Finance

Published: Mar 29, 2023
Updated: Mar 29, 2023

Foreign Remittance Certificates: Why They are Necessary and the Role of Filing 15CA/15CB

Sending money abroad has become increasingly common in today's globalized world. Whether it is for business purposes, education, travel or simply to support loved ones, remitting money overseas has become a routine for many. However, with the increase in cross-border transactions, the Indian government has made it mandatory to obtain a Foreign Remittance Certificate (FRC) for all foreign remittances. In this article, we will discuss why FRCs are necessary and the role of filing Form 15CA/15CB in obtaining them.

Why are Foreign Remittance Certificates Necessary?

Foreign Remittance Certificates are issued by authorized dealers or banks in India and serve as proof that the remittance has been made for a specific purpose and in compliance with the foreign exchange regulations. FRCs are required for a variety of transactions, including foreign currency investments, payment for import of goods, gifts and donations, and overseas education and travel.

FRCs are necessary to ensure that the money being sent out of the country is legitimate and not being used for any illegal activities. They also help in tracking the flow of foreign currency in and out of the country, which is essential for maintaining a healthy balance of payments.

Role of Filing Form 15CA/15CB

Form 15CA and 15CB are forms that must be filed with the Income Tax Department by individuals or businesses making foreign remittances. The purpose of these forms is to provide information about the remittance, the recipient and the purpose of the remittance. Form 15CA is an online declaration form, while Form 15CB is a certificate of an accountant certifying that the remittance is in compliance with Indian laws.

Filing Form 15CA and 15CB is mandatory for all foreign remittances exceeding INR 5 lakhs per transaction. This requirement applies to all types of foreign remittances, including those made for travel, education, medical treatment, and gifts.

The role of filing these forms is to ensure that the remittance is legitimate, and the taxes on the remittance have been paid. These forms also help the government to track the flow of foreign currency in and out of the country.

These Certificates are necessary to ensure that the money being sent out of the country is legitimate and in compliance with Indian laws. Filing Form 15CA/15CB is mandatory for all foreign remittances exceeding INR 5 lakhs per transaction. The process of obtaining FRCs and filing the required forms may seem tedious, but it is a necessary step to ensure that the remittance is in compliance with Indian laws and regulations.

Non compliance can cause great consequences

It is important to note that non-compliance with these regulations can result in penalties, fines and even imprisonment. Therefore, it is advisable to seek the help of a professional accountant or authorized dealer to ensure that all necessary procedures are followed correctly.