As per the provisions of Income tax act, 1961 new rule has come up which clearly states that 15CA/CB is applicable only if a person is responsible for paying to a non-resident, any interest or salary or any other sum chargeable to tax. Also no CA Certificate is required in Form 15CB and no furnishing of Form 15CA to the Income Tax department for any payment or money transfer out of India that is not taxable.
Requirement of Form 15CA and 15CB if:
Form 15CA Part A need to be furnished only for payment that is taxable but does not exceed Rs. 50,000 or aggregate of payment does not exceed Rs. 250,000 in a financial year.
After obtaining updated CA Certificate in Form 15CB and revised Part B of the Form 15CA need to be furnished to the Income Tax department for any other payment.
Additional details to be provided in new Form 15CB are:
- Taxability under the Income-tax Act without considering the relief of the DTAA
- If income is chargeable to tax in India and relief is claimed under the DTAA, whether TRC has been obtained from the recipient?
- If remittance is on account of capital gains details of amount of short-term, long-term capital gains and the basis of arriving at the taxable income.
Gifts by Resident Indians to NRI’s– With the amendment in the Form 15CB/CA, certification from a CA is not required if a resident is making payment to NRI’s as a gift in cash or cheque. Gifts are always exempt income for Individuals and HUF. Gifts are not chargeable to tax if they are received from relatives and can be in cash or in kind.
Many of our NRI clients had been facing issues in getting their funds repatriated from NRO to their NRE accounts or any other Foreign Accounts even when the source of fund was a Gift received from their relatives. This also created delay in transfer of fund as it required preparation and attestation of Form 15CA/CB by a Chartered Accountant stating the source of fund and the reason for not deducting TDS.
Even though with the new Form 15 CA/CB, NRI’s are relaxed from getting it prepared and submitting it to the Banks, there are still certain guidelines of FEMA which needs to be looked into. Form A2 has to be submitted which is an Application for Remittance Abroad (For Payments other than Imports and Remittances Covering Intermediary Trade. FEMA Declaration, attached at the bottom of the form, also needs to be filled in along with the Purpose and Group name ticked and the respective Product or service. In this case S1302 – . Remittance towards personal gifts and donations can be selected. Click here to download the Form A2.
The amount should be credited to the Non-Resident (Ordinary) Rupee Account (NRO) a/c of the NRI / PIO and credit of such gift amount may be treated as an eligible credit to NRO a/c. The gift amount would be within the overall limit of USD 100,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) for a resident individual. It would be the responsibility of the resident donor to ensure that the gift amount being remitted is under the LRS and all the remittances under the LRS during the financial year including the gift amount have not exceeded the limit prescribed under the LRS.
A resident individual may make a remittance under the Liberalized Remittance Scheme for resident individuals up to USD 75,000 for acquisition of shares (of listed companies) or debt instruments in a company abroad.
In addition to the above, as per relevant guidelines, a person resident in India:
- May purchase a foreign security out of the funds held in RFC account maintained in accordance with Foreign Exchange Management (Foreign Currency accounts by Person Resident in India) Regulations, 2000;
- May acquire bonus shares on the foreign securities held in accordance with the provisions of the FEMA or rules or regulations made there under;
- When not permanently resident in India, may purchase a foreign security from out of his foreign currency resources outside India;
The limit to remit for the purpose of Medical expense is USD 100,000. Remittance in excess of USD 100,000 is allowed without any monetary limit subject to estimate from doctor in India or a doctor/hospital abroad. Reserve Bank approval is required to release exchange if the amount exceeds the estimate from the doctor in India or doctor/hospital abroad.
With the changes in the Form 15CA/CB there have also been changes in the nature of payment for which CA certification is not required. Below is mentioned the list of payments for which Form 15CA/CB is not required and Form A2 would suffice the transfer.
- Indian investment abroad -in equity capital (shares)
- Indian investment abroad -in debt securities.
- Indian investment abroad -in branches and wholly owned subsidiaries.
- Indian investment abroad -in subsidiaries and associates.
- Indian investment abroad -in real estate.
- Loans extended to Non-Residents.
- Payment- for operating expenses of Indian shipping companies operating abroad.
- Operating expenses of Indian Airlines companies operating abroad.
- Booking of passages abroad -Airlines companies.
- Remittance towards business travel.
- Travel under basic travel quota (BTQ).
- Travel for pilgrimage.
- Travel for medical treatment.
- Travel for education (including fees, hostel expenses etc).
- Postal services.
- Construction of projects abroad by Indian companies including import of goods at project site.
- Freight insurance – relating to import and export of goods.
- Payments for maintenance of offices abroad.
- Maintenance of Indian embassies abroad.
- Remittances by foreign embassies in India.
- Remittance by non-residents towards family maintenance and-savings.
- Remittance towards personal gifts and donations.
- Remittance towards donations to religious and charitable institutions abroad.
- Remittance towards grants and donations to other Governments and charitable institutions established by the Governments.
- Contributions or donations by the Government to international institutions.
- Remittance towards payment or refund of taxes.
- Refunds or rebates or reduction in invoice value on account of exports.
- Payments by residents for international bidding.
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