 30-40%.

Claiming Lower TDS Rates Under DTAA

One of the most valuable aspects of the Form 15CB process is the ability to claim lower TDS rates under India's network of Double Tax Avoidance Agreements. India has active DTAAs with over 90 countries, and the treaty rates are often significantly lower than domestic rates.

Domestic vs. Treaty TDS Rates

Requirements for Claiming Treaty Benefits

To claim the lower DTAA rate in Form 15CB, the following documents must be on file:

• Tax Residency Certificate (TRC): Issued by the tax authority of the recipient's home country, confirming they are a tax resident there. This is mandatory under Section 90(4) of the Income Tax Act.
• Form 10F: A declaration by the non-resident providing their tax identification number, residential status, nationality, and the period for which the TRC is applicable.
• No PE Declaration: A written confirmation from the non-resident that they do not have a permanent establishment in India (relevant for business profits and fees for technical services).

Without these documents, the CA cannot certify the treaty rate, and the domestic rate will apply — resulting in higher TDS for the company.

Step-by-Step Filing Process

Here is the exact workflow for filing Form 15CA and 15CB on the Income Tax e-Filing portal:

Step 1: Gather Documentation

Before approaching your CA, compile all supporting documents: the invoice, agreement, TRC, Form 10F, No PE declaration, and TDS challan. Missing even one document will delay the certification.

Step 2: CA Issues Form 15CB Online

The CA logs into the Income Tax e-Filing portal using their credentials, fills in Form 15CB with the remittance details, and digitally signs it. The system generates a unique acknowledgment number for the 15CB.

Step 3: File Form 15CA Online

The remitter (or their authorized representative) logs into the e-Filing portal and files Form 15CA Part C, referencing the 15CB acknowledgment number. Upon submission, the system generates a 15CA acknowledgment.

Step 4: Submit to Authorized Dealer Bank

The 15CA acknowledgment number is provided to the authorized dealer (AD) bank along with the remittance instructions. The bank verifies the 15CA filing on the Income Tax portal before processing the remittance.

Step 5: Bank Processes Remittance

Once the bank confirms the 15CA filing, it processes the outward remittance under FEMA regulations. The entire process from documentation to bank remittance typically takes 3-5 working days if all documents are in order.

Payments Exempt from Form 15CA/15CB

Rule 37BB specifies 33 categories of payments where Form 15CA and 15CB are not required. Key exemptions that foreign companies frequently encounter include:

• Payment for imports of goods (the most commonly used exemption)
• Payments from an Indian resident's own funds held in RFC (Resident Foreign Currency) accounts
• Payments by way of gift or donation to non-residents
• Travel-related payments through authorized money changers
• Payments for international call charges to foreign telecom operators
• Payments for medical treatment abroad
• Payments for education abroad

However, the exemption for imports is the most operationally significant. If your Indian subsidiary pays a foreign supplier for goods imported into India, no 15CA/15CB is required. But if the same subsidiary pays the foreign parent for management services, the full 15CA/15CB process applies.

Penalty for Non-Compliance: Section 271-I

Section 271-I of the Income Tax Act prescribes penalties for failure to furnish, or furnishing inaccurate information in, Form 15CA and 15CB. The penalty provisions are straightforward but significant:

• Penalty amount: INR 1,00,000 (one lakh) for each default
• What constitutes a default: Failing to file Form 15CA before remittance, filing without the required Form 15CB, or furnishing inaccurate information in either form
• Reasonable cause defense: Under Section 273B, no penalty can be imposed if the defaulter proves reasonable cause for the failure

Beyond the statutory penalty, non-compliance creates practical problems. Banks will refuse to process remittances without valid 15CA acknowledgments, and the Income Tax Department may treat the failure as an indicator of potential tax evasion, triggering scrutiny of other cross-border transactions.

Common Mistakes Foreign Companies Make

Mistake 1: Not Tracking Cumulative Remittances

The INR 5 lakh threshold is per financial year and cumulative across all remittances to all non-residents. Companies that make multiple small payments often lose track and inadvertently cross the threshold without filing Part C with Form 15CB.

Mistake 2: Using Domestic TDS Rates When Treaty Rates Are Available

Many companies default to the domestic TDS rate of 20% (plus cess) without checking whether a lower DTAA rate is available. For a company remitting INR 1 crore in royalties to a US parent, the difference between the domestic rate (20.8%) and the India-US DTAA rate (10-15%) is INR 5.8-10.8 lakh — a significant cash flow impact.

Mistake 3: Filing the Wrong Part of Form 15CA

Filing Part A when Part C is required (because cumulative remittances exceed INR 5 lakh) or filing Part D when the payment is actually taxable are common errors that can result in Section 271-I penalties.

Mistake 4: Not Obtaining TRC and Form 10F in Advance

Foreign parent companies often delay providing their Tax Residency Certificate and Form 10F, which means the Indian subsidiary cannot claim treaty benefits and must deduct tax at the higher domestic rate. Getting these documents should be part of the annual compliance calendar.

Mistake 5: Treating Form 15CA/15CB as a One-Time Exercise

Each remittance requires a separate Form 15CA filing. Companies that set up recurring monthly payments (management fees, royalties, interest) must file 15CA every month, and if the cumulative amount exceeds INR 5 lakh, they need a fresh 15CB for each filing.

Best Practices for Efficient 15CA/15CB Compliance

• Maintain a remittance tracker: Track all outbound remittances by financial year, nature of payment, and cumulative amount. This prevents threshold miscalculations.
• Collect TRC and Form 10F at the start of each financial year: Ask your foreign parent or counterparty to provide these documents in April, so they are ready when needed.
• Engage a CA on retainer for 15CB certifications: If you make regular outbound payments, a retainer arrangement is more cost-effective and ensures faster turnaround.
• Build 5 working days into payment timelines: When promising payment deadlines to foreign counterparties, factor in the 15CA/15CB processing time.
• File Form 15CA before instructing the bank: The bank will not process the remittance without the 15CA acknowledgment. Filing in advance prevents last-minute delays.
• Keep a compliance file for each remittance: Store the 15CA acknowledgment, 15CB certificate, TDS challan, TRC, Form 10F, and bank confirmation together for each payment. This is essential for audit defense.

Key Takeaways

• Form 15CA has four parts — the correct part depends on the remittance amount, taxability, and whether you have an AO order or CA certificate
• Form 15CB (CA certificate) is mandatory for taxable remittances exceeding INR 5 lakh cumulative in a financial year
• DTAA treaty rates can reduce TDS by 5-10 percentage points, but require TRC, Form 10F, and No PE declaration
• Penalty under Section 271-I is INR 1 lakh per default for non-filing or inaccurate filing
• The entire process takes 3-5 working days — build this into your payment timelines
• 33 categories of payments are exempt from 15CA/15CB, with import payments being the most commonly used exemption