Income Tax Department crackdown: Suspicious foreign remittances under scrutiny – all you need to know

Income Tax Department has identified several entities that have transferred substantial amounts of foreign exchange overseas over the past three years.

Income Tax crackdown: The Income Tax Department has started a nationwide exercise to examine what it believes are “suspicious” foreign remittances made by entities that report little or no business activity. The scrutiny also covers the individuals associated with these entities and chartered accountants who issued tax determination certificates for the transactions.The exercise also extends to entities based in districts along India’s land borders that have sent substantial amounts of money overseas.According to the department, the verification drive covers around 394 entities, including 117 located in states along the country’s land borders, as well as 36 professionals.“On August 18, the Department launched a nationwide detailed verification exercise to verify these (suspicious) foreign remittances, focusing on shell entities, the persons behind them, and the professionals who have issued Form 15CB certificates,” the tax department said in a post on X.

Why the crackdown?

The action follows analysis of financial data and ground-level intelligence that pointed to sizable overseas remittances by entities with little or no declared business operations, according to a PTI report.The department has also warned chartered accountants about issuing Form 15CB/Form 146 certificates, urging them to apply appropriate care, diligence and professional judgment.“They should properly examine the underlying transactions and relevant facts before certifying the remittances, as these certifications play an important role in maintaining trust in the system,” the I-T department said in a statement.Form 15CB or Form 146 is a tax determination certificate prepared by chartered accountants for foreign remittances from India. It is required when taxable payments of more than Rs 5 lakh in a financial year are made to a non-resident or foreign company, and serves to validate compliance with tax deducted at source (TDS) and the Double Taxation Avoidance Agreement (DTAA).Using ground intelligence and an analysis of data relating to outward foreign remittances, the Income Tax Department has identified several entities that have transferred substantial amounts of foreign exchange overseas over the past three years.The department said its investigation also uncovered a nationwide network of entities involved in sending funds abroad during a search operation targeting a group of fictitious charitable trusts. These trusts were allegedly involved in providing accommodation entries against bogus donations and contributions.

What Income Tax Department has discovered

Initial field-level checks found that the entities making these overseas transfers either had not filed income-tax returns or had reported only very modest turnover in their returns. The declared turnover did not appear to correspond with the sizable sums being sent abroad.The stated reasons for the remittances, including payments for freight, software imports and consulting services, also did not appear consistent with the amounts involved. Further inquiries found that the entities were not operating from the addresses they had declared.“Further analysis of the data also revealed that a large number of Form 15CB certificates were issued by a relatively small group of professionals. The remitted funds were also received by a clustered group of entities,” the I-T department said.“Form 15CB, read with Rule 37BB of the Income-tax Rules, 1962 (corresponding to Form 146 read with Rule 220 of the Income-tax Rules, 2026), requires the accountant certifying a foreign remittance to verify its taxability with reference to the books of account and other relevant documents. However, the findings raise concerns about whether adequate due diligence was carried out by the accountants before issuing these certificates,” the I-T department said.