When is a Form 15CB from a CA mandatory, and are there remittances that are exempt from both Form 15CA and 15CB?
A CA-certified Form 15CB is mandatory before filing Form 15CA (Part C) for all remittances to non-residents that are taxable in India and exceed Rs 5 lakh in aggregate during the financial year, as required under Rule 37BB of the Income Tax Rules 1962 read with Section 195 of the Income Tax Act 1961. However, Rule 37BB(3) lists 33 specified purposes (including remittances toward imports of goods, foreign travel, and educational expenses) for which neither Form 15CA nor Form 15CB is required. For taxable remittances below Rs 5 lakh, Form 15CA (Part B) is required but Form 15CB is not. CBDT Circular No. 11/2021 relaxed the requirement temporarily during the portal migration, but the standard Rule 37BB framework is currently fully operative.
What tax determination does our CA make when certifying Form 15CB for a payment to a foreign software company?
When certifying Form 15CB for a payment to a foreign software company, the CA must determine whether the payment constitutes royalty under Section 9(1)(vi) of the Income Tax Act 1961 (which includes amounts paid for use of computer software per Explanation 4) or fees for technical services under Section 9(1)(vii), or a business payment not taxable in India if the recipient has no Permanent Establishment here. Post the Supreme Court's ruling in Engineering Analysis Centre of Excellence v. CIT (2021), off-the-shelf software purchases are not royalty and are not taxable in India, meaning Form 15CB should reflect nil withholding — but customised or licensed software may still qualify as royalty. The CA must examine the contract, the relevant Double Taxation Avoidance Agreement (if the foreign company provides a Tax Residency Certificate under Section 90(4)), and verify the nature of the software being paid for before certifying the applicable rate.
What is the procedure for filing Form 15CA on the Income Tax portal, and what are the consequences of non-filing?
Form 15CA must be filed electronically on the Income Tax e-filing portal (incometax.gov.in) by the remitter before making the remittance, and the generated acknowledgement number must be submitted to the authorised dealer bank as a precondition for releasing the foreign exchange under the RBI's AD bank guidelines. The remitter's CA first uploads Form 15CB on the portal, and the Form 15CB acknowledgement number is then cited in Form 15CA Part C. Failure to furnish Form 15CA before remittance is an offence under Section 271-I of the Income Tax Act 1961, attracting a penalty of Rs 1 lakh per default. The AD bank is obligated under RBI Master Circular on Remittances to withhold the remittance if Form 15CA (or the applicable exemption declaration) is not produced.
If the foreign recipient provides a lower withholding certificate from their home country's tax authority, does that reduce our withholding obligation?
A certificate from a foreign tax authority does not by itself reduce the Indian withholding obligation — the relevant instrument is a certificate of lower deduction issued by the Indian Income Tax Officer under Section 197 of the Income Tax Act 1961, obtained by the non-resident (or by the remitter on their behalf) by filing an application in Form 13 with the jurisdictional Assessing Officer. Separately, if a valid DTAA applies and the non-resident furnishes a Tax Residency Certificate under Section 90(4) of the ITA 1961 along with Form 10F (now to be filed on the Indian e-filing portal), the DTAA rate may be applied in Form 15CB, which could be nil or lower than the domestic rate. Without either a Section 197 certificate or a valid TRC with Form 10F, the CA must certify withholding at the applicable Section 195 rate or the DTAA rate, whichever is beneficial as per Section 90(2).
What details from the underlying contract must we provide to our CA for the Form 15CB certification process?
To certify Form 15CB accurately, the CA requires: the complete agreement or invoice identifying the nature of payment (service, royalty, interest, dividend, etc.), the country of residence of the payee and their Tax Identification Number for DTAA application, the Tax Residency Certificate and Form 10F if a DTAA rate is to be applied, banking details of the remitter and payee, and the exact remittance amount in foreign currency along with the conversion rate. The CA must also verify under Rule 37BB whether any prior remittances to the same party in the same financial year have been made (to assess the Rs 5 lakh aggregate threshold) and whether the remittance falls within an exempt category under Rule 37BB(3). Providing incomplete contractual information may result in the CA certifying an incorrect rate, exposing the remitter to interest under Section 201(1A) at 1.5% per month for under-deduction.
