Form 15CA and 15CB: a practitioner’s walk-through

Any payment from India to a non-resident — whether it is a software royalty, a foreign vendor invoice, an NRI’s remittance of sale proceeds from a property, a dividend to a foreign shareholder, a deputation reimbursement — passes through two parallel checks before the AD bank releases the money. The first is the Section 195 withholding check under the Income-tax Act: is tax to be deducted at source, and if so at what rate. The second is the FEMA check: is the transaction permissible, and what is its purpose code. Form 15CA and Form 15CB are how both checks get documented.

Where the requirement comes from

The mechanism is in Section 195(6) of the Income-tax Act, 1961 read with Rule 37BB of the Income-tax Rules, 1962. The Act requires the person responsible for the remittance to furnish information about it in a prescribed form (Form 15CA), and where the remittance is subject to TDS, an accountant’s certificate (Form 15CB) is the supporting document on which Form 15CA is filed. The forms are filed on the e-filing portal; the AD bank executing the remittance requires both before processing.

The four Parts of Form 15CA

Form 15CA is not one form — it is four. The rule structure splits remittances into four buckets, and each bucket needs a different Part:

• Part A — small remittances. Used when the aggregate of remittances in the year does not exceed Rs. 5 lakh. No CA certificate (no 15CB) required.
• Part B — remittances above the small threshold, where the remitter has obtained a lower or nil withholding order under Section 195(2) / 195(3) / 197 from the Assessing Officer. The order itself substitutes for the 15CB.
• Part C — remittances above the small threshold that are taxable in India under the Income-tax Act and the applicable DTAA. Form 15CB is required. This is the most common case.
• Part D — remittances that are not taxable in India under domestic law (for example, payments listed in the “Specified List” in Rule 37BB Annexure, such as travel for medical treatment, education abroad, gift remittance under LRS within limits, payments by a tour operator). No 15CB required.

Picking the wrong Part is the single biggest cause of AD-bank rejections. The most frequent error is using Part D for a payment that is actually taxable — the bank queries it, the filing goes back to the remitter, and the wire is delayed.

What goes in Form 15CB

Form 15CB is the chartered accountant’s certificate. It says, in substance: I have examined the agreement, the nature of the transaction, the residential status of the recipient, the applicable DTAA, and I certify that the tax to be deducted at source on this remittance is X% of Y. The chartered accountant signs it with a UDIN. The form has fields for:

• The remittance amount and currency
• The country of the recipient
• The nature of the remittance (matched to an RBI Purpose Code)
• The relevant section of the Income-tax Act under which TDS applies (typically Section 195)
• The applicable DTAA Article (e.g., Article 12 for royalties / FTS, Article 7 for business profits)
• Whether a Tax Residency Certificate has been provided by the non-resident (Section 90(4) requires one for treaty benefit)
• The rate of TDS, the amount of TDS, and the amount payable after TDS

Form 15CB cannot be issued without examining the underlying documents. We routinely ask for: the invoice or agreement, the PAN (or NRI declaration of no-PAN), the Tax Residency Certificate of the recipient, a Form 10F filing (mandatory since the digitisation of treaty claims), and the No-PE declaration from the recipient. Without these, the 15CB cannot honestly cite treaty rates.

The chronology of a typical remittance

1. Remitter identifies the payment and shares the documentation pack with the CA.
2. CA reviews the agreement, classifies the income head (royalty, FTS, business income, dividend, capital gain), determines residency of the recipient, checks the DTAA, calculates the TDS rate.
3. CA issues Form 15CB on the e-filing portal with a UDIN.
4. Remitter logs into the e-filing portal, picks the relevant Part of 15CA, references the 15CB acknowledgement number (for Part C), and submits 15CA.
5. Remitter downloads acknowledgement copies of both forms and presents them to the AD bank with the remittance request.
6. AD bank verifies form-portal records (most major banks check live), debits the remitter’s account, deducts the TDS as instructed, and processes the SWIFT.
7. Remitter deposits the TDS to the credit of the Central Government within the prescribed time, and reports the deduction in the quarterly TDS return (Form 27Q / its successor under ITA 2025).

The four mistakes we see most

Mistake 1: Filing 15CA before 15CB is issued

Part C 15CA requires a 15CB acknowledgement number. If the 15CB has not been generated yet, the 15CA submission fails. The order matters — CA issues 15CB first, remitter then files 15CA referencing it.

Mistake 2: Wrong RBI Purpose Code

RBI Purpose Codes (S0001, S0102, S0306, etc.) classify the remittance for FEMA reporting. The AD bank uses the Purpose Code to apply the right FEMA framework. A wrong code triggers a query at the bank level even when the tax position is correct. Royalty as “business services” or FTS as “other professional services” are common mismatches. We keep the RBI Purpose Code Master sheet open during 15CB drafting and confirm the code with the remitter before filing.

Mistake 3: Treaty benefit without TRC / Form 10F

Section 90(4) requires the non-resident to furnish a Tax Residency Certificate to claim treaty benefit. Since 2022, Form 10F has had to be filed on the income-tax portal by the non-resident, generating an acknowledgement that supports the treaty claim. Many remitters certify Form 15CB at the treaty rate without these documents in hand — this is an exposure both for the CA (whose certificate is unsupported) and for the remitter (whose TDS rate cannot be defended in an assessment).

Mistake 4: Treating reimbursements as untaxable by default

Cross-charges from a parent for shared services, employee secondment cost reimbursements, group-IT cost recoveries — these are often labelled “pure reimbursement” by the remitter and certified under Part D. The reality is more nuanced. Reimbursement-at-cost can be untaxable, but only when the underlying documentation supports it. The default position should be Part C with appropriate TDS; reimbursement treatment requires a written CA opinion supporting the analysis. We see this most often in MNC India arms, and it is the highest-exposure 15CA / 15CB error in our practice.

Penalty exposure

Failure to file Form 15CA / 15CB where required attracts penalty under Section 271I — a flat Rs. 1 lakh for each failure. The penalty is on the remitter, not on the CA. Beyond the penalty, the larger exposure is the disallowance of the underlying expense under Section 40(a)(i) for non-deduction of TDS — which converts a deductible payment into a taxable add-back.

Practical guidance

Two habits help. First, treat 15CA / 15CB as a planning exercise, not a filing exercise — if you know a payment is coming in three weeks, line up the documentation now, get the TRC and Form 10F from the foreign counterparty early, and avoid the last-minute scramble that produces mistakes. Second, keep a register: every cross-border payment, its Purpose Code, its 15CB acknowledgement number, its 15CA acknowledgement number, the date the TDS was deposited, and the quarter of the TDS return it appears in. The register is what an assessment officer asks for — the time to build it is during the payment, not after the notice.

Sources

• Income-tax Act 1961 — Section 195 (deduction of tax on payments to non-residents)
• Income-tax Rules 1962 — Rule 37BB (information to be furnished for payments to non-residents)
• RBI Master Direction on Reporting under FEMA — RBI website (Purpose Codes for outward remittances)
• Income-tax e-filing portal — Form 15CA, Form 15CB and Form 10F