CBDT: Verification Drive on Suspicious Foreign Remittances

Income Tax Department’s Verification Drive on Suspicious Foreign Remittances

CBDT press release dated 18 August 2026 announcing a nationwide verification exercise targeting suspicious outward foreign remittances. The Department has identified entities that remitted substantial funds abroad despite reporting little or no genuine business activity.

What Triggered the Investigation?

The Income Tax Department analyzed foreign remittance data and conducted ground-level intelligence gathering. During searches involving certain fictitious charitable trusts providing accommodation entries through bogus donations, authorities uncovered a network of entities remitting money overseas.

Key red flags identified:

• Many entities were non-filers of income tax returns or reported very small turnovers.
• The reported turnover did not justify the large amounts remitted abroad.
• Remittances were often described as payments for software imports, consulting services, or freight charges, but the underlying business activities appeared inconsistent with such transactions.
• Several entities were not operating from their declared business addresses.

Focus on Form 15CB and Form 15CA/146

A significant finding was that a relatively small group of professionals had issued a large number of Form 15CB/Form 146 certifications for these remittances. The Department observed that many remittances were routed to a clustered group of overseas recipients. Under the Income-tax Rules, an accountant issuing Form 15CB/Form 146 certifications (corresponding to Form 146 under the new rules) is expected to

• Verify the nature and purpose of the remittance.
• Examine supporting agreements and invoices.
• Determine whether the payment is taxable in India.
• Verify applicable TDS provisions.
• Review books of account and relevant documentation.

The Department has expressed concern that adequate professional due diligence may not have been exercised before issuing some certificates.

Scale of the Verification Exercise

The nationwide verification launched on 18 August 2026 covers:

The exercise focuses on Shell entities, Beneficial persons behind such entities, Professionals issuing Form 15CB certificates and Large outward remittances from border districts and sensitive locations

Key Message for Tax Professionals

• The CBDT has specifically reminded accountants that while issuing Form 15CB/Form 146, they must exercise the following due care: Professional diligence, independent judgment, and Proper verification of underlying transactions and supporting documents
• For professionals, this means maintaining robust documentation such as foreign remittance agreements, vendor invoices, tax residency certificates, Form 10F (where applicable), FEMA compliance records, and books of account supporting the transaction and TDS computation workings.

Implications for Businesses of these CBDT Press Releases

Businesses making foreign remittances should ensure Genuine commercial substance behind transactions, Proper agreements with foreign vendors, supporting invoices, and bank records. Correct withholding tax analysis, consistency between turnover and remittance amounts, and availability of documents supporting Form 15CB certification.

CBDT Press Releases on Verification Drive on Suspicious Foreign Remittances

Conclusion

The CBDT’s latest action indicates increasing use of data analytics, foreign remittance databases, and field intelligence to detect suspicious cross-border transactions. The verification drive is not only focused on remitting entities but also on professionals issuing Form 15CB/Form 146 certifications. Taxpayers and chartered accountants should therefore strengthen documentation, due diligence, and compliance procedures relating to foreign remittances.