Form 15CA and 15CB TDS Compliance on Foreign Remittances

If your business makes payments to non-residents, you have long dealt with Form 15CA and Form 15CB as the mandatory pre-remittance compliance under the Income Tax Act 1961. That framework has changed. From April 1, 2026, the Income Tax Rules 2026 (notified alongside the Income Tax Act 2025) replaced Form 15CA with Form 145 and Form 15CB with Form 146. The underlying obligation remains the same: declare the taxability of every foreign remittance to the Income Tax Department before the bank initiates the SWIFT transfer. What has changed is the form number, certain structural refinements to Part D, and the alignment of section references with the new Act.

This guide covers everything you need to know about the transition: the four parts of Form 145, when Form 146 is required, the filing process on the e-filing portal, DTAA considerations, penalties, and what happens to old filings made under Form 15CA/15CB.

What Were Form 15CA and Form 15CB?

Form 15CA was a declaration filed by any person making a payment (remittance) to a non-resident or a foreign company. It was filed electronically on the Income Tax e-filing portal, and the acknowledgement number had to be submitted to the authorised dealer (bank) before the remittance could be processed. The purpose was to ensure that the remitter had evaluated the tax liability arising on the payment and that TDS under Section 195 had been correctly deducted and deposited.

Form 15CB was a certificate issued by a practising Chartered Accountant. It certified the nature of the payment, the applicable rate of TDS (under the Income Tax Act or the relevant DTAA), and that the tax had been correctly deducted. Form 15CB was not required for every remittance; it was triggered when the aggregate remittance to a payee exceeded Rs 5 lakh in a financial year and no order or certificate from the Assessing Officer was available.

Together, Form 15CA and Form 15CB formed the compliance backbone of India's foreign remittance tax reporting system under Rule 37BB of the Income Tax Rules, 1962.

What Replaced Them: Form 145 and Form 146

The Income Tax Act 2025 replaced the Income Tax Act 1961 with effect from April 1, 2026. Alongside, the Central Board of Direct Taxes (CBDT) notified the Income Tax Rules 2026, which renumbered all prescribed forms.

The substantive obligations are carried forward. Rule 37BB continues to govern the requirement, with updated section references pointing to Section 393 (TDS on non-resident payments) and Section 462 (penalty for non-furnishing of information) under the new Act.

The compliance logic is unchanged: determine taxability, select the correct Form 145 Part, obtain Form 146 from a CA where required, file on the portal, hand the acknowledgement number to the bank, and the bank processes the remittance.

Section 195: The Foundation of TDS on Foreign Payments

Section 195 of the Income Tax Act 1961 (now Section 393 under the Income Tax Act 2025) is the provision that makes all of this necessary. It requires every person making a payment to a non-resident to deduct TDS at the applicable rate if the payment is chargeable to tax in India.

Key points of Section 195:

• Scope: Any sum (other than salary) payable to a non-resident that is chargeable to tax in India.
• Responsible person: The payer (the Indian entity or individual making the remittance) is the deductor.
• Rate of TDS: Depends on the nature of income (royalty, fees for technical services, interest, capital gains, etc.) and whether a DTAA applies. Domestic rates range from 10% to 40%. DTAA rates are often lower.
• Section 195(2): If the payer considers that the entire payment is not chargeable to tax, the payer may apply to the Assessing Officer for a determination.
• Section 195(3): Certain payees can apply for a nil or lower deduction certificate from the AO.

Form 145 and Form 146 are the procedural implementation of this obligation. They ensure the remitter has evaluated Section 195 and complied before the money leaves India.

For a detailed breakdown of TDS rates and practical scenarios under Section 195, see our TDS on non-residents guide covering Section 195 and Section 393.

Form 145: Four Parts Explained

Form 145 is structured into four parts. The correct part depends on three factors: whether the remittance is chargeable to tax in India, the aggregate amount remitted to the same payee during the financial year, and whether an AO certificate has been obtained.

Part A: Taxable, Aggregate Up to Rs 5 Lakh

Part A is the simplified filing for smaller taxable remittances. If the total amount remitted to a particular non-resident payee during the financial year does not exceed Rs 5 lakh, the remitter files Part A with basic details: payee name, country, nature of payment, amount, and TDS details. No CA certificate is needed. The remitter self-declares the taxability and applicable TDS rate.

Part B: AO Certificate Obtained

Part B applies when the aggregate exceeds Rs 5 lakh but the remitter has already obtained an order or certificate from the Assessing Officer under Section 195(2), 195(3), or Section 197. The AO's determination overrides the need for a CA certificate. The remitter uploads or references the AO order number while filing Part B.

For guidance on obtaining a lower or nil TDS certificate, see our Section 197 guide.

Part C: Taxable Above Rs 5 Lakh, CA Certificate Required

Part C is the most common filing for businesses making significant foreign payments. The aggregate remittance exceeds Rs 5 lakh, the payment is taxable, and the remitter has obtained Form 146 from a Chartered Accountant. The CA certificate must be uploaded during the Part C filing. Part C cannot be submitted on the portal without a valid Form 146 with UDIN (Unique Document Identification Number from the ICAI portal).

Part D: Not Chargeable to Tax

Part D covers remittances that are not chargeable to tax in India. Examples include business income of a foreign entity with no permanent establishment (PE) in India (under a DTAA), payments exempt under specific sections, or transactions that fall under the 33 exempt categories notified under Rule 37BB(3). The remitter self-declares the non-taxability and provides the basis (DTAA article, section, or exempt category number).

Form 146: When the CA Certificate Is Mandatory

Form 146 is mandatory when all three conditions are met simultaneously:

1. The remittance is chargeable to tax in India under the Income Tax Act or DTAA.
2. The aggregate remittances to the same payee during the financial year exceed Rs 5 lakh.
3. The remitter has not obtained an order or certificate from the Assessing Officer under Section 195(2)/195(3)/197.

When these three conditions converge, the remitter must engage a practising Chartered Accountant to issue Form 146 before filing Form 145 Part C.

What Does the CA Certify in Form 146?

The Chartered Accountant examines the transaction and certifies:

• The nature of the remittance and the relevant head of income under Indian tax law
• Whether the payment is taxable in India under domestic law or treaty provisions
• The applicable rate of TDS and the amount of tax deductible
• Whether any DTAA benefit has been claimed, and if so, the relevant treaty article and rate
• Whether a Tax Residency Certificate (TRC) and Form 10F have been obtained from the payee
• Whether any exemption or lower deduction certificate under Section 197 applies
• That the tax liability has been discharged before the remittance is made

The CA must generate a UDIN from the ICAI portal for every Form 146 issued. A Form 146 without a valid UDIN is rejected on the income tax e-filing portal.

Turnaround Time

A CA typically requires 1 to 3 business days to review the contract, invoice, TRC, and applicable DTAA provisions, and issue Form 146. For recurring payments to the same vendor (such as monthly SaaS subscriptions), the initial review takes longer, but subsequent certificates can be issued faster since the nature of payment and treaty analysis remain the same.

DTAA Considerations for Foreign Remittances

The Double Taxation Avoidance Agreement (DTAA) between India and the payee's country of residence can significantly reduce the TDS rate applicable on the remittance. For example:

To claim the lower DTAA rate, the remitter must obtain the following from the non-resident payee:

1. Tax Residency Certificate (TRC): Issued by the tax authority of the payee's country confirming tax residency.
2. Form 10F: A self-declaration by the non-resident containing nationality, tax identification number, and address details.
3. No PE declaration: Where relevant, a declaration that the non-resident does not have a permanent establishment in India.

Without these documents, you must deduct TDS at the higher domestic rate. The CA issuing Form 146 handles these documents as part of the certification.

For a detailed analysis of treaty rates, see our India-USA DTAA guide.

Step-by-Step Filing Process on the E-Filing Portal

The filing process for a straightforward Part A or Part D typically takes 20 to 30 minutes. Part C filings require advance planning because the CA must first issue Form 146 with UDIN, which adds 1 to 3 business days to the overall timeline. If your business makes regular foreign payments, build this lead time into your payment cycle.

E-verification options: Form 145 must be e-Verified after submission. You can use a Digital Signature Certificate (DSC) registered on the portal, or an Electronic Verification Code (EVC) generated via Aadhaar OTP or net banking. For companies and LLPs, DSC of the authorised signatory is the standard method.

Exempt Payments: When Form 145 Is Not Required

Rule 37BB(3) notifies 33 categories of remittances that are fully exempt from the Form 145/Form 146 requirement. For these payments, neither form is needed. The major exempt categories include:

• Import of goods (covered under customs, not income tax)
• Tuition and other fees paid to recognised foreign universities
• Medical treatment abroad by an Indian resident
• Purchase of international travel tickets (air, rail, sea)
• Remittances by Indian residents to close family members (spouse, children, parents) up to USD 25,000 per financial year
• Embassy and consulate remittances
• Subscriptions to foreign publications

Important caution: A subscription to a foreign magazine is exempt. A SaaS licence payment to a US technology vendor is not on the exempt list and is typically classified as royalty income taxable in India. The nature of the payment, not just the category label, determines whether the exemption applies.

Transitional Provisions: Old Form 15CA/15CB Filings

Form 15CA and Form 15CB filed on or before March 31, 2026 remain valid for remittances that were processed before that date. The Income Tax Department has not required retrospective re-filing under the new form numbers.

For businesses that had ongoing compliance under the old forms:

• Remittances processed before April 1, 2026: Old Form 15CA/15CB acknowledgements continue to be valid. No action needed.
• Remittances processed on or after April 1, 2026: Must use Form 145 and Form 146 (where applicable), even if the underlying contract or invoice was dated before April 2026.
• Pending Form 15CB certificates: If a CA had started work on a Form 15CB before March 31, 2026 but the remittance was not made before that date, a fresh Form 146 must be issued instead.

The form numbers in quarterly TDS returns (Form 27Q, now Form 144 under the new rules) also reference the new form numbers. When reporting Section 195 deductions for Q1 FY 2026-27 onwards, use Form 145/146 references.

Penalties for Non-Compliance

Failure to File Form 145

Section 271-I of the Income Tax Act 1961 (now Section 462 under the Income Tax Act 2025) prescribes a penalty of Rs 1,00,000 per instance for failure to furnish the information required under Rule 37BB. The penalty applies per remittance, not per financial year. A company making twelve monthly payments to a foreign vendor without filing Form 145 faces a potential penalty exposure of Rs 12 lakh.

TDS Default Under Section 201

If you fail to deduct TDS under Section 195 on a payment to a non-resident, you are treated as an assessee in default under Section 201. The consequences include:

• TDS amount: You must pay the TDS that should have been deducted, from your own funds.
• Interest under Section 201(1A): 1% per month (or part thereof) from the date of deduction to the date of payment, and 1.5% per month from the date of deduction to the date of actual deposit.
• Penalty under Section 271C: Penalty equal to the amount of TDS not deducted, though this is subject to reasonable cause provisions.

Bank Reporting

Authorised dealers (banks) are required to report remittances for which they did not receive a Form 145 acknowledgement to the Income Tax Department. This makes non-compliance easily detectable during assessment or scrutiny proceedings.

The combined exposure of TDS default, interest, penalty under Section 462, and potential prosecution makes it significantly costlier to skip the compliance than to invest the time and CA fees upfront.

Practical Scenarios

Scenario 1: Indian Company Paying a US SaaS Vendor

An Indian private limited company pays USD 1,500 per month (approximately Rs 1.5 lakh) to a US-based SaaS company. The annual aggregate is approximately Rs 18 lakh. The payment qualifies as royalty under the Income Tax Act.

• Form 145 Part: Part C (taxable, aggregate exceeds Rs 5 lakh)
• Form 146: Required from a CA for each remittance
• TDS rate: 10% under the India-US DTAA (subject to TRC and Form 10F from the US vendor)
• Documents from vendor: Tax Residency Certificate, Form 10F, no PE declaration

Scenario 2: Freelancer Payment Below Rs 5 Lakh

A startup pays Rs 3 lakh to a UK-based freelance designer for branding work. This is the only payment to this designer during the year.

• Form 145 Part: Part A (taxable, aggregate does not exceed Rs 5 lakh)
• Form 146: Not required
• TDS rate: 10% under the India-UK DTAA for fees for technical services (with TRC), or 20% + cess without DTAA documents

Scenario 3: Student Education Fees

An Indian parent sends GBP 15,000 to a UK university for their child's tuition fees.

• Form 145: Not required. Education fees to recognised foreign universities fall under the Rule 37BB(3) exempt categories.
• Form 146: Not required.
• The remittance is processed under the Liberalised Remittance Scheme (LRS) without additional income tax form compliance.

Scenario 4: Remitter Has AO Certificate

A large infrastructure company makes annual interest payments of Rs 2 crore on an External Commercial Borrowing. The company has obtained a certificate from the Assessing Officer under Section 195(2) confirming the applicable TDS rate.

• Form 145 Part: Part B (AO certificate obtained)
• Form 146: Not required (the AO certificate substitutes the CA certificate)
• TDS rate: As determined by the AO in the certificate

Let Tax Garden Handle Your Foreign Remittance Compliance

Filing Form 145 and obtaining Form 146 involves determining taxability under Indian law and applicable DTAAs, computing the correct TDS rate, coordinating with a CA for certification, and ensuring the acknowledgement reaches the bank before the payment deadline. For businesses making regular international payments, this becomes a recurring compliance workstream.

Tax Garden's compliance team handles the entire process: taxability determination, TDS computation, Form 146 coordination with a CA, Form 145 filing on the portal, and acknowledgement submission to the bank. Fixed-fee plans are available for businesses with recurring foreign payment obligations.

This article draws on the Income Tax Act 2025, Rule 37BB of the Income Tax Rules 2026, Section 195 (now Section 393) and Section 271-I (now Section 462) of the Income Tax Acts, and CBDT circulars on foreign remittance compliance procedures. Transitional validity of Form 15CA and Form 15CB is based on CBDT administrative guidance issued alongside the Income Tax Rules 2026. DTAA rates referenced are from the respective treaties as currently in force. Readers should verify the applicable rates and exempt categories with a qualified Chartered Accountant before processing cross-border payments, as treaty rates and administrative guidance may be updated by CBDT from time to time.

Frequently Asked Questions

What documents should I collect from a foreign vendor to apply the DTAA rate?

Collect a Tax Residency Certificate from the vendor's home tax authority, Form 10F filed by the vendor on the Indian income tax portal, and, where relevant, a declaration that it has no permanent establishment in India. Without the TRC and Form 10F, TDS must be deducted at the domestic rate, which is usually higher.

What if the foreign vendor does not have an Indian PAN?

The higher 20% no-PAN rate under Section 206AA does not apply to payments such as interest, royalty, fees for technical services and dividends if the non-resident gives its name, email, contact number, address, TRC and foreign tax identification number. Collect these before the payment date so the normal or treaty rate can be applied.

The vendor wants the full invoice amount without tax deduction. How is TDS worked out?

If you agree to bear the tax, the payment must be grossed up under Section 195A. TDS is then computed on the grossed-up amount, not the invoice value. For example, at an effective rate of 10%, a USD 9,000 net payment is grossed up to USD 10,000 and USD 1,000 is deposited as TDS. The grossed-up tax is a cost to your business.

By when must TDS on a foreign payment be deposited?

TDS deducted on a payment to a non-resident must be deposited by the 7th of the following month, and by 30 April for deductions made in March. Late deposit attracts interest at 1.5% per month from the date of deduction, and failure to deduct attracts 1% per month from the date it was deductible.

Can I file Form 15CA for a remittance made after 1 April 2026?

No. Payments made on or after 1 April 2026 fall under the Income-tax Act, 2025, so the declaration is filed in Form 145 and the CA certificate in Form 146. Form 15CA and 15CB filed for remittances made up to 31 March 2026 remain valid, and nothing needs to be re-filed for them.