Applicability of Forms 15CA and 15CB for payment of rent outside India
Added: (Mon Feb 21 2022)
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Forms 15CA and 15CB
Every year, millions of Indians remit money outside India for one purpose or the other. Form 15CA and 15CB are required for remittance of any money outside India either to Non Resident or to the foreign company or from Indian bank account to foreign bank account or from NRO account to NRE account.
In this write up, we have discussed about applicability of form 15CA and Form 15CB in case of payment of rent to non resident by a resident individual.
As per the provisions of the Income Tax Act, 1961 (“the Act”), any person paying rent to nonresident is required to deduct TDS at the applicable rates.
It may be noted that subsequent to amendment made in section 195, now, the person responsible for paying rent has to provide certain information to
The tax department irrespective of the fact whether such remittance is taxable in India or not.
Further, as per Rule 37BB, the information relating to payment to nonresident or foreign company is to be given in form 15CA and 15CB.
Also, rule 37BB (3) (ii) provides that there is no need to furnish aforesaid information under following two circumstances:
a) In case the remittance is made by resident who is individual and it does not require prior approval of RBI Or
b) In case the remittance falls under prescribed list of 33 categories which are exempted and are covered under liberalized remittance scheme of the RBI.
Therefore, aforesaid payment of rent to nonresident or to their NRO account may be covered under LRS limit of USD 2,50,000 without any RBI approval for such remittance.
Further, department has also issued a FAQ wrt issuance of form 15CA on its website and in reply to one of the questions as to when is form 15CA not required to be furnished,
The department understanding is also same as above i.e Form 15CA is not required to be furnished in case remittance is made by resident individual and it does not require prior
Approval of RBI or secondly, such remittance is under the exempted list of RBI.
Thus, from reading of above, it appears that there may not be any requirement of furnishing of form 15ca and 15cb at the time of payment of rent to nonresident by resident individual.
However, the matter is still controversial and both types of opinions i.e. for furnishing of form 15CA and 15CB and against issuance of such forms are possible.
Those who are in favor of furnishing of information in form 15CA have following arguments:
a) Section 195(6) provides for reporting of all the amount paid to nonresident whether it is taxable or not and therefore, any rules of forms cannot curtail down the provisions of such section.
b) Form 15CA would be required to be issued since rent paid/payable to nonresident is chargeable to tax in India and does not fall under the exemption list.
c) The primary purpose of providing information in Form 15CA and 15CB is so that transactions can be monitored as to on which transactions, tax was deductible but not deducted.
Those who are against the furnishing of information in form 15CA have following argument:
1) Both the section 195(6) and rule 37BB needs to be read in conjunction. Rule 37BB(3) overrides rule 2), which requires the reporting of nontaxable transaction
2) As per RBI master direction on “other remittance facilities” AD bankers require simple letter from remitter in case amount of current account remittance does not exceed
USD 25,000. Also, since payment of rent falls under such current account transaction, there is no requirement of furnishing of form 15CA.
Therefore, from foregoing, one may conclude that there is no requirement to furnish form 15CA and 15CB at the time of payment of rent by resident individual to nonresident.
However, as mentioned above, alternate views are also possible on aforesaid matter and one may consult his/her tax advisor before making final decision.