Form 15CA and 15CB for Foreign Remittances: The Rs 5 Lakh Threshold That Decides Which Part You File

If you have ever tried to pay a foreign consultant, a non-resident landlord, or an overseas software vendor from an Indian bank account, your banker will have asked for "the 15CA" before releasing the money. That single demand hides a branching rule under Section 195 of the Income-tax Act, 1961, and Rule 37BB of the Income-tax Rules, 1962, where one number decides everything: whether your remittances cross Rs 5 lakh in the financial year. Below that line you file a short self-declaration; above it you may need a chartered accountant's certificate in Form 15CB. This guide walks through exactly which part you file, with a worked example built on the aggregation rule that most remitters get wrong.

What the Section Says

Section 195(1) of the Income-tax Act, 1961 requires any person responsible for paying a non-resident (not being a company) or a foreign company to deduct income-tax at source if the sum is chargeable to tax in India. Unlike salary TDS under Section 192, there is no basic-exemption threshold here: the obligation bites on the first rupee of a chargeable payment, and the rate is the one prescribed in the Finance Act or the relevant Double Taxation Avoidance Agreement, whichever is lower, as the Department's own guidance on Section 195 summarises.

The reporting machinery sits in Rule 37BB, which prescribes Form 15CA (the remitter's declaration) and Form 15CB (an accountant's certificate). The Income Tax Department's Form 15CA FAQ divides Form 15CA into four parts, and the dividing line between the short and the long route is a remittance, or an aggregate of remittances, exceeding Rs 5 lakh during the financial year.

Here is how the four parts map, quoting the thresholds exactly as the Department states them:

Two definitions anchor the above. First, the "accountant" who signs Form 15CB must be one defined under the Explanation to Section 288(2) of the Act, which in practice means a chartered accountant in full-time practice. Second, the Rs 5 lakh figure is an aggregate for the whole financial year, not a per-transaction limit, so the test is cumulative from 1 April to 31 March. Rule 37BB(3) also carves out a specified list of remittances (for example certain import payments) that need no Form 15CA or 15CB at all, so the first question is always whether the payment is chargeable to tax before you reach for either form.

Three further anchors are worth internalising before you file. The withholding rate follows the lower-of-two rule noted above, which is why the beneficiary's residential status and any treaty relief under a DTAA matter so much. The deducted tax is ordinary TDS, deposited and reported like any other withholding. And because surcharge and cess ride on top of the base treaty or Act rate, the figure your accountant certifies in Form 15CB is rarely a round number.

Worked Example

Consider Mr Verma, a resident proprietor in Pune who engages a Singapore-based marketing consultant during FY 2025-26. The consultancy fees are chargeable to tax in India, so Section 195 applies and every payment must be routed through Form 15CA. Watch how the Rs 5 lakh aggregate rule changes which part he files as the year progresses:

The first two payments, totalling Rs 4,50,000, stay inside the Rs 5 lakh ceiling, so Mr Verma files only Part A each time, a short self-declaration with no accountant involved. The October payment of Rs 1,50,000 pushes the cumulative figure to Rs 6,00,000, breaching the Rs 5 lakh line, and from that point every further remittance for FY 2025-26 moves to Part C and needs a Form 15CB certificate, because Mr Verma has not obtained any Assessing Officer order under Section 195(2) that would have let him use Part B instead.

Suppose the applicable withholding comes to 10 per cent of the Rs 1,50,000 October payment, that is Rs 15,000 of tax, plus the health and education cess of 4 per cent that applies across the board, giving Rs 15,600 to be deducted and deposited. Mr Verma must obtain the Form 15CB certificate first, then quote its details while filing Part C of Form 15CA, and only then instruct his bank to remit the net amount abroad. You can model the base withholding on the TDS calculator, estimate the annual liability using the income tax calculator, and, where the payment is for the transfer of a capital asset such as property, size the gain first on the capital gains calculator.

The sequencing matters: Form 15CB is dated and certified by the accountant before Form 15CA Part C is submitted, and Form 15CA must be furnished to the authorised dealer bank before the remittance is actually made, as Rule 37BB requires. A certificate obtained after the money has left the account does not cure the default.

Common Mistakes

The error that surfaces most often in scrutiny is treating the Rs 5 lakh figure as a per-transaction limit. As Mr Verma's October payment of Rs 1,50,000 shows, a remittance far smaller than Rs 5 lakh can still trigger Part C and Form 15CB once the cumulative total for the financial year crosses the line, because Rule 37BB tests the aggregate from 1 April onwards, not each payment in isolation.

A second recurring mistake is assuming Form 15CA is never required when the remittance is not taxable. In fact a non-chargeable payment is reported under Part D of Form 15CA, and only the specified list of remittances under Rule 37BB(3) escapes the form entirely; lumping a genuinely taxable payment into the "not chargeable" bucket to avoid the 4 per cent cess and TDS is exactly what reopens assessments.

The third pitfall is skipping Form 15CB when a valid Assessing Officer certificate exists, or the reverse. If the remitter holds an order under Section 195(2), 195(3) or 197 fixing a lower or nil rate, the correct route is Part B with no 15CB; obtaining a redundant 15CB wastes a professional fee, while filing Part A or Part B without the required certificate above Rs 5 lakh leaves the declaration defective.

Finally, remitters underestimate the penalty. Section 271-I of the Act, inserted with effect from 1 June 2015, levies a penalty of Rs 1,00,000 for failure to furnish Form 15CA or 15CB, or for furnishing inaccurate particulars in them, over and above the interest and disallowance consequences of short-deducting TDS under Section 195. At Rs 1,00,000 a default, the certificate fee for Form 15CB is almost always the cheaper path.

FAQ

Is Form 15CA always required for every foreign remittance?

No. Form 15CA is required only when the payment to a non-resident is chargeable to tax under the Income-tax Act, 1961. Remittances on the specified list in Rule 37BB(3) are exempt from both Form 15CA and 15CB, and a payment that is genuinely not chargeable is reported under Part D of Form 15CA rather than omitted.

What is the difference between Form 15CA and Form 15CB?

Form 15CA is the remitter's own declaration, filed online on the e-filing portal. Form 15CB is a certificate from an accountant defined under Section 288, confirming the taxability, rate and amount of TDS. Under the Department's FAQ, Form 15CB is needed only for Part C, that is where remittances exceed Rs 5 lakh in the financial year and no Assessing Officer certificate under Section 195(2), 195(3) or 197 is held.

Is the Rs 5 lakh limit per transaction or for the whole year?

It is an aggregate for the financial year running 1 April to 31 March. Once the total of your remittances to non-residents crosses Rs 5 lakh, subsequent payments move from Part A to Part C (or Part B if you hold an Assessing Officer order), regardless of how small the individual payment is.

Who can sign Form 15CB?

Only an "accountant" as defined in the Explanation to Section 288(2) of the Act, which means a chartered accountant in practice. The accountant must certify the nature of the remittance, the applicable rate under the Finance Act or the relevant DTAA, and the tax deducted before Form 15CA Part C is submitted.

What happens if I remit the money without filing Form 15CA?

Section 271-I, effective 1 June 2015, imposes a penalty of Rs 1,00,000 for failing to furnish, or inaccurately furnishing, Form 15CA or 15CB. Separately, under-deduction of tax under Section 195 can trigger interest and disallowance of the expense, so the exposure runs well beyond the Rs 1,00,000 figure.

Can I use Part B to avoid getting Form 15CB?

Yes, but only if you actually hold a certificate or order from the Assessing Officer under Section 195(2), 195(3) or 197 fixing the rate of deduction. Part B exists precisely for that situation; without such an order, remittances above Rs 5 lakh must go through Part C with Form 15CB.

Does the lower DTAA rate apply automatically?

No. The treaty rate under a DTAA applies only on satisfying the conditions for treaty relief, and the accountant will record the applicable rate while certifying Form 15CB. India retains taxing rights in many situations, so the rate certified reflects the lower of the Finance Act rate and the treaty rate, grossed up with the 4 per cent health and education cess.