๐๐จ ๐๐จ๐ฎ ๐๐๐๐ ๐ญ๐จ ๐ ๐ข๐ฅ๐ ๐ ๐จ๐ซ๐ฆ 15๐๐ โ 15๐๐ ๐ฐ๐ก๐๐ง ๐ฆ๐๐ค๐ข๐ง๐ ๐ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ ๐ญ๐จ ๐๐๐๐ฌ ๐ฐ๐ข๐ญ๐ก ๐๐ง ๐๐๐ ๐๐๐๐จ๐ฎ๐ง๐ญ?
Under ordinary circumstance, when a person is making any payment to a non-resident, the AD Banker mandates such person to furnish Form 15CA and / or Form 15CB for the transaction before releasing any payment to non-residents in their foreign currency account / offshore bank account. This is because the AD Banker is mandated by the RBI to obtain a certain set of documents (which includes Form 15 CA and / or Form 15 CB) ๐๐๐๐จ๐ซ๐ ๐ฉ๐ซ๐จ๐๐๐ฌ๐ฌ๐ข๐ง๐ ๐๐ง๐ฒ ๐ซ๐๐ฆ๐ข๐ญ๐ญ๐๐ง๐๐๐ฌ ๐จ๐ฎ๐ญ๐ฌ๐ข๐๐ ๐๐ง๐๐ข๐.
Now, hereโs the tricky part, what happens if you are making a payment to a non-resident who has an NRO account (for example, NRIs or Person of Indian origin)?
Letโs first understand what is an NRO account? NRO accounts are a popular way for NRIs to manage their deposits or income earned in India such as dividends, pension, rent, sale proceeds, etc. in INR.
If you end up making a payment to an NRO account holder, technically, there is no money going outside India. Hence, the AD Banker is not involved and the remittance can happen directly from the payerโs Indian bank account to the NRO account holder like any other day-to-day transaction.
But, does that mean there is no obligation on the payer to file Form 15CA and / or Form 15CB since there is no money going outside India? ๐๐ก๐ ๐๐ง๐ฌ๐ฐ๐๐ซ ๐ญ๐จ ๐ญ๐ก๐๐ญ ๐ข๐ฌ ๐๐จ.
The obligation on the payer to file Form 15CA and / or Form 15CB stems from Section 195 of the Income-tax Act, 1961 read with Rule 37BB of the Income-tax Rules, 1962. The section requires any person responsible for making a payment to a non-resident / foreign company to file Form 15CA and / or Form 15CB ๐ฉ๐ซ๐ข๐จ๐ซ ๐ญ๐จ ๐ซ๐๐ฆ๐ข๐ญ๐ญ๐ข๐ง๐ ๐ญ๐ก๐ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ.
In layman terms, the obligation to file Form 15CA and / or Form 15CB is not associated with remittance of funds outside India but actually associated with making ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ ๐ญ๐จ ๐ง๐จ๐ง-๐ซ๐๐ฌ๐ข๐๐๐ง๐ญ๐ฌ, a fact that is often overlooked by most players.
So keep this in mind ๐๐๐๐จ๐ซ๐ making your next remittance to a NRO account holder, be it for rent or sale proceeds on transfer of property / shares even if your banker does not mandate as the penalty for non-filing / filing inaccurately is โน 1 ๐ฅ๐๐ค๐ก!!
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