Form 15CA/CB Filing in India: When It’s Required and How to Stay Compliant
As a wholly-owned subsidiary (WOS) in India, making cross-border payments is routine for your business. Whether the payment is for technical fees paid to the parent, software subscriptions, royalties, or profit repatriations, global payments are normal in the modern-day business environment.
However, before the authorized dealer bank makes the remittance, there is one critical compliance step that cannot be missed: Form 15CA and 15CB under the Income Tax Act.
These are more than simple formalities; the forms are a compulsory tax compliance to ensure tax accuracy for outbound payments. And as a WOS, a single misstep can have grave consequences, from remittance delays to regulatory scrutiny.
What are Forms 15CA and 15CB?
Form 15CA: It’s an online declaration submitted by the Indian subsidiary declaring if the payment is taxable as per the Indian laws and if TDS (tax deducted at source) has been accurately applied.
Form 15CB: This is a CA-issued certificate to verify the nature of remittance, its tax implications, and DTAA applicability to ensure compliance with the domestic taxation norms.
These forms are essential for WOS to:
- Pay managerial or technical fees to the global parent
- Reimburse expenses to the head office
- Remit dividends and/or royalties
- Pay for software licenses or SaaS tools to affiliates or the parent company
- Pay for any other service arrangement involving cross-border transactions
Why Compliance Is Important?
The Indian authorities require compliance to ensure:
- Applicable tax is deducted at source
- All incomes chargeable to Indian tax are duly reported
- Indian rights under Double Taxation Avoidance Agreements are protected
When are Forms 15CA and 15CB Applicable?
Scenario | Form 15CA | Form 15CB |
Remittance does not incur tax in India and is less than INR 5 lakh | Part A is required | Not required |
Remittance that does not incur tax in India but exceeds INR 5 lakh | Part B is required | Not required |
Remittance incurs tax in India and is less than INR 5 lakh | Part A is required | Not required |
Remittance incurs tax in India and exceeds INR 5 lakh | Part C is required | Required |
Remittance is exempt under Rule 37BB | Not required | Not required |
Common Scenarios for Foreign Subsidiaries
Transaction Type | Form 15CA | Form 15CB |
Technical or consultancy fees to the parent company | ✅ | ✅, if amount exceeds INR 5 lakh |
Reimbursement of expenses (no markup, as per intercompany agreement) | ✅ | Based on the nature |
Royalty or license fees for intellectual property | ✅ | ✅ |
Purchase of software/SaaS subscriptions | ✅ | ✅, if amount is taxable and exceeds INR 5 lakh |
Dividend repatriation (post-tax profits) | ✅ | ✅ |
Import of raw materials or capital goods | ❌ | ❌ |
Salary to a foreign expatriate seconded from the parent company | ✅ | ✅ if amount is taxable and exceeds INR 5 lakh |
Key Compliance Factors
Regulatory Framework: WOS must adhere to the regulatory guidelines outlined by the Reserve Bank of India and the Income Tax Authority. For example, a software development company remitting funds to a global entity to pay for a software license must comply with RBI-governed outward remittance laws and IT-governed tax laws.
Purpose of Remittance: Companies must verify that the remittances align with permissible activities, such as imports, investments, or payments for global services. For example, a remittance made to a foreign law firm to seek legal advisory services while negotiating an international contract is permissible.
Documentation and Record-Keeping: Ensuring accurate documents, which include contracts, forms, and invoices, is crucial to ensure transparency and audit trails.
Due Diligence: A thorough due diligence of the global recipient to determine legitimacy, transaction risk, and compliance with anti-money laundering and KYC regulations is advisable.
Periodic Reporting: Companies must submit periodic reports to the relevant authorities. The reporting norms relate to foreign borrowings, investments, and other global transactions.
The regulatory requirements for global transactions are complex and confusing. Seeking expert guidance from professionals with experience in cross-border payments will ensure your WOS stays compliant to avoid audits, delays, and penalties.
At Greenvissage, our experts specialize in working with global companies to maintain accurate documentation, benchmark studies, and ensure complete compliance. Reach out to us; call on +91 8237857853 or drop us a mail at info@greenvissage.com.
