Tax dept launches nationwide probe into suspicious foreign remittances

Income Tax Department Opens Sweeping Inquiry into Questionable Overseas Fund Flows

Theindiapostdaily.com – Beginning on 18 August, the Income Tax Department initiated a countrywide verification drive targeting 394 entities flagged for potentially unexplained outward remittances of substantial size. The sweep also extends to 36 professionals who had issued certification documents for those transactions. V. Rajitha, commissioner of income tax and the Central Board of Direct Taxes (CBDT) spokesperson, confirmed the operation in a statement released on Tuesday.

How the Targets Were Identified

According to Rajitha, the department compiled its list through field-level intelligence gathering combined with a three-year review of outward remittance data. Early checks revealed discrepancies between the sums sent abroad and the revenue figures those entities reported.

“Preliminary verification found that the amounts remitted abroad did not appear to have a clear correlation with the entities’ reported turnovers.”

Investigators additionally noted that declared justifications for certain payments—cited as freight charges, software imports, or consulting fees—did not align with what ground-level checks uncovered. A subset of the flagged entities also appeared to be absent from the registered addresses they had filed.

Link to Fictitious Charitable Trusts

The CBDT spokespersons explained that the wider network surfaced during a search operation aimed at a cluster of sham charitable trusts. Those entities were allegedly issuing accommodation entries in exchange for fabricated donations or contributions.

Regulatory Backdrop: The FCRA Amendment

The verification drive unfolds amid efforts to shore up oversight of foreign funding. The Foreign Contribution (Regulation) Amendment Bill, 2026, entered the Lok Sabha in March and was sent to a Joint Parliamentary Committee on 12 August for detailed scrutiny. The legislation would establish protocols for supervising, managing, and disposing of assets tied to foreign contributions once an organisation’s FCRA registration lapses, is suspended, or is cancelled.

Scrutiny of Certification Professionals

Data analysis uncovered that a disproportionately large volume of Form 15CB certificates had been generated by a narrow cohort of professionals, raising questions about whether proper due diligence preceded each issuance. Form 15CB, issued by a chartered accountant, attests to the taxability of a foreign remittance, the applicable tax rate, and the tax deducted at source before funds leave the country. Under departmental norms, the certificate records the nature of the payment, its taxability, the TDS rate, and the deduction amount.

Rajitha stressed that accountants issuing Form 15CB or its successor form are obliged to apply due care, professional diligence, and sound judgement, examining the underlying transaction and all pertinent facts before certifying any remittance.

Transition to the New Tax Framework

Effective 1 April 2026, the Income Tax Act, 2025 supplanted the Income Tax Act, 1961. Within the revised architecture, Form 146 now serves the function previously filled by Form 15CB, while Form 145 corresponds to the old Form 15CA. The Income Tax Rules, 2026, under Rule 220, carry forward the relevant monetary thresholds.

Current departmental guidance stipulates that Form 146 must accompany any taxable payment above ₹5 lakh in a financial year directed to a person resident outside India or to a foreign company, with a chartered accountant validating the purpose of the payment and the applicable tax deduction.

Land-Border Focus and Ongoing Work

The exercise specifically encompasses entities situated in districts along India’s land borders that have been channeling significant sums overseas. On the status of the inquiry, the official added:

“Further investigations are currently underway.”