Businesses making foreign payments must comply with Form 15CA and 15CB requirements under Indian tax laws. These forms play a crucial role in helping the Income Tax Department track whether tax has been deducted at source (TDS) on payments made to non-residents. However, in case of any error, you may not only face a significant penalty but also risk disallowance of the related expenses. Therefore, it is essential to ensure accuracy while filing these forms To help you avoid such issues, this blog outlines the rules, highlights recent updates, and provides practical steps—along with three real-world examples—to help businesses stay fully compliant.
What Are Form 15CA and Form 15CB?
Form15CA:
In essence, it is an online declaration form submitted by the remitter to confirm whether the foreign payment is taxable and, furthermore, whether tax has been deducted. It is a System to track foreign remittances under Section 195 of the Income Tax Act.
Form15CB:
A certificate issued by a Chartered Accountant, required if the remittance is taxable and exceeds ₹5,00,000 in a financial year. The CA certifies taxability, rate, and compliance with DTAA provisions.
Types of Form 15CA:
- Part A – For non-taxable remittances up to ₹5 lakh
- Part B – For non-taxable remittances above ₹5 lakh Support by a certificate/order
- Part C – For taxable remittances above ₹5 lakh with CA certificate (Form 15CB)
- Part D – For remittances that are not chargeable to tax under domestic law or DTAA, including part payments of invoices that are entirely non-taxable.
Note: Any part payment toward an invoice that is not taxable can be reported using Part D of Form 15CA.
Applicable Legal Summary:
Form15CA/CB compliance is mandated under Section 195 read with Rule 37BB of the Income Tax Rules. Non-compliance can lead to:
- Penalty of ₹1,00,000 (Section 271-I)
- Expense disallowance under Section 40(a)(i)
- Interest for non-deduction (Section 201)
- FEMA violations for incorrect disclosure to banks
Even if the payment is not taxable, Form 15CA (Part D) is still necessary to inform the bank. 33 exempt categories (as per CBDT Notification 93/2015) don’t need 15CA/CB.
Latest Updates (FY 2024-25)
- Online submission through the Income Tax portal is mandatory.
- Part D can be used for part payments of non-taxable invoices.
- 33 notified transactions (imports, education, travel, etc.) are exempt from both forms.
Practical Examples:
Example 1: – Taxable Payment Over ₹5 Lakh
Scenario: –
A company pays ₹8,00,000 to a foreign consultant for technical services. Since this is a taxable service and the amount is over ₹5 lakh:
- Get Form 15CB from a CA
- File Form 15CA (Part C)
- Submit both to the bank
- TDS @10% ₹80,000; Net payment = ₹7,20,000
Example 2: – Non-Taxable Import Payment
Scenario: –
A company pays ₹12,00,000 to a supplier in Germany for importing raw materials. This transaction is not taxable in India and is also exempt under the government’s notification:
- No Form 15CA or 15CB required
- Provide invoice and import details to the bank
- Bank processes the payment directly
Example 3: Part Payment of Non-Taxable Invoice
Scenario:
A company makes an advance payment of ₹1,50,000 out of a total invoice of ₹6,00,000 for cloud-based software. The entire invoice is not taxable:
- File Form 15CA (Part D) for ₹1,50,000
- No need for Form 15CB
- Submit online and give the form to the bank
Consequences of Non-Compliance:
- ₹1 lakh penalty for not filing Form 15CA/CB
- Disallowance of expense, increasing taxable profits
- Late interest u/s 201
- Remittance blockage or reversal by bank
- Risk of scrutiny by tax authorities or RBI
Best Practices for Businesses
- Confirm taxability for each transaction
- Maintain valid DTAA documents: TRC, Form 10F, No PE declaration
- File Form 15CA online in the correct part (A, B, C, or D)
- Take CA support when the amount exceeds ₹5 lakh
- Keep remittance documentation and filing acknowledgments
FAQs: Form 15CA/CB Compliance:
Q1. You are required to file Form 15CA even if no TDS is deducted ?
You must still file Part D of Form 15CA if the remittance is not taxable but also not exempted under Notification 93/2015.
Q2. Can Form 15CB be issued without an invoice?
A Chartered Accountant needs a valid invoice and, if applicable, an agreement to determine taxability and issue Form 15CB
Q3. Do I need to file 15CA again if I make a second part-payment for the same invoice?
Yes, each payment requires a fresh 15CA declaration, even for part payments.
Q4. What if I wrongly file Part C instead of Part D?
While the remittance may go through, incorrect classification could raise compliance flags. Rectify with a revised filing or written justification if queried.
Q5. What is the role of TRC and Form 10F?
These are mandatory to apply lower TDS under DTAA. Without these, the domestic tax rate will apply.
Conclusion:
Nowadays, you must strictly follow the rules for sending money abroad; ignoring them is no longer an option. Regardless of whether you’re making a small advance payment or, conversely, a major international transfer, properly handling the filing of Form 15CA and 15CB is, therefore, absolutely essential. Missteps can result in penalties, blocked transactions, and audit concerns. With proper documentation, CA certification where needed, and the correct use of Parts A–D of Form 15CA, businesses can stay fully compliant and avoid unnecessary tax burdens.
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This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
Published on: June 16, 2025