Making Form 15CB for Royalty/Fee for Technical Service Invoice
Foreign remittances for royalty or Fee for Technical Services (FTS) require tax compliance under the Income-tax Act, 1961. Let’s break it down clearly for Indian professionals, consultants, and businesses.
What is Form 15CB?
It certifies the taxability of a foreign remittance and confirms that TDS (Tax Deducted at Source) has been correctly deducted.
When is Form 15CB Required?
For most remittances chargeable to tax, Form 15CB is mandatory before submitting Form 15CA (Part C).
You need Form 15CB if:
- The remittance exceeds ₹5 lakh in a financial year, and
- The payment is chargeable to tax under the Income-tax Act.
| Purpose | Form 15CB Required? |
|---|---|
| Royalty payments | ✅ Yes |
| Fee for technical services | ✅ Yes |
| Import of goods | ❌ No (not taxable) |
| Personal gifts or remittances | ❌ No |
Key Legal Provisions for Royalty & FTS
- Section 9(1)(vi) and (vii) – Deems Royalty and FTS paid to non-residents as income accrued in India.
- Section 195 – Mandates TDS on payments to non-residents.
- DTAA (Double Taxation Avoidance Agreement) – Overrides domestic rates if a treaty exists with the payee country.
📌 Example:
For US residents, the India–USA DTAA allows a 10% TDS rate on royalty/FTS, provided PAN and Tax Residency Certificate (TRC) are available.
Documents Needed for Form 15CB (Royalty/FTS Cases)
To issue Form 15CB, the CA will need:
- Invoice copy for Royalty/FTS
- Agreement between payer and payee
- PAN of payee (if available)
- Tax Residency Certificate (TRC)
- Bank details and remittance purpose
- Applicable DTAA clause reference
- TDS challan copy (if already deducted)
Step-by-Step Process to File Form 15CB
- Collect documents: Agreements, invoices, TRC, PAN, etc.
- Determine taxability: Is the payment taxable in India?
- Deduct TDS: Pay tax using Challan No. 281 under Section 195.
- CA certifies Form 15CB on e-filing portal.
- Upload 15CA (Part C) using 15CB acknowledgment.
Expert Tip
Always consult a CA before initiating the remittance.
Misclassification of payments (e.g. treating royalty as software purchase) can trigger penalty under Section 271-I (₹1 lakh per default).
Penalty for Non-Compliance
| Error | Section | Penalty Amount |
|---|---|---|
| Not furnishing Form 15CA/CB | Section 271-I | ₹1,00,000 per remittance |
| Incorrect TDS deduction | Section 201 | Tax + interest |
| Late tax payment | Section 234E | ₹200/day (late fee) |
When is Form 15CB Not Needed?
- Remittance is not chargeable under the Act
- Amount is less than ₹5 lakh in FY and covered by Rule 37BB
- Covered under Rule 37BB list (33 items) like imports, travel, education
👉 See the full list here – incometaxindia.gov.in
FAQs on Form 15CB for Royalty/FTS
Q1. Is Form 15CB needed if DTAA rate is NIL?
Yes, the CA must still certify that the remittance is non-taxable under DTAA.
Q2. Can a CA issue Form 15CB without actual remittance?
No. Form 15CB must be linked to an actual foreign remittance with valid documentation.
Q3. Can we use the same Form 15CB for multiple invoices?
Only if they relate to the same agreement, purpose, and tax rate.
Summary
It ensures tax compliance under Section 195 and DTAA. Mandatory for taxable remittances exceeding ₹5 lakh. Avoid hefty penalties—get expert help before sending money abroad.