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

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

Rohit

medium_Rohit.png

small_Rohit.png

thumbnail_Rohit.png

Rohit Khuranna

As a freelancer or professional in India, managing your taxes doesn't have to be complicated. The government has introduced a simpler way through Section 44ADA of the Income Tax Act - the presumptive taxation scheme that lets you pay taxes on just 50% of your gross receipts, regardless of your actual expenses.

No more maintaining detailed books or tracking every expense. Whether you're a doctor, architect, lawyer, or freelance consultant, this scheme could significantly simplify your tax compliance while potentially reducing your tax burden.

In this guide, we'll break down everything you need to know about Section 44ADA - who can use it, the limits, how to file your income tax return, and common mistakes to avoid.&nbsp;

What is Section 44ADA of the Income Tax Act?

<a href="https://incometaxindia.gov.in/Acts/Finance%20Acts/2003/102120000000009718.htm">Section 44ADA</a> is a simplified tax calculation method for professionals and freelancers. Instead of tracking every expense and making complex calculations, these normal provisions assume that half of what you earn is your net profit.

Here's how it works: You earned ₹20 lakhs from your consultancy work this year. Under Section 44ADA, You can declare ₹10 lakhs (50% of your earnings) as your taxable income. The remaining ₹10 lakhs are considered to cover your business expenses - no questions asked, no proof needed.

This straightforward approach saves you from the hassle of maintaining detailed expense records while potentially reducing your tax burden.

Who is eligible for Section 44ADA of the Income Tax Act?&nbsp;

Not everyone can take advantage of Section 44ADA - designed specifically for certain eligible professionals and small business structures. Let's break down who can benefit from this presumptive scheme.

If you're working in any of these fields, you're likely eligible:

For example, if you're a doctor running your clinic as an individual practitioner or in partnership with other doctors, you can opt for Section 44ADA. However, if you've structured your practice as an LLP or a private limited company, you won't be eligible for this scheme.

Remember, just because you're in one of these professions doesn't automatically mean you should opt for Section 44ADA. The decision should depend on your actual expenses and business circumstances. 

What are the limits under 44ADA of the Income Tax Act?&nbsp;

To use Section 44ADA, your professional income must stay within certain limits.&nbsp;

Here's what you need to know about these thresholds:&nbsp;

₹50 Lakhs If you're receiving payments through any means (cash, cheque, or online transfers), you can use Section 44ADA as long as your total professional income doesn't exceed ₹50 lakhs in a financial year.

&nbsp;₹75 Lakhs There's good news if you mostly receive digital payments. You can enjoy a higher limit of ₹75 lakhs if you meet this condition:

Scenario 1: A consultant earning ₹60 lakhs annually:

Scenario 2: A lawyer earning ₹55 lakhs annually:

💡Important: When we say "cash receipts," this includes not just physical cash but also bearer cheques and bank drafts that aren't account payee. To stay safe, always insist on account payee cheques or digital payments from your clients.

Taxable Income under 44ADA of Income Tax Act&nbsp;

Let's examine how your taxable income is calculated under Section 44ADA—it's simpler than you might think.

Under Section 44ADA, the tax department assumes half of your turnover is your profit. Here's how it works in practice:

Let's say you're a freelance architect who earned ₹40 lakhs this year:

📚Note: Once you calculate your income this way, you can't claim any additional expenses. The 50% calculation is final - even if your actual expenses were higher or lower.

Can you declare more than 50%?&nbsp;

Yes! The 50% is just the minimum. If your actual profit is higher, you should declare the higher amount. For example, if your real expenses were only ₹15 lakhs on a ₹40 lakh income, you should declare ₹25 lakhs as your taxable income.

A consultant earns ₹30 lakhs in a year:

Remember, this simplified calculation is one of the biggest advantages of Section 44ADA - no need for detailed bookkeeping or expense tracking!

Let's clear up a common confusion - Section 44ADA doesn't have its special tax rates. Instead, after calculating your taxable income as 50% of your gross receipts, you'll pay taxes according to regular income tax slab rates.

Here's a practical example: Imagine you're a freelance consultant earning ₹30 lakhs annually:

Choose your tax regime based on your overall tax situation, including available deductions and other income sources.

The only thing Section 44ADA does is help you calculate your professional income easily - it doesn't change how that income is taxed. You'll still need to pay taxes according to the normal income tax slabs applicable to you.&nbsp;

Section 44ADA of Income Tax Act with Example&nbsp;

Here, we look at two practical examples to understand how Section 44ADA impacts your tax calculations.

Example 1: A freelance software exporter&nbsp;

Meet Priya, a freelance software exporter who earned ₹40 lakhs this year with actual expenses of ₹12 lakhs.

In this case, Section 44ADA benefits Priya by reducing her taxable income by ₹8 lakhs.

Consider Rahul, a legal consultant with annual earnings of ₹35 lakhs and high operating expenses of ₹22 lakhs.

Here, Rahul would pay more tax under Section 44ADA since his expenses exceed 50% of his income. He's better off not opting for this scheme.

👉Key Takeaway: Section 44ADA isn't always the best choice, depending on your business expenses. If your real expenses are less than 50% of your income, 44ADA can save you taxes and reduce your compliance burden. But if your expenses are higher, you might want to opt for regular tax computation.

Do I Have to Pay Advance Tax Under Section 44ADA of the Income Tax Act?&nbsp;

Yes, you must pay advance tax if you opt for Section 44ADA, but the rules are simpler than regular advance tax payments.

What happens if you miss the deadline? If you don't pay advance tax by March 15th:

💡Pro tip: Mark March 15th on your calendar and set aside funds throughout the year to meet this obligation. It's better to be prepared than to scramble for funds at the last minute!

Do I have to Maintain Books of Account under Section 44ADA of the Income Tax Act?&nbsp;

One of the biggest advantages of Section 44ADA is that it frees you from the hassle of maintaining detailed books of accounts - with some conditions, of course. Let's break this down:

Suppose you're declaring 50% (or more) of your gross receipts as income, and your total receipts are within limits (₹50 lakhs generally, or ₹75 lakhs for mostly digital payments). In that case, you can skip maintaining detailed books of accounts.

When you must maintain books: You'll need proper bookkeeping in two situations:

Example: A consultant earning ₹40 lakhs annually who declares ₹20 lakhs (50%) as income:

The same consultant, if declaring only ₹15 lakhs as income (claiming higher expenses):

👉Remember: While detailed bookkeeping might not be mandatory, keeping basic records of your income and major expenses is still good practice for your reference!

Which ITR form to choose for Section 44ADA of the Income Tax Act?&nbsp;

If you've opted for Section 44ADA, you must file your returns using ITR-4. This form is specifically designed for professionals and businesses using presumptive taxation schemes.&nbsp;

Mistakes to Avoid When Opting for Section 44ADA&nbsp;

Many professionals miss benefits or face tax troubles because of simple oversights. Here are the key mistakes you should avoid:&nbsp;

large_Section 44 ADA of Income Tax Act

medium_Section 44 ADA of Income Tax Act

small_Section 44 ADA of Income Tax Act

thumbnail_Section 44 ADA of Income Tax Act

Section 44 ADA of Income Tax Act

Let’s discuss Raj, a small business owner in Delhi who spent countless hours managing his accounts and calculating expenses. With an annual turnover of ₹80 lakhs from his retail store, he struggled to keep track of every receipt (cash receipts included) and wondered if there was an easier way to handle his taxes.&nbsp;

Like many small business owners in India, tax compliance became a major challenge.

The good news is that the government has simplified tax filing through the presumptive taxation scheme under Section 44AD of the Income Tax Act. This guide will walk you through everything you need to know—from eligibility and income limits to filing your tax returns. Whether you run a retail store or operate as a freelancer, you'll learn how this scheme lets you declare a fixed turnover percentage as taxable net income, simplifying tax compliance.

What is Section 44AD of the Income Tax Act?

<a href="https://incometaxindia.gov.in/Tutorials/13.%20Tax%20on%20presumptive%20basis%20in%20case%20of%20certain%20eligible%20businesses.pdf">Section 44AD</a> makes it really simple for small businesses to calculate their taxable income. Instead of tracking and deducting every expense from gross revenue, this scheme lets you declare a fixed percentage of your turnover as income—8% for cash transactions and 6% for digital payments.

Let's say your business has an annual income of ₹50 lakhs, mostly through digital modes. Rather than maintaining detailed expense and other financial records, you can declare 6% of this amount (₹3 lakhs) as your taxable income. This presumptive income is then taxed according to regular income tax slabs.

The scheme removes the burden of extensive bookkeeping and helps small businesses focus more on growing their business than managing complex accounts.

Who is eligible for 44AD of the Income Tax Act?&nbsp;

Not every business can opt for Section 44AD. The scheme is specifically designed for small businesses operating in India.&nbsp;

However, professionals like doctors, lawyers, and architects must look at Section 44ADA instead of 44AD for their tax filing. Also, this scheme isn't for you if you've incorporated a private limited company.

Remember, the key word here is "resident of India ." Non-resident Indians (NRIs) running businesses in India can't opt for this scheme, even if they meet all other criteria.

📚Note: Being eligible by business type isn't enough—you'll also need to meet the turnover criteria, which we'll cover in the next section.

Which businesses are not covered under 44AD of the Income Tax Act?

Let us clarify <a href="https://incometaxindia.gov.in/Tutorials/13.%20Tax%20on%20presumptive%20basis%20in%20case%20of%20certain%20eligible%20businesses.pdf">which businesses can't use Section 44AD</a>, even if they meet the turnover criteria:

What are the limits under 44AD of the Income Tax Act?&nbsp;

Think of turnover as all the money your business earns in a year or the previous year. The limits for using Section 44AD depend on how you receive your payments:&nbsp;

Here's a simple example: If your business makes ₹2.5 crore annually and almost all payments come through bank transfers, UPI, or account payee cheques, you can use this scheme. But if you receive even ₹13 lakhs (more than 5%) in cash, you'll be limited to the ₹2 crore threshold.

📚Note: Payments received through bearer cheques or non-account payee bank account drafts are counted as cash payments. Only digital transfers and account payee cheques qualify as non-cash payments.

For instance, if you run a wholesale business making ₹2.8 crore annually with 98% payments through UPI and bank transfers, you can opt for Section 44AD. However, you won't be eligible if you run a retail store with the same turnover but receive 10% payments in cash.

Taxable Income under 44AD of the Income Tax Act&nbsp;

Let's understand how your taxable return of income is calculated under Section 44AD with some real-world examples:

Under this scheme, you don't need to calculate your profit by subtracting expenses. Instead, a fixed percentage of your total turnover is considered as your taxable income:

Say you run a grocery store with an annual turnover of ₹1 crore. If all your customers pay in cash, your taxable income would be ₹8 lakhs (8% of ₹1 crore). But if most customers pay through UPI or bank transfers, your taxable income would be only ₹6 lakhs (6% of ₹1 crore).

Here's another example: Your business has a turnover of ₹50 lakhs, with ₹30 lakhs through digital payments and ₹20 lakhs in cash. Your taxable income would be:

📚Note: You can't claim additional expenses after choosing these percentages. Even if your actual expenses are higher, they won't reduce your tax liability further.&nbsp;

However, you can always declare more income if your profits exceed these percentages.

Remember, this taxable income will be subject to regular tax rates based on your tax slab.

The tax under Section 44AD follows the same income tax slab rates that apply to all individuals. The only difference is in how your taxable income is calculated.

For example, if your business turnover is ₹50 lakhs through digital payments, your taxable income would be ₹3 lakhs (6% of turnover). This ₹3 lakhs is then taxed according to your income tax slab - whether you fall in the 5%, 20%, or 30% bracket depends on your total income, including income from other sources.

Remember, you can choose the old or new tax regime while paying taxes on this income.

Section 44AD of Income Tax Act with Example&nbsp;

Here are two practical examples to understand Section 44AD. These examples will help you show the difference between opting and not opting for this scheme:

Meet Priya, who runs a local grocery store with an annual turnover of ₹40 lakhs, mostly through UPI payments.

Taxable income: ₹5 lakhs (₹40 lakhs - ₹35 lakhs)

Consider Rajesh, who runs a wholesale business with ₹1.5 crore turnover mostly in cash.

No detailed bookkeeping is needed. Simple ITR filing via ITR 4

Do I Have to Pay Advance Tax Under Section 44AD of the Income Tax Act?&nbsp;

If you opt for Section 44AD, you must pay advance tax, but the rules are simpler than regular advance tax payments. Let's understand this clearly:

Under normal tax rules, you must pay advance tax in four instalments yearly. But if you've opted for Section 44AD, you only need to make one payment - due date by March 15th of the financial year.

Here's a practical example: Suppose your business turnover for FY 2023-24 is ₹50 lakhs through digital modes. Your presumptive income would be ₹3 lakhs (6% of turnover). You need to calculate the tax on this amount and pay it as advance tax by March 15, 2024.

Warning: If you miss this March 15th deadline, you must pay interest under <a href="https://incometaxindia.gov.in/tutorials/6-interest%20payable%20by%20the%20taxpayer.pdf">Section 234C</a>. The interest is calculated at 1% per month on the unpaid tax amount.

💡Quick Tip: Estimate your annual turnover by early March and ensure you pay advance tax on time. This helps avoid any last-minute rush and potential interest charges.

Do I have to Maintain Books of Account under Section 44AD of the Income Tax Act?&nbsp;

One of the biggest advantages of Section 44AD is that it frees you from detailed bookkeeping requirements. Let's understand what this means for your business:

If you declare income at 6-8% of your turnover under Section 44AD:

However, it's still good business practice to keep basic records like:

For example, If you run a retail store with ₹80 lakhs turnover and opt for Section 44AD, you don't need to track every small expense like electricity bills, staff salaries, or shop maintenance. Depending on your payment modes, you'll just declare 6-8% of your turnover as income.

📚Note: This exemption from maintaining books applies only if you declare at least 6-8% of turnover as income. If you declare a lower percentage, you must maintain complete books and get them audited.

Section 44AD of Income Tax Act: 5-Year Rule&nbsp;

Once you opt for Section 44AD, you must stay with it for five consecutive years. Here's how it works:

Say you start using Section 44AD in FY 2022-23:

Here's a real example: Amit runs a trading business and opts for Section 44AD in FY 2022-23, declaring 6% of his ₹1 crore turnover as income. In FY 2023-24, he declares actual profits instead of presumptive income. As a result:

💡Pro Tip: Before opting for Section 44AD, consider whether you can commit to it for 5 years, especially if your business is growing rapidly or your profit margins differ significantly from the presumptive rates.&nbsp;

Which ITR form to choose for Section 44AD of the Income Tax Act?&nbsp;

If you're filing taxes under Section 44AD, you must use <a href="https://www.incometax.gov.in/iec/foportal/help/e-filing-itr4-form-sugam-faq">ITR-4 form</a> for your income tax return.

Mistakes to Avoid When Opting for Section 44AD&nbsp;

Watch out for these common mistakes under Section 44AD:&nbsp;

Before jumping in, make sure your business qualifies. For example, if you're a doctor or lawyer, you can't use Section 44AD (you need 44ADA instead). Also, check your turnover - it should be under ₹2 crore or ₹3 crore if 95% of your payments are digital.

Getting the math wrong on digital payments&nbsp;

Many business owners forget digital payments are taxed at 6%, not 8%. Let's say you receive ₹50 lakhs through UPI - your taxable income would be ₹3 lakhs (6%), not ₹4 lakhs (8%). This simple mistake could cost you extra tax.

Think carefully before opting out. Raj, a small retailer, opted out after two years, thinking he could switch back when it was convenient. Now he's stuck maintaining detailed books and paying for audits for five years - something he wasn't prepared for.

Once you choose Section 44AD, 6-8% is your final taxable income. Some business owners try to claim additional expenses on top of this, but that's not allowed and could get you in trouble with the tax department.

Remember: Section 44AD is meant to simplify your tax life. Following these guidelines can help you avoid unnecessary complications and keep things straightforward.

large_44AD of Income Tax Act

medium_44AD of Income Tax Act

small_44AD of Income Tax Act

thumbnail_44AD of Income Tax Act

44AD of Income Tax Act

Sending money abroad can feel overwhelming, especially when understanding the compliance requirements. One key challenge Indian residents face is knowing when and how to file Form 15CA and Form 15CB, essential documents for making international payments to non-residents.

For example, if you run a software company in India and must pay USD 10,000 to a US-based UI/UX consultant, your bank will ask for Forms 15CA and 15CB before processing the payment.&nbsp;

Does that sound relatable? Don't worry. We're here to simplify it for you.

This blog will explain exactly what these forms are, why they matter, and how to file them easily. Let's get started!

Form 15CA is a declaration form required under Indian tax law, specifically <a href="https://www.incometax.gov.in/iec/foportal/help/all-topics/statutory-forms/popular-form/form15ca-faq#:~:text=As%20per%20Section%20195%2C%20every,be%20furnished%20in%20Form%2015CA.">Section 195 of the Income Tax Act</a>. It must be submitted by any person making payments to non-residents or foreign companies when such payments are deemed taxable in India. This form ensures that the correct amount of tax is deducted at source (TDS) before the payment (remittance) is made.

Form 15CA helps the Income Tax Department monitor foreign remittance details and their tax implications. It also assists non-residents in claiming credit for taxes deducted in India.&nbsp;

TDS rate declaration: The form requires disclosing the TDS rate applicable to the payment. This rate may be based on either <a href="https://www.incometax.gov.in/iec/foportal/help/all-topics/statutory-forms/popular-form/form15ca-faq#:~:text=As%20per%20Section%20195%2C%20every,be%20furnished%20in%20Form%2015CA.">Section 195 of the Income Tax Act</a> or any lower rate specified in a relevant DTAA.

Deductions: The payer must ensure that TDS is deducted at the source before paying, reflecting compliance with Indian tax obligations.

Form 15CB is a certificate from a Chartered Accountant (CA) required before filing Part C of Form 15CA. This certificate ensures compliance with the Double Taxation Avoidance Agreement and Income Tax Act for accurate tax deductions on payments. When making taxable payments above ₹5 lakhs to non-residents, you must first obtain this CA certificate and then use it to file Part C of Form 15CA.

Quick note: A DTAA is an agreement between two countries that helps determine the tax rates and obligations when making cross-border payments. For example, when paying a US-based consultant, the India-US DTAA helps decide which tax rate applies to your payment and how much TDS needs to be deducted before sending the money abroad.

TDS rate certification: In Form 15CB, the CA certifies the TDS rate applied to the payment. The rate could be determined as follows:

Deductions overview: The CA also confirms that all necessary deductions have been made according to legal requirements before remittance.

Let's break down Form no. 15CA into simple, digestible parts. Think of it as a document with four versions (A, B, C, and D), each for specific situations.

Part A: For taxable payments up to ₹5 lakhs

Use this version when you've got special permission from the tax officer (Assessing Officer) under <a href="https://www.incometax.gov.in/iec/foportal/help/all-topics/statutory-forms/popular-form/form15ca-faq">Section 195(2), 195(3), or 197</a> to:

Think of it as a pre-approved tax discount. When filing, you'll need to show the official permission letter.

Details required: Payer (remitter) and recipient (remittee) information and the AO's order details.

This is for bigger payments. You'll need to use this when:

Important: You'll need your CA to provide Form 15CB first before filing this part. This extra step helps verify your tax calculations for larger amounts.

Use this when your payment isn't taxable in India. For example:

Even though these payments might be exempt, you must declare them through Part D of Form 15CA.

💡Quick Tip: When you're paying non-resident service providers (like international consultants, developers, or designers):

Remember: These forms are for sending money abroad, not for receiving international payments.