Send money abroad in case of Commercial / Business transactions
Check out, How to send money abroad in case of commercial/business transactions, the Types of Documents required, and Applicable Charges
Foreign Outward Remittance
Case – II: Commercial / Business transactions
Basic Documents Required:
| Requesting letter for O/w Remittance from the customer | Yes |
| Form A1 (For Import Payments only) Form A2 (for payments other than imports and remittances covering intermediary trade) | Yes |
| Declaration under FEMA | Yes |
| Copy of Agreement, Invoice/Purchase Order | Yes |
| Form 15CA/15CB along UDIN (Not Required in case of Import of Goods. Ref. Rule 37BB) | Yes |
Types of Charges:
- Margin Matrix, % may vary on the basis amount of remittance.
- SWIFT Charges
- GST (Service Tax) (Min Rs. 45)
- Import Charges
- Foreign Outward Remittance charges (Min Rs. 1,000).
Example
CA Cult, a business entity needs to make the payment for technical services received from outside India, let’s say, from USA. Particulars of the transactions are as follows:
- Invoice Amount: $5,000
- Conversion Rate: Rs. 80/$
- Amount in INR $ 5,000 * 80 = Rs. 4,00,000/-
- Remittance is Chargeable to Tax in India
Documents required for the above Remittance:
- Request Letter for Foreign Remittance
- Form A2
- Declaration under FEMA
- Copy of Agreement with Service Provider, Copy of Invoice
- Form 15CA Part A Only (Amount is Chargeable to Tax but not Exceeding Rs. 5 Lakhs)*
*Note: In the above example, if the amount of Remittance exceeds Rs. 5,00,000/- then we need to provide Form 15CA Part C along with Form 15CB and UDIN.
Calculation of Charges
- Margin Matrix: $5,000 * 12% = Rs. 600/-
- SWIFT Charges = 500 + 18% GST = Rs. 590/-
- GST (Service Tax)
Upto Rs. 1 Lakh * 1% = 1,000
From Rs. 1 Lakh to Rs. 4 Lakhs (i.e., on remaining Rs. 3 Lakhs * 0.5%) = 1,500
GST would be = 1,000 + 1,500 = 2,500 * 18% = Rs. 450/- - Foreign Outward Remittance Charges = Rs. 4 Lakhs * 0.12% = Rs. 480 + 18% GST thereon
But the Minimum Charges are Rs. 1,000/-.
Therefore in this case, Rs. 1,000+ 18% GST thereon = Rs. 1,000 + 180 = Rs. 1,180/
Note: Import Charges are applicable in case of Import only.
Applicability of forms 15CA and 15CB are as under (Source- Income-tax Portal):
Form 15CA has four sections:
Remittance Chargeable to TAX
- Part A – If remittance or the aggregate of such remittances is chargeable to tax and does not exceed 5 lakh rupees during the financial year
- Part B – If remittance is chargeable to tax and the remittance or the aggregate of such remittances, exceeds 5 lakh rupees during the financial year and an order / certificate u/s 195(2) / 195(3) / 197 has been obtained from the AO
- Part C – If remittance is chargeable to tax and the remittance or the aggregate of such remittances, exceeds 5 lakh rupees during the financial year and a certificate in Form No. 15CB from an accountant has been obtained.
Remittance Not Chargeable to TAX
4. Part D – If remittance is not chargeable to tax
Check out Other Relevant Blogs
- How to send money abroad by Non-Residents of India (NRI)
- How to send money abroad under LRS by Indian Residents
- What is Foreign Remittance? and How to remit funds outside India?
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