Income Tax Department Launches Nationwide Verification of Suspicious Foreign Remittances

Published: 19 August 2026

The Income Tax Department has launched a nationwide verification exercise into suspicious foreign remittances, focusing on entities whose outward remittances appeared disproportionate to their reported turnover, business activity and financial profile.

The exercise also places particular attention on the professionals who issued certificates for such remittances. According to the Department's press release dated 18 August 2026, approximately 394 entities and 36 professionals have been covered, including 117 entities located in districts along India's land borders.

Why Has the Income Tax Department Started This Exercise?

The Department stated that its data analysis and ground intelligence identified several entities that had remitted substantial amounts of foreign exchange over the last three years despite reporting very small turnovers or limited income in their tax returns.

In some cases, the stated purpose of the remittance, such as payment for freight, imports, software or consultancy services, did not appear to correspond with the financial profile or actual business activity of the entity. Further ground-level intelligence also indicated that certain entities were not operating from the addresses declared by them.

The Department's findings have therefore raised concerns about possible shell entities, accommodation transactions and the movement of funds outside India without corresponding genuine commercial activity.

Form 15CB / Form 146: Why Is It Important?

Foreign remittances can involve tax withholding obligations where the payment to a non-resident is chargeable to tax in India. Under the earlier Income-tax Act, 1961 framework, Form 15CB is the accountant's certificate used in specified cases to examine the nature and taxability of the remittance and determine the applicable tax treatment.

With the Income-tax Act, 2025 coming into effect from 1 April 2026, the corresponding new form is Form 146. The Income Tax Department's transition guidance confirms that Form 146 corresponds to the earlier Form 15CB.

The certification involves examination of relevant agreements, documents and books of account for determining the nature of the remittance and the applicable tax treatment. The prescribed Form 15CB itself requires details concerning the beneficiary, nature of remittance, taxability, applicable provisions and, where relevant, DTAA relief.

What Has Concerned the Department About Professionals?

The Department observed that a large number of Form 15CB certificates had been issued by a relatively small group of professionals, while the remitted funds were received by a cluster of entities.

This does not mean that issuing multiple certificates or having multiple clients is, by itself, a violation. The concern arises where the certification process may not have been supported by adequate examination of the underlying transaction and relevant records.

The Department has specifically emphasised that accountants issuing Form 15CB/Form 146 are expected to exercise due care, diligence and professional judgment before certifying foreign remittances.

Key Due-Diligence Points for CAs

For professionals issuing Form 15CB or Form 146, the present development highlights the importance of maintaining a robust documentation trail. Depending on the nature of the transaction, the following should ordinarily be examined:

• Agreement, contract, purchase order or engagement document with the foreign recipient.
• Invoice and supporting commercial documents.
• Books of account and accounting treatment of the transaction.
• Nature and purpose of the remittance and the applicable RBI purpose code.
• Taxability of the payment under the applicable provisions of Indian tax law.
• Applicability of the relevant DTAA, wherever treaty relief is claimed.
• Tax Residency Certificate and other documents supporting treaty benefits, wherever applicable.
• Permanent Establishment considerations in relevant cases.
• TDS computation, including gross-up where applicable.
• Consistency between the remittance, the client's business activity, financial statements and supporting records.

The objective should be to ensure that the certificate is based on actual examination of facts and documents, rather than merely relying on information or representations provided by the client.

What Should Businesses Making Foreign Remittances Do?

Businesses should also view this development as a reminder to strengthen their foreign-remittance documentation. A genuine transaction should be capable of being explained through a clear commercial trail from the underlying agreement or invoice to the accounting entry, tax analysis and actual remittance.

Where a payment is being made for software, consultancy, technical services, royalty, interest, imports or other cross-border services, the taxability should be evaluated based on the actual nature of the payment rather than merely the description appearing on the invoice.

A Data-Driven Approach to Foreign Remittance Compliance

The latest action also demonstrates the increasing use of data analytics and cross-verification by the tax authorities. A mismatch between reported turnover, business activity and the scale of foreign remittances can potentially become a red flag for further verification.

The Department has stated that the current exercise covers shell entities, the persons behind them and professionals who issued the relevant certificates. Further investigations are underway.

This article is intended for general information and awareness and should not be considered a substitute for transaction-specific tax or legal advice. The applicable provisions should be examined based on the facts of each remittance.