Your Bank Wants a Form 15CB. Rule 37BB Often Does Not

Two opposite mistakes happen around Form 15CB, and both are expensive.

A bank asks for one on a remittance that needs nothing at all, and a certificate is commissioned to satisfy a counter clerk. Or a Part D is filed on a sum that was chargeable all along, the money leaves, and the remitter discovers eighteen months later that section 201 follows them rather than the recipient.

Rule 37BB has five destinations and only one of them carries an accountant's certificate. Our Form 15CA / 15CB tool walks the tree; this note explains it.

The whole rule, in one table

Four of the five need no accountant. That is the point most often lost.

Start by asking whether the Rule applies at all

Rule 37BB(3) puts two categories outside it:

• A remittance by an individual that does not require prior approval of the Reserve Bank under section 5 of FEMA read with Schedule III to the Current Account Transactions Rules.
• A purpose in the specified list — thirty-three entries covering payment for imports, advance against imports, travel for education or medical treatment, family maintenance and savings by non-residents, personal gifts and donations, payment or refund of taxes, and Indian investment abroad, among others.

For these, nothing is filed. Not a Part D, not a nil certificate — nothing.

The ₹5 lakh test is on the year, not the payment

This is the step most often got wrong, and it is got wrong in a way that only surfaces later.

The threshold is the aggregate of such remittances during the financial year, not the size of the one in front of you. Four remittances of ₹2 lakh are over it. A remitter who filed Part A on each of the first three, correctly, has to be in Part C by the fourth — and a Part A filed at that point is wrong.

Anyone remitting regularly needs a running total for the year, not a decision taken afresh each time.

Part D is a position, not a formality

Filing Part D is a statement that the sum is not chargeable to tax in India. It is quick, it needs no accountant, and that combination makes it look like a box to tick.

It is not. If the sum was chargeable:

• the remitter is an assessee in default under section 201 for the tax that should have been deducted;
• interest under section 201(1A) runs from the date the deduction should have been made;
• the expenditure can be disallowed under section 40(a)(i); and
• section 271-I provides a penalty of ₹1 lakh for furnishing inaccurate information in Form 15CA or 15CB.

By the time any of this arrives the money is abroad and the recipient has no reason to engage. The exposure sits entirely with the person who remitted.

So the basis for treating a sum as not chargeable belongs on the file, in writing, at the time — with the contract, the invoice, and the residency and permanent-establishment evidence behind it.

What a Form 15CB actually certifies

A 15CB is not an administrative stamp. It states the nature of the remittance, the rate at which tax has been deducted, and the basis for that rate — including the treaty article where one is relied on.

Signing one means having read the contract, satisfied oneself on the recipient's residence, and formed a view on whether there is a permanent establishment in India. Where treaty relief is claimed, that means a Tax Residency Certificate under section 90(4), Form 10F under section 90(5), and usually a no-permanent-establishment declaration.

Which is to say: the work behind a 15CB is the same work that answers the chargeability question in the first place. If that has been done properly, the certificate follows from it. If it has not, the certificate is where the gap shows.

Where the bank's practice diverges from the Rule

Authorised dealers carry their own risk under FEMA and have their own compliance manuals, and it is common for a bank to ask for a 15CB where Rule 37BB requires none — on a specified-list purpose, or on a Part D remittance.

That is the bank's requirement, not the law's, and it is worth saying so before commissioning a certificate that nothing calls for. Sometimes the bank relents when shown the Rule. Sometimes it does not, and a certificate is obtained to get the remittance through. Either way it should be a decision taken knowingly rather than a cost absorbed by default.

What to have ready

• The contract or invoice, and what the payment is actually for.
• The recipient's Tax Residency Certificate and Form 10F where a treaty is relied on.
• A no-permanent-establishment declaration where the treaty article calls for one.
• The running total of such remittances for the financial year to date.
• Any order or certificate under section 195(2), 195(3) or 197 already held, and what amount and period it covers — they are issued for both, and they are spent.

Where this comes up

Most often on a repatriation following a property sale, where the TDS question and the remittance question arrive together and are usually addressed in the wrong order. See the buyer deducts on the whole sale price, and the property sale calculator alongside it.

References

• Section 195(6) and Rule 37BB, with the specified list in the Rule.
• Sections 201, 201(1A), 40(a)(i) and 271-I for the consequences of getting chargeability wrong.
• Sections 90(4) and 90(5) for the Tax Residency Certificate and Form 10F.

Our work on remittances, lower-deduction certificates and treaty positions is set out under international taxation.

General information on how Rule 37BB is structured, not advice on a particular remittance. Whether a sum is chargeable turns on the contract, the treaty and the facts, and nothing here decides it.