Everything you need to know about Form 15CA and 15CB

Introduction

In this article, you will learn about form 15CA and form 15CB. You will also get to know why remittances are taxed and in which case tax exemptions are applicable for an online money transfer. Since these two forms are concerned with the taxation of remittances, it is vital to know whether taxing is a good idea in the first place or not. Let’s start! Pakistani expatriates must know about the tax mechanism to stay better informed. It will help them make an online money transfer to Pakistan from the UK or any other country.

The need to tax remittances

Almost all the studies available on this topic denounce the idea of taxing remittance income. Many studies and profound observations of the impact of taxes on remittances led to such a conclusion. Besides, taxing remittances means double taxation of migrant workers’ income in host countries. The standard global practice deducts taxes at the source or remitter’s end. Thus, taxing an expatriate’s income again on the receiving end is not a good idea. Several studies have proved that such a practice makes migrants and their families regressive. It also drops the flow of remittance through formal channels as people resort to other informal channels to remit their earnings. So, what is the need for forms 15CA and 15CB? Let’s try and understand. The need to tax income arises when earnings exceed a specific limit. Obviously, taxation on goods, services, and revenue is any government’s primary source of income. And for the payment of these taxes, people have to follow the policies. Furthermore, these forms are tools to ensure compliance by expatriates. They have to fill out these forms to check the status of their qualification for taxation. Let’s now study the forms themselves.

Form 15CA

The Income Tax Act requires reporting any payment that an expatriate makes to outside people. The basic idea is to ensure tax deductions and reporting to the governments to keep track of the flow of funds. To put things into perspective, Form 15CA serves as a declaration by the remitter about tax deductions at source and compliance with the government’s tax policies.

Form 15CB

This form is a certificate issued by a Chartered Accountant or any other competent authority based on the target country. This is to ensure that the emitter has complied with the Double Taxation Avoidance Agreement and Income Tax Act. How taxing remittances leads to double taxation is explained above. Now, let’s see a few benefits of these two forms.

Proof of clean money

There is a parallel yet informal system to move remittances globally known as Hawala or Hundi, which is used for the movement of black money. An expatriate must acquire these forms to ensure that only the formal channels to send money online are used and that the money being sent is clean.

Double Taxation Check

No expatriate likes to let the employer deduct tax from their income at source, and then make them pay taxes on already-taxed income. Form 15CB helps to avoid this duplicity.

Compliance with regulations

Every country sets different compliance procedures for taxation. But these two forms are almost universal to ensure that the expatriates follow the principles completely.

Ease of sending large sums

Transferring large sums of money raises doubts about several issues like: What is the source; Who earned it; How is the said money earned; What is the purpose of moving the money; Is the money moving channel secure and government-regulated, etc? Also, any of these concerns can invite various troubles for expatriates. These can include having to face many bureaucratic hurdles in trying to explain and answer. But these forms are an easy way to solve all these queries. And this way, the expatriates face no problems while they send a large amount which is otherwise a little complicated. It is also important to understand that not all inbound remittances qualify to be put up on these forms. There are certain limits below which the remitter can send the sum directly. And these limits differ from country to country. It all boils down to mainly sending money from abroad through online money transfer companies. Thus, it is necessary to look for the best company that offers you the following few essential features.

• The company you choose must hold a fine and noble reputation in the remittance industry.
• It ensures secure transactions so that your hard-earned money remains safe.
• The service provider must offer the best evolving exchange rates directly linked with the international market.
• The company must not have a hidden fee. There must be a transparent fee structure open for the customers to study.
• It must charge a low fee for its services.

You will hardly find a few companies, including ACE Money Transfer, that offer these many features. Due to such features, ACE has acquired a noble and positive reputation globally.

Conclusion

Earning in a foreign land alone is not enough. You have learned how important it is to ensure tax compliance to avoid troubles in another country. Thus, you need to make sure to strictly comply with the tax regulations of your country of residence. Start using Form 15CA and Form 15CB if your income qualifies you to do so.