Foreign Remittances Under IT Scanner: CBDT Launches Nationwide Verification Exercise

The Income Tax Department has launched a nationwide verification exercise into suspicious foreign remittances involving entities whose outward payments appear disproportionate to their reported business activity. The exercise also places renewed emphasis on the professional responsibility involved in certifying foreign remittances.

394 Entities and 36 Professionals Under Verification

As per the CBDT Press Release dated 18 August 2026, the verification exercise covers approximately:

• 394 entities;
• 117 entities located in States along India’s land borders; and
• 36 professionals associated with certification of foreign remittances.

The Department has stated that the exercise is based on data analysis and ground intelligence relating to significant outward foreign remittances during the preceding three years. 

Why Are These Foreign Remittances Being Examined?

The Income Tax Department identified cases where entities had remitted substantial amounts abroad despite having little or no reported business activity.

Preliminary verification reportedly found that some entities:

• Had not filed income-tax returns or had reported very small turnovers;
• Made foreign remittances having no apparent correlation with their reported turnover;
• Stated purposes such as freight payments, software imports and consultancy services that did not appear consistent with their business activities; and
• Were reportedly not operating from their declared addresses. 

The investigation is also examining shell entities, the persons behind them and the wider network involved in such transactions.

Form 15CB / Form 146: Increased Professional Scrutiny

A significant aspect of the exercise is the scrutiny of professionals who issued certificates relating to foreign remittances.

Under the Income-tax Rules, 2026, Form 146 corresponds to the erstwhile Form 15CB under the Income-tax Rules, 1962. Form 146 is linked with Rule 220 and is used for specified taxable payments to non-residents or foreign companies exceeding ₹5 lakh in a tax year, subject to the prescribed conditions. 

The CBDT has observed that a relatively small group of professionals had issued a large number of such certificates for remittances involving clustered recipient entities. This has led the Department to examine whether adequate due diligence was undertaken before certification. 

What Should Businesses and Taxpayers Do?

Businesses making genuine overseas payments should ensure that the transaction is properly supported and consistent with their books and actual business activities.

Important documents and checks should include:

• Agreement, purchase order and invoice;
• Nature and purpose of the payment;
• Details of the foreign supplier/service provider;
• Evidence of receipt of goods or services, wherever applicable;
• Taxability under the Income-tax Act, 2025;
• Applicable DTAA provisions;
• TDS and withholding-tax analysis;
• Form 145/Form 146 compliance, wherever applicable; and
• Proper banking and accounting records supporting the remittance.

The broader lesson is that foreign remittances should be commercially genuine, properly documented and consistent with the taxpayer’s overall financial profile.

Message for Chartered Accountants and Other Professionals

The CBDT has specifically emphasised that professionals issuing Form 15CB/Form 146 certificates should exercise due care, diligence and professional judgment and properly examine the underlying transactions and relevant facts before certification. 

A certificate should therefore be issued only after appropriate examination of the available records, including the nature of the transaction, contractual documents, taxability, applicable DTAA provisions and supporting evidence.

Conclusion

The CBDT’s action demonstrates the increasing use of data analytics and ground intelligence to identify inconsistencies between reported business activity and cross-border financial transactions. However, the present exercise is a verification and investigation process; it should not by itself be interpreted as a finding that every transaction or entity covered is unlawful.

Further investigations are underway. Businesses making foreign remittances and professionals involved in their certification should therefore strengthen documentation, tax analysis and compliance procedures.

For expert guidance on this topic, contact your tax professional today.