India taxes individuals based on a system of income slabs. Different tax rates are assigned to different ranges of income.&nbsp;

Understanding tax slabs is crucial for several reasons.

As a person earns more, the tax liability also increases, creating a fair and progressive tax system in the country. To achieve this, the government regularly updates and announces changes to tax slabs in the Union Budget.

The income tax slabs differ between the old and new tax regimes. Let's explore the specific slab rates applicable to Individuals for FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25).

Income Tax Slab Rates For FY 2023-24 (AY 2024-25)&nbsp;

Rates of the old tax regime slabs are categorized into three groups:

The new tax regime applies uniform tax rates to all individuals, eliminating the age-based distinctions in the old system. The new tax regime slabs 2023-24 are outlined below.

Applicability of Surcharge for FY 2023-24 (AY 2024-25)

The income tax <a href="https://incometaxindia.gov.in/charts%20%20tables/tax%20rates.htm">surcharge</a> is an extra fee imposed on top of the <a href="https://www.skydo.com/blog/how-to-file-taxes-under-44ada?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">regular income tax</a>. An additional tax is applied to individuals with higher income earnings in a specific financial year. Let’s look at the applicable surcharge rate under the Old and New tax regime.

However, 25% or 37% surcharge rates will not apply to income under the following sections.

Consequently, the highest surcharge rate on the tax payable for such incomes will be 15%.

Starting from the Assessment Year 2023-24, the maximum surcharge rate on tax payable for dividend income or capital gain specified in Section 112 will be capped at 15%.&nbsp;

A 4% Health and Education cess will be applied to all cases’ total income tax liability and surcharges.

Comparison of tax rates under the New tax regime and the Old tax regime for FY 2022-23 (AY 2023-24)

How do you calculate the income tax from the income tax slabs?

Let’s understand the calculation with an example.

Sanjana, aged 35, has a total taxable income of Rs. 8,50,000. She has opted for the old tax regime. Her income includes income from salary, interest and rental income. Deductions under section 80 have been reduced. Now, Sanjana wants to know her <a href="https://www.skydo.com/blog/gst-requirements-international-service-sales?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">tax liability</a> for FY 2022-23 (AY 2023-24).

*Sanjana, an individual taxpayer under the age of 60, enjoys an income exemption limit of up to Rs 2,50,000. Other taxpayers, i.e., senior and super senior citizens, have higher income tax exemption thresholds of Rs 3,00,000 and Rs 5,00,000, respectively.

Please be aware that the tax rates in the New Tax Regime are uniform for all categories of individuals, including regular individuals, senior citizens, and super senior citizens.&nbsp;

Individuals with a net taxable income of up to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability in both the New and Old tax regimes. It's important to note that in Budget 2023, the rebate under the new regime has been extended, making income up to Rs 7 lakh tax-free from the FY 2023-24 onward.

Let's delve into effective strategies to maximize your investments while minimizing the associated tax burdens.

ELSS mutual funds provide a dual benefit of potential capital appreciation and tax savings under Section 80C of the Income Tax Act. Investing in ELSS reduces taxable income and offers a path for long-term wealth growth.

2. Explore tax-efficient investment avenues

Health insurance qualifies for tax benefits under Section 80D. You can claim tax benefits on premiums paid - up to Rs 20,000 for senior citizens and Rs 15,000 for others. For example, if you pay Rs 15,000 for your policy and Rs 20,000 for your senior citizen parent, you can claim a total tax benefit of Rs 35,000.&nbsp;

Maturity value is tax-free for sums received under critical illness insurance policies.

This strategy entails selling loss-making assets to realize the capital loss and using it to offset the gains earned by profit-making assets.

For instance, if you have a loss of Rs. 20,000 in Stock A and a gain of Rs. 30,000 from Stock B, you can sell Stock A during a market downturn to offset the gains. This way, you can reduce your taxable income. The saved amount can be reinvested for portfolio growth.

Ensure that tax loss harvesting aligns with your overall financial goals and plan by considering a discussion with a financial professional or tax advisor.

<a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Consult financial professionals or tax advisors</a> for effective tax planning and strategic advice. Their expertise can provide tailored insights aligned with your financial goals and ensure a well-informed approach to optimize your tax situation.

If you need help deciding what is right for you, we will connect you with our panel of Indian and US-based CA / CPAs. Feel free to reach out to us.

Q1. How is a taxpayer's income categorized?

Ans: A taxpayer's income falls into five categories outlined in Section 14 of the Income Tax Act. These include Income from salary, Profits from a business or profession, Income from House Property, Capital Gains, and Income from Other Sources.

Q2. Is it possible to avail of 80C deductions while choosing the new tax slabs 2023-24?

Ans: No, under the new tax regime, several deductions and exemptions, including those under section 80C, are not permitted. Opting for the new tax regime means foregoing the ability to claim deductions under section 80C.

Q3. What do "Previous Year" and "Assessment Year" mean?

Ans: We have two important terms in income tax provisions: (i) Previous Year and (ii) Assessment Year. Previous Year is when you earn income, typically from April 1st to March 31st. The year right after the Previous Year, from April 1st to March 31st, is called the 'Assessment Year.'

For example, the Previous Year is from April 1, 2023, to March 31, 2024 (FY 2023-24). The corresponding Assessment Year is from April 1, 2024, to March 31, 2025 (AY 2024-25).

Q4. What is the tax exemption limit for calculating income tax rebate under section 87A?

Ans: For FY 2023-24 (AY 2024-25), the rebate limit has been increased to Rs. 7,00,000 under the new tax regime. This means a resident individual with taxable income up to Rs 7,00,000 will receive Rs 25,000 or the amount of tax payable (whichever is lower) as tax relief. However, the old tax regime's threshold limit will remain the same, i.e., Rs 12,500 if taxable income is up to Rs 5,00,000.

Q5. How much is the standard deduction for FY 2023-24?

Ans: You can claim a standard deduction of ₹50,000 to the income taxable under the head ‘Salaries.’ The standard deduction is a tax benefit that can be claimed irrespective of the amount spent on Transport or Medical Allowance. It applies to individuals earning a salary or pension income.

Prepare for the upcoming year's tax season by understanding the tax slabs for 2023-24 and optimizing your tax savings. 

Tax Slabs in 2023-24: Plan Ahead for Next Year Tax Savings

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Rohit Khuranna

When making payments to non-residents, you must deduct a certain tax percentage at the source as per Section 195 of the Income Tax Act.

Additionally, effective management of TDS is paramount for tech exporters to minimise its impact on the bottom line. By optimising tax planning strategies, such as leveraging double taxation avoidance agreements (DTAA), correctly utilising forms 15CA and 15CB, and exploring available exemptions or deductions, you can minimise TDS leakage and preserve their financial resources.

Proactive TDS management ensures compliance with tax regulations, reducing the risk of penalties or legal complications. By understanding the nuances of TDS on foreign payments and adopting effective management strategies, you can positively influence their cash flow, profitability, and overall financial stability in international transactions.



Minimising TDS on foreign payments is a key objective for tech exporters to optimise their financial outcomes. The following strategies can help reduce TDS on these transactions.

1. Double Taxation Avoidance Agreements (DTAA)&nbsp;

DTAA is a bilateral agreement or treaty between two countries to prevent taxpayers from being subject to taxation on the same income in both jurisdictions. DTAA reduces or eliminates taxes in one country for income already taxed in another country.&nbsp;

Leveraging such tax agreements is a paramount strategy for tech exporters aiming to minimise TDS on foreign payments. These international agreements often provide provisions to lower <a href="https://www.skydo.com/blog/decoding-withholding-tax-an-i-t-export-service-providers-toolkit-for-simplifying-international-payments?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">withholding tax</a> rates, optimising financial returns for businesses engaged in cross-border transactions.&nbsp;

By understanding and utilising the provisions of DTAA, tech exporters can minimise their TDS liability.

<a href="https://www.skydo.com/blog/form-15ca-cb/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Form 15CA</a> is a declaration form that provides information about the purpose and nature of the remittance. A qualified <a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">chartered accountant</a> issues Form 15CB certifying the transaction details.&nbsp;

As Section 195 of the Income Tax Act prescribes, these forms ensure the proper reporting of foreign remittances and help determine the applicable TDS rates. Tech exporters should ensure accurate and timely form filing to minimise potential TDS discrepancies.

Effective tax planning minimises TDS on foreign payments for tech exporters. By carefully structuring transactions, exploring available exemptions, and aligning business operations with tax regulations, exporters can strategically reduce the withholding tax burden.&nbsp;

Adopting a proactive and well-informed approach to tax planning ensures that tech exporters retain more of their earnings from international transactions, enhancing overall financial efficiency and competitiveness in the global market.

As of <a href="https://economictimes.indiatimes.com/wealth/tax/new-tcs-rule-to-come-into-effect-from-october-1-2023-finance-ministry/articleshow/101345956.cms">October 1, 2023</a>, a significant update has been implemented regarding Tax Deducted at Source (TDS) in India. The Ministry of Finance has introduced a notable change related to foreign remittances.&nbsp;

There will be no Tax Collection at Source (TCS) on foreign remittances of up to Rs 7 lakh per financial year. This update, outlined in a notification released on June 28, 2023, signifies a restoration of the Rs 7 lakh threshold per individual for TCS on all categories of <a href="https://www.skydo.com/blog/what-is-lrs?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Liberalised Remittance Scheme (LRS)</a> payments.&nbsp;

This threshold applies irrespective of the purpose and includes all modes of payment. Therefore, the first Rs 7 lakh remittance under LRS will not incur TCS, providing relief for individuals engaging in foreign transactions.

A practical guide below features a comprehensive checklist and step-by-step approach to minimise TDS leakage.

Minimising TDS on foreign payments requires careful consideration of legal requirements, proper documentation, and proactive tax planning. By following this practical guide and seeking professional assistance, tech exporters can effectively minimise TDS leakage, optimise their tax position, and enhance their profitability in international transactions.

Minimising Tax Deducted at Source (TDS) on foreign payments is a crucial aspect of financial management for individuals and businesses engaged in <a href="https://www.skydo.com/blog/the-pros-and-cons-of-cross-border-payment-solutions?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">cross-border transactions</a>. By understanding the intricacies of TDS regulations, exploring available exemptions and provisions, and leveraging tax treaties effectively, one can significantly reduce the impact of TDS on international payments.

Implementing proper documentation, ensuring compliance with relevant tax laws, and seeking professional advice when needed are essential steps in the journey to minimise TDS. It's not just about saving money; it's about optimising financial processes and fostering a smoother international business environment.

As the global economy continues to evolve, staying informed about changes in tax regulations and proactively adapting strategies will be key to successfully navigating the complexities of TDS on foreign payments. By adopting a proactive and informed approach, individuals and businesses can not only minimise TDS but also pave the way for more efficient and cost-effective cross-border financial transactions.

Q1. What are the penalties for non-compliance with TDS rules on foreign payments?

Ans. Non-compliance penalties may include interest charges on the unpaid tax amount, penalty levies, and disallowance of expenses. The penalties vary based on the nature and severity of the non-compliance, and it is essential to adhere to TDS rules to avoid these consequences.

Q2. How does the recent change in tax laws affect TDS on foreign payments for tech exporters?

Ans. The recent change in tax laws does not affect TDS on foreign payments for tech exporters. The recent amendment pertains to TCS applicability and has no bearing on TDS.&nbsp;

Q3. Can I claim a refund for TDS on foreign payments? If yes, what is the process?

Ans. Yes, it is possible to claim a refund for TDS on foreign payments if the taxpayer's total tax liability is lower than the TDS amount deducted. The process involves filing an income

Q4. Does the size or nature of my tech export business affect the TDS rules applicable to me?

Ans. The size or nature of your tech export business does not generally affect the TDS rules applicable to you. TDS rules depend on the nature of the payment and the provisions outlined in the Income Tax Act. However, certain requirements or thresholds may vary depending on specific circumstances.

Q5. Are any specific TDS rules for tech exporters that differ from general businesses?

Ans. Yes, certain specific TDS rules for tech exporters may differ from general businesses, such as provisions related to software royalty payments and technical services.

Q6. How to transfer money from the USA to India without paying taxes?

Ans: Transferring money from the USA to India without paying taxes is not advisable, as tax regulations apply. Utilising legal channels, like NRE or NRO accounts, can help manage tax implications.

Ans: LRS, or Liberalised Remittance Scheme, is significant as it allows Indian residents to freely remit a certain amount abroad for permissible transactions, promoting ease of foreign exchange management.

Q8. Are inward remittances taxable in India?

Ans: Inward remittances are generally not taxable in India, as they represent funds received from abroad. However, specific circumstances or types of income may have tax implications.

Q9. Who can receive tax-free foreign remittances in India?

Ans: Indian residents, such as non-resident Indians (NRIs) and those with specified exemptions, can receive tax-free foreign remittances in India, subject to certain conditions and limits.

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One of the main challenges businesses face when exporting services globally is navigating international payments. Different countries have different export payment terms, payment systems, currencies, and regulations, making it difficult for businesses to know which payment method to use, how to negotiate payment terms and manage exchange rate risk.

Understanding payment terms in export is essential for businesses that export services globally. Here are ten important international payment terminologies for global export business:

<a href="https://www.skydo.com/blog/get-the-most-out-of-your-forex-savings-with-skydo?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Forex, or foreign exchange</a>, refers to the global marketplace for trading national currencies against one another. It plays a pivotal role in international trade by facilitating the conversion of currencies and enabling businesses to engage in <a href="https://www.skydo.com/blog/future-of-cross-border-payments-2030-and-beyond?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">cross-border transactions</a>.&nbsp;

Understanding the Forex market is crucial for businesses as it allows them to manage currency risks, hedge against exchange rate fluctuations, and <a href="https://www.skydo.com/blog/price-it-right-driving-success-in-your-it-services-company?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">optimize pricing strategies</a>.&nbsp;

A nuanced comprehension of Forex dynamics allows businesses to strategically hedge against currency volatility, ensuring stable profit margins and fostering competitive advantages in the ever-evolving landscape of international trade. In essence, mastery of Forex enhances financial resilience, fostering a more agile and adaptive approach to global business.

Exchange rates represent the value of one currency in terms of another, determining the cost of international transactions. Fluctuations in exchange rates significantly impact your international payments, affecting the amount you receive or pay.&nbsp;

Influencing factors of exchange rate fluctuations include–

Monitoring these factors is crucial for individuals and businesses engaged in cross-border transactions, as understanding exchange rate dynamics helps mitigate risks and optimize financial decisions, ensuring your international payment methods align with prevailing market conditions.

A <a href="https://www.skydo.com/blog/benefits-of-multi-currency-accounts?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">multi-currency account</a> is a versatile financial ally in international payment methods that empowers you to hold and manage funds in various currencies within a single account. With this account, you can seamlessly transact and keep money in different currencies, offering flexibility and convenience in international dealings.&nbsp;

Its features include real-time currency exchange, enabling you to switch between currencies at competitive rates. In addition, having a multi-currency account can reduce fees when conducting transactions in foreign currencies.&nbsp;

#4: International Bank Account Number (IBAN)

The International Bank Account Number (IBAN) is a globally recognised identifier for bank accounts. In your international transactions, IBANs play a crucial role in simplifying and securing cross-border payments. They ensure accuracy by providing a standardised format, reducing errors in manual data entry.&nbsp;

With IBANs, transactions become more efficient, as they contain essential information like the country code and account number. This streamlines the process and enhances security by preventing misrouting of funds.&nbsp;

Let’s take an example of an IBAN for a hypothetical bank in the US.&nbsp;

The IBAN would be GB29NWBK60161331926819.

"GB" represents the country code (United Kingdom).

#5: Society for Worldwide Interbank Financial Telecommunication (SWIFT)

Entrusting your global financial transactions to the <a href="https://www.skydo.com/blog/why-was-a-certain-amount-deducted-from-my-swift-payments?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Society for Worldwide Interbank Financial Telecommunication (SWIFT)</a> is a strategic move in international finance.&nbsp;

SWIFT operates as a member-owned cooperative, providing a secure messaging network that facilitates seamless money transfers between participating banks. Its role in international transactions is pivotal, acting as the linchpin for secure communication among financial institutions worldwide.

Central to the efficacy of SWIFT is the utilisation of unique codes, commonly known as SWIFT codes or bank identifier codes (BIC). These codes, typically eight or 11 characters long, play a crucial role in ensuring the security and efficiency of payments.&nbsp;

For instance, the Italian bank UniCredit Banca boasts the SWIFT code UNCRITMM, where each segment holds specific information about the institution, its country, and its location.

SWIFT codes serve as digital fingerprints, guaranteeing that funds reach their intended destination with precision. The meticulous encoding of sender and recipient information within these codes expedites transactions and fortifies the financial ecosystem against potential security threats.&nbsp;

In essence, SWIFT and its codes are guardians of the global financial landscape, enabling you to navigate cross-border transactions with confidence and reliability.

A <a href="https://www.investopedia.com/terms/l/letterofcredit.asp">Letter of Credit (LC)</a> serves as a financial lifeline, defining a predetermined line of credit for international transactions. This crucial instrument assures payment, mitigating risks inherent in cross-border deals. Acting as a contractual guarantee, LCs boost trust between you and clients by ensuring funds are set aside for payment upon service delivery.&nbsp;

This secure payment method establishes a framework for seamless transactions, fostering a reliable and transparent relationship with partners worldwide. As the backbone of your payment system, LCs not only define financial parameters but also fortify the foundation of trust in the dynamic landscape of global IT services.

Embracing <a href="https://www.sebi.gov.in/legal/circulars/apr-2023/bank-guarantees-bgs-created-out-of-clients-funds_70518.html">bank guarantees (BGs)</a> for payment acceptance is pivotal in your global IT service business. BGs serve as a financial safety net, ensuring secure transactions on an international scale.&nbsp;

Functioning as a commitment from a bank that payment will be made in the event of a default, BGs offer reassurance to both parties involved. For your business, this means guaranteed payment upon successful service delivery, fostering trust and mitigating risks associated with cross-border transactions.&nbsp;

Advance payments in international trade refer to funds transferred by the buyer to the seller before the goods or services are delivered. This prepayment is a common method to secure a transaction, providing the seller with financial assurance.&nbsp;

One advantage for businesses using advance payments is immediate cash flow, aiding in production or procurement. However, the buyer faces the risk of non-delivery or dissatisfaction, making due diligence crucial.

Documentary collection, an alternative, involves a bank facilitating the exchange of documents for payment. Its purpose is to reduce payment risks while offering flexibility. Unlike letters of credit, documentary collection does not provide the same level of security, but it is less costly and complex.

While advance payments offer quick liquidity, they may strain buyer-seller relationships due to trust concerns. The documentary collection strikes a balance between security and simplicity.&nbsp;

Understanding these methods is vital for businesses engaged in global transactions, allowing them to choose the most suitable payment mechanism based on their specific needs and risk tolerance.

Selecting appropriate payment terms is crucial for international trade. Understand the common options to make informed decisions tailored to your business needs. Among the widely used terms is Letter of Credit (L/C), where a bank guarantees payment upon compliance with agreed-upon conditions.&nbsp;

Advance Payment demands payment before shipment, providing security but potentially affecting buyer trust. Open Account involves trust between parties, with the seller shipping goods before payment. To strike a balance, consider Cash in Advance for security or Open Account for established relationships.

For your business, assess factors such as cash flow, risk tolerance, and relationship history with your global clients. Balance the buyer's need for credit against your desire for payment security.&nbsp;

Building a comprehensive understanding of terms of payment in export ensures smoother transactions, reduces financial risks, and fosters stronger international business relationships. Tailor your approach, considering the unique dynamics of your industry and partners, to make informed decisions that align with your business objectives.

Currency risk in <a href="https://www.skydo.com/blog/simplify-your-global-payments-with-skydo?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">global transactions</a> refers to the potential financial loss due to fluctuating exchange rates. When conducting international business, changes in currency values can impact profits and expenses.&nbsp;

To shield your business, employ strategic currency risk management. Hedge against volatility using financial instruments like forward contracts or options, fixing exchange rates in advance. Diversify currency holdings to spread risk, minimising the impact of adverse movements.&nbsp;

Stay informed about geopolitical events and economic indicators influencing currency markets. By adopting these strategies, you'll fortify your business against currency risk, ensuring stability in an unpredictable global financial landscape.

Bonus: Other Important International Payment Terminologies

Comprehending international payment terminologies is paramount for businesses venturing into global service exports. Mastery of payment regulations language ensures avoidance of legal and financial pitfalls, fostering a seamless cross-border transaction experience.&nbsp;

Staying abreast of evolving global payment trends is indispensable for maintaining a competitive edge. By navigating the intricate landscape of international payments, businesses position themselves to capitalize on opportunities and mitigate risks. A nuanced understanding of these terminologies not only safeguards against pitfalls but also establishes a foundation for successful and compliant global business operations.

Q1. What are the methods of payment in international trade?

Ans: International trade commonly involves payment methods such as letters of credit, bank transfers, and open account transactions. These methods ensure secure and efficient cross-border transactions.

Q2. What are the common methods of foreign payments?

Ans: Common methods of international payment include letters of credit, bank transfers, and open account transactions. These foreign payment methods facilitate smooth and secure financial transactions between parties engaged in global trade.

Ans: Documentary credit or letter of credit is a financial arrangement widely used in international trade, issued by a bank to guarantee payment to the seller upon the fulfilment of specified conditions.

Ans: Documentary collection is a method of payment in international trade where a seller entrusts the handling of shipping documents to banks, with the buyer making payment upon document presentation as per agreed terms.

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Income Tax, an unavoidable facet of your financial life, looms annually like clockwork. The tax filing process can be daunting, given the formidable 23 chapters and 298 sections of the Income Tax Act of 1961 that you must go through.&nbsp;

As a resident earning in India and making domestic transactions, it is relatively easier to comply with all the tax rules. But what if you are a resident with a global business presence and send international payments during the financial year? Tax compliance with regards to&nbsp;<a href="https://www.skydo.com/blog/how-do-you-receive-a-foreign-remittance-in-a-savings-account?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">foreign remittance</a>&nbsp;can get tricky. If you are a resident who has sent money to a non-resident, you must file Form 15CA and 15CB to ensure tax deduction at source. This blog explains both forms and how to ensure effective compliance for foreign remittances.

Form 15CA is a declaration by the remitter, a resident of India, making international transactions and remitting money to a non-resident. The Income Tax Department, under Section 195 of the Income Tax Act, 1961, requires you to collect <a href="https://www.skydo.com/blog/ways-to-ensure-zero-tds-leakage?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Tax Deductible at Source (TDS)</a> from the payments made to non-residents.&nbsp;

Form 15CA creates an effective information processing system for the Indian Tax Department to track foreign remittances and identify your tax liability to avoid withholding taxes.&nbsp;

In early 2023, the Income Tax Department recently revised Rule 37BB, which entails that the authorised dealers/banks should furnish Form 15CA (from the remitter) in case of foreign remittance, failing which the department levies a duty.&nbsp;

The entire list of payments where you do not require filing forms 15CA and 15CB are can be found this <a href="https://incometaxindia.gov.in/Rules/Income-Tax%20Rules/103120000000007406.htm">list</a>&nbsp;by the Income Tax Department.

The Income Tax Department has also created an online facility for remitters to file Form 15CA online and send the submitted form’s copy to the bank as proof of tax clearance from the tax department.

Form 15CA consists of the following four parts.

Part A: You must fill this part if the remittance is chargeable to tax and the aggregate of foreign remittance to non-resident(s) does not exceed Rs 5 lakhs during the financial year.&nbsp;

Part B: You must fill this section if the remittance is chargeable to tax and the aggregate of such foreign remittance to non-resident(s) exceeds Rs 5 lakhs during the financial year. Additionally, the remitter should have an order/certificate u/s 195(2)/195(3)/197 of the Income Tax Act from the Assessing Officer.&nbsp;

Part C: Part C applies if the remittance is chargeable to tax and the aggregate of such foreign remittance to non-resident(s) exceeds Rs 5 lakhs during the financial year, and the remitter has obtained the Form 15CB from a <a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Chartered Accountant</a>.&nbsp;

Part D: Part D applies if the remittance is not chargeable to tax under the provisions of the Income Tax Act.&nbsp;

Here are the steps to<a href="https://www.incometax.gov.in/iec/foportal/sites/default/files/2021-10/Process%20Document.pdf"> File Form 15CA of your income tax return online</a>:

Form 15CB is a certificate that the remitters must obtain from a licensed Chartered Accountant to certify the liability of withholding tax and the details of payments, such as rates with the Tax Deducted at Source (TDS). Form 15CB is mandatory for uploading the Part C of Form 15CA with the Income Tax Department.&nbsp;

The main aim of submitting Form 15CB is to seek help from a Chartered Accountant who certifies that the remitter has followed the provisions of the Income Tax Act and the Double Taxation Avoidance Agreement – DTAA concerning tax deductions while making international transactions with non-residents.

Form 15CB includes the following details:

Some foreign remittances do not require the remitter to submit Form 15CB if:

<a href="https://www.incometax.gov.in/iec/foportal/sites/default/files/2021-10/Process%20Document.pdf">The process of obtaining the 15CB form</a> is as follows:

Earlier, a person remitting money to a foreign national was required to furnish a certificate as specified by the RBI, but the process was cumbersome to manage and resulted in tax withholding. Now, with Forms 15CA and 15CB, the Income Tax Department can collect information about remittances chargeable and collect taxes when the resident makes foreign remittances.

The Tax Deducted At Source (TDS) through Form 15CA helps to curb illicit outflows and money laundering activities while strengthening the government’s efforts to track cross-border transactions. Consequently, Form 15CB allows certification for the remitter with adherence to the Foreign Exchange Management Act (FEMA) and the Double Taxation Avoidance Agreement – DTAA.&nbsp;

Details Required For Filing Form 15CA and 15CB&nbsp;

Filing Forms 15CA and 15CB require some information and documents on the part of the remitter for accurate filing. If you have made international transactions, you will require the following details to fill out both forms.

Revised Rules for Submitting Form 15CA and 15CB effective from April 1, 2016

To simplify filing both forms, we consulted with our Head of Finance and CA,<a href="https://www.linkedin.com/in/carohitkhurana/"> Rohit Khurana</a>, to answer all the burning questions. Here is what he had to say:&nbsp;

International transactions are vitally important for an individual doing business in foreign countries or a company with a global presence. However, with earnings comes the compliance aspect, which is an integral part of the Indian tax system.&nbsp;

Form 15CA and 15CB ensure that a resident remitter can comply with all the relevant tax laws and continue to remit internationally. Since the Indian Tax Department has created an online method to file both forms, it has become easier to adhere to the compliance aspect and certify the TDS through a licensed CA.

Q1. What types of documents are required while filing Form 15CA?

Ans: When filing Form 15CA for foreign remittances, you will need to provide the following details:

Q2. What will happen in case of non-compliance with Form 15CA and Form 15CB?

Ans: Non-compliance with Form No. 15CA and Form No. 15CB can lead to penalties. If the remitter fails to file the relevant forms, the assessing officer can levy a penalty of Rs 1 lakh.

Ans: Form 15CB is used by remitters who are making foreign remittances and are liable to pay Tax Deducted at Source (TDS). It is a certificate issued by a Chartered Accountant to certify the withholding tax liability and payment details.

Q4. Is it compulsory to file Form 15CB before filing Part C of Form 15CA?

Ans: Yes, it is compulsory to file Form 15CB before filing Part C of Form 15CA. Part C of Form 15CA requires the remitter to have obtained Form 15CB from a Chartered Accountant to certify the withholding tax liability, and this certificate is a prerequisite for completing Part C of Form 15CA.

Q5. How can Form 15CA and 15CB be revised or cancelled?

Ans. Form 15CA can be withdrawn within 7 days from submission, with the withdrawal link accessible on the Assessee's website.

Ans. Individuals or entities, except companies, responsible for payments to non-residents or foreign companies, must provide the necessary details in Form 15CA.

Q7. What scenarios do not require filing Form 15CA?

Ans. Exceptions for filing Form 15CA include individual remittances not needing RBI approval and transactions falling under RBI-specified purposes codes.

Q8. Is submission of Form 15CB compulsory?

Ans. Form 15CB is necessary only if remittances exceed Rs. 5 lakh annually, requiring an accountant certificate as per Section 288 of the Income Tax Act, 1961.

Ans. Chartered Accountants (CAs) registered on the e-filing portal handle Form 15CB, enabled by assigning Form 15CA from the taxpayer.

Ans. Form 15CB requires e-verification using the CA's Digital Signature Certificate (DSC) registered on the e-filing portal. There's no set timeframe, but it must precede the remittance.

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For exporters, eBRC (Electronic Bank Realization Certificate) is a key compliance document that serves as proof of payment received from abroad for exported goods or services. It is especially important for goods and software exporters covered under SOFTEX.

In this blog, we’ll break down what eBRC is, why it matters, how to obtain it, and everything else you need to know.

An eBRC (Electronic Bank Realization Certificate) is digital proof that your bank issues once you receive payment for an export. Simply put, it confirms that you’ve been paid for your goods or services.

This certificate is important because it helps you report your earnings, file taxes easily, and even access government benefits meant for exporters including low-cost loans, subsidies, duty exemptions and more.&nbsp;Since eBRC includes all the transaction details, it also makes compliance with authorities like the Income Tax Department smooth and hassle-free.

Before eBRC, getting a <a href="https://www.skydo.com/blog/bank-realisation-certificate-all-you-need-to-know">Bank Realization Certificate (BRC)</a> was a tedious process. Exporters had to visit their bank, apply for a physical BRC, and then submit it to the Directorate General of Foreign Trade (DGFT). The DGFT would manually enter transaction details, making the process slow and complicated—especially for claiming export incentives.

In 2012, the DGFT introduced e`BRC, eliminating the need for physical visits and paperwork. Now, banks issue BRCs digitally, making it faster, easier, and more efficient for exporters to claim benefits and comply with regulations.

In India, banks issue an -BRC to exporters through the following process.

How do you check the eBRC status on the DGFT Website?

Here are the steps to check the status of your eBRC (Electronic Bank Realization Certificate) online.

DGFT has made it mandatory for all exporters to apply for and receive the eBRC to demonstrate that they have received payment for their exported goods or services per DGFT regulations.