Form 15CA and 15CB: The TDS Paperwork Before Any Remittance Leaves India for an NRI

Every rupee that leaves India for a non-resident passes through a single compliance gate first: Form 15CA, and often its companion Form 15CB. The rule sits in Section 195 of the Income-tax Act, 1961, which obliges any person making a payment to a non-resident or a foreign company that is chargeable to tax to deduct tax at source before the money moves. The Income Tax Department's Form 15CA FAQ is explicit that the online declaration must be filed on the e-filing portal before the remittance is made, and that the authorised dealer bank will not release the funds without it. For an NRI expecting sale proceeds, rent, or a maturity payout to reach a US account, this paperwork is the difference between a same-week transfer and a remittance held for weeks.

This guide walks a US-bound remittance through the four parts of Form 15CA, the Chartered Accountant's certificate in Form 15CB, the India-US Double Taxation Avoidance Agreement rates that cap the withholding, and the FEMA account rules that decide how much can leave at all. The numbers here trace to the Income Tax Department FAQ dated against the current e-filing portal, the India-US treaty effective 12 September 1991, and the Foreign Exchange Management Act, 1999.

FEMA / DTAA Position

Two separate statutes govern a cross-border remittance, and both must clear before the bank acts. The Foreign Exchange Management Act, 1999 decides whether the transfer is permitted at all; Section 195 of the Income-tax Act, 1961 and the relevant tax treaty decide how much tax is withheld on the way out. Confusing the two is the most common reason a transfer stalls.

Under Section 6 of FEMA, 1999, capital-account transactions need the Reserve Bank of India's permission unless they are specifically permitted, while current-account transactions are generally free subject to the rules notified under the Act. A resident individual remits abroad under the Liberalised Remittance Scheme, capped at USD 250,000 per financial year. An NRI remitting from an NRO account out of current-year income faces no such LRS ceiling, because LRS applies to residents; the NRO repatriation route carries its own USD 1 million per financial year limit, which we cover below and in the repatriation calculator. The term FEMA and the residential status that flows from it decide which ceiling applies.

The India-US Double Taxation Avoidance Agreement, in force since 12 September 1991, sets the ceiling rates India may apply when it withholds tax on a payment to a US resident. Those treaty rates are not a blanket exemption. On long-term capital gains India retains its taxing right and applies 12.5%; the treaty does not make capital gains exempt in India. Interest is capped at 15% under the treaty, and royalties and fees for technical services at 15%, with Article 12 applying a "make available" test to technical services. Dividends are capped at 15% only where the US recipient holds at least 10% of the voting stock under the parent-subsidiary rule in Article 10; in all other portfolio cases the treaty rate is 25%. The DTAA rate is available only against a valid Tax Residency Certificate, and you can model the saving in the DTAA benefit calculator.

Tax Treatment in India

Section 195 of the Income-tax Act, 1961 requires the payer to withhold tax at the rate in force, and the settled position is that withholding is at the DTAA rate or the Income-tax Act rate, whichever is lower. The treaty rate only applies when the non-resident furnishes a Tax Residency Certificate and, where required, Form 10F; without them the domestic rate applies in full. TDS under Section 195 has no basic-exemption threshold the way salary TDS does, so even a modest chargeable payment triggers the deduction.

Form 15CA is the remitter's declaration, and it has four parts keyed to the amount and the taxability of the payment. For remittances up to Rs 5 lakh in a financial year, the remitter files Part A only. Above Rs 5 lakh, Part C is used together with a Chartered Accountant's certificate in Form 15CB, unless the remitter has obtained an Assessing Officer's certificate under Section 195(2), 195(3) or 197, in which case Part B is used instead. Where the remittance is not chargeable to tax under the Act at all, Part D applies and no 15CB is needed. The Rs 5 lakh figure is an aggregate across the financial year, not per transaction, so a second Rs 3 lakh remittance after an earlier Rs 3 lakh one crosses the line.

Form 15CB is the CA's certification of the nature of the payment, the taxability, the applicable DTAA article, and the rate and amount of TDS. It must be filed on the e-filing portal before Form 15CA Part C, because Part C pulls the 15CB acknowledgement number. A worked long-term capital-gains case shows the arithmetic. An NRI sells listed Indian equity, realising a long-term capital gain of Rs 10,00,000. The first Rs 1,25,000 is exempt, leaving Rs 8,75,000 taxable at the 12.5% long-term rate, which is Rs 1,09,375; the 4% health and education cess adds Rs 4,375, for Rs 1,13,750 withheld. Because the gain is below Rs 50,00,000, no surcharge applies. You can rebuild this in the NRI tax calculator.

Surcharge enters above Rs 50 lakh of total income and runs at 10% between Rs 50 lakh and Rs 1 crore, 15% between Rs 1 crore and Rs 2 crore, and 25% between Rs 2 crore and Rs 5 crore. Above Rs 5 crore the surcharge is 25% in the new regime. These slabs sit on top of the base tax before the 4% cess is applied, so a large one-off remittance of sale proceeds can carry a materially higher effective rate than the headline 12.5% suggests. The NRI tax calculator applies the surcharge bands in order.

Rental income routed abroad follows a different path. Rent from Indian property paid to an NRI is chargeable in India, so the tenant or managing agent must deduct TDS under Section 195 and the remittance needs Form 15CA, with Form 15CB once the yearly total crosses Rs 5 lakh. A standard deduction of 30% of net annual value applies to house property before tax, and the rental income tax calculator handles the computation. Where the NRI's actual liability is lower than the 195 rate, a lower-deduction certificate under Section 197 lets the tenant withhold less, and the remittance then goes out under Form 15CA Part B.

Tax Treatment Abroad

Tax withheld in India is not a dead cost for a US-resident NRI, because Article 24 of the India-US treaty, effective since 12 September 1991, provides for a foreign tax credit in the country of residence. The United States taxes its residents on worldwide income, so the same capital gain or interest is reported again on the US return, and the India tax of Rs 1,13,750 from the worked example above becomes a credit against the US liability on that income, subject to the US foreign-tax-credit limitation. The credit is claimed in the US tax year in which the income is recognised, which may not line up with the Indian financial year ending 31 March.

The mechanism is a credit, not a refund, so the relief is capped at the US tax otherwise due on that slice of foreign income. If the Indian 12.5% long-term rate exceeds the US rate on the same gain, the excess Indian tax is generally not recoverable in that year, though US rules allow carry-back and carry-forward of unused foreign tax credits within statutory limits. The foreign tax credit calculator estimates the overlap. Because the treaty rate applies only against a valid Tax Residency Certificate, a US-resident NRI who omits the TRC pays the full domestic rate in India and then claims credit in the US, which is cash-flow-negative until the US return is filed.

For a UAE-resident NRI the arithmetic differs, because the Emirates levies no personal income tax, so there is no foreign liability to credit the Indian tax against; the India-side withholding under Section 195 is effectively the final tax on that income. This is why the "country" in a remittance question matters: the same Rs 10,00,000 gain, taxed at 12.5% in India, is softened by a US credit under Article 24 but is a terminal cost for a Dubai-based remitter. Treaty positions vary by country, and the applicable article should be confirmed against the specific DTAA before Form 15CB is signed.

Repatriation Mechanics

The account the money sits in before it leaves India decides both the ceiling and the paperwork. Balances in a Non-Resident External account and a Foreign Currency Non-Resident deposit are fully and freely repatriable, principal and interest, because they are funded from foreign earnings; a remittance from an NRE account or an FCNR deposit is generally not chargeable to Indian tax, so Form 15CA Part D is used and no Form 15CB is needed. Interest on NRE and FCNR deposits is exempt from Indian income tax while the holder is a non-resident, which is why these routes avoid the 15CB step.

The NRO account is the constrained one. It holds Indian-source income such as rent, dividends and pensions, and repatriation from it is capped at USD 1 million per financial year across all NRO accounts of the holder, after the applicable taxes are paid. A remittance out of an NRO balance is almost always chargeable in India, so it runs through Form 15CA Part C with a Form 15CB certificate once the yearly total exceeds Rs 5 lakh, and under Part A below that threshold. The USD 1 million window resets each financial year on 1 April, and the repatriation calculator tracks the used portion.

A returning NRI who becomes a resident again converts NRE and FCNR balances into a Resident Foreign Currency account, a route the desk covered in the RFC account guide. Where a FEMA step has already gone wrong on a property or account, the contravention can be regularised through compounding, as set out in the FEMA compounding explainer; and the limits on a resident relative lending to an NRI are in the interest-free loan guide. The sequence that works in practice is: confirm the FEMA route and ceiling first, obtain the TRC and Form 10F to claim the treaty rate, have the CA sign Form 15CB where the yearly total exceeds Rs 5 lakh, file Form 15CA online, and only then instruct the authorised dealer bank.

FAQ

When is Form 15CB mandatory for an NRI remittance?

Form 15CB is required when a chargeable remittance exceeds Rs 5 lakh in aggregate in a financial year and the remitter has not obtained an Assessing Officer's certificate under Section 195(2), 195(3) or 197. Below Rs 5 lakh, only Form 15CA Part A is filed and no CA certificate is needed, per the Income Tax Department's Form 15CA FAQ.

Does Form 15CA apply if the remittance is not taxable in India?

Yes. A remittance that is not chargeable to tax under the Income-tax Act, 1961, such as a transfer from an NRE account or an FCNR deposit, still requires Form 15CA, filed under Part D. Form 15CB is not needed in that case because there is no TDS to certify.

What rate of tax is withheld under Section 195?

Tax is withheld at the DTAA rate or the Income-tax Act rate, whichever is lower, but the treaty rate applies only against a valid Tax Residency Certificate. Under the India-US treaty effective 12 September 1991, long-term capital gains are taxed at 12.5% in India, interest at 15%, and portfolio dividends at 25%.

Can a US-resident NRI recover the Indian TDS?

The Indian tax withheld is creditable against US tax on the same income under Article 24 of the India-US treaty, in force since 12 September 1991. It is a credit, not a refund, so relief is capped at the US tax otherwise due on that income, with unused credit carried forward under US limits.

How much can be repatriated from an NRO account in a year?

Repatriation from NRO accounts is capped at USD 1 million per financial year across all the holder's NRO accounts, after taxes are paid. The window resets on 1 April each financial year. NRE and FCNR balances are fully repatriable without this ceiling.

Is Form 15CA needed for rent paid to an NRI landlord?

Yes. Rent on Indian property paid to an NRI is chargeable in India, so the tenant deducts TDS under Section 195 and files Form 15CA, adding Form 15CB once the yearly total crosses Rs 5 lakh. A 30% standard deduction on net annual value applies before tax is computed.

Does the Rs 5 lakh threshold reset per transaction?

No. The Rs 5 lakh figure is an aggregate across the financial year, not per remittance. Two chargeable transfers of Rs 3 lakh each in the same year cross the threshold on the second transfer, moving the filing from Part A to Part C with a Form 15CB certificate.