Money Went Abroad. But Left a Trail For the Income Tax Department.

Sending money abroad is usually a fairly routine business transaction.

An Indian company pays an overseas consultant. A startup pays for software. An importer pays a foreign supplier. The bank processes the remittance, the required tax forms are filed, and the transaction is done.

Except, perhaps, it isn't.

On August 18, 2026, the Income Tax Department launched a nationwide verification exercise into suspicious foreign remittances. It has identified around 394 entities and 36 professionals for scrutiny, including 117 entities located in states along India's land borders.

Now, this isn't a blanket investigation into everyone sending money overseas. The department says its analysis found entities that were either non-filers or reported very small turnovers while remitting disproportionately large sums abroad. In some cases, the stated purpose of the payments, such as freight, software or consulting services, did not appear to match the entity's financial profile.

And that's where the story gets interesting.

The problem wasn't the money going abroad

Imagine a company with ₹50 lakh of annual turnover sending ₹5 crore to an overseas entity for “consulting services.”

The paperwork might exist. There could be an invoice, a bank transfer and even a Chartered Accountant's certificate.

But the numbers don't quite fit.

That's what the tax department appears to be looking at. Its preliminary ground verification found cases where entities weren't operating from their declared addresses, while further data analysis showed that a relatively small group of professionals had issued a large number of Form 15CB certificates and the remitted funds were received by a clustered group of entities.

In other words, the department isn't just asking “Was the form filed?”

It is increasingly asking “Does the entire transaction make sense?”

And that's a big change for businesses

For years, cross-border tax compliance could feel like a paperwork exercise. You identified the nature of the payment, determined the tax treatment, prepared the required forms and moved the money through the banking channel.

But now, those pieces can be compared against each other.

As CA Avinash Kumar Rao, Partner at Mohindra & Associates, puts it, foreign-remittance compliance is increasingly moving from a form-driven process to a data-driven verification framework. The commercial substance of a transaction can be tested against tax filings, banking data and the stated purpose of the remittance.

And that changes how businesses should think about documentation.

A contract sitting in a folder isn't enough if the invoice, books, tax return and bank transaction tell a different story.

So where does Form 146 come in?

This is where the CA's role becomes important.

Under the Income Tax Act, 2025, Form 146 is the successor to Form 15CB. The Income Tax Department describes it as an accountant's certificate for taxable payments to a non-resident or foreign company where the payment or aggregate payments exceed ₹5 lakh in a tax year. The CA examines details including the nature of the payment, taxability, DTAA provisions and TDS.

Form 145, meanwhile, is the remitter's declaration for such payments. The Income Tax Department says it is filed for each relevant remittance, and in specified cases the Form 146 certificate is required alongside it.

That distinction matters.

As Rao explains, Form 145 is the remitter's/entity-level declaration, while Form 146 is the accountant's certification on taxability. They cannot simply be treated as two versions of the same document.

A CA certificate isn't a free pass

This is perhaps the most important takeaway from the department's verification drive.

A Form 146 certificate doesn't turn an otherwise questionable transaction into a legitimate one.

The CA is expected to examine the underlying transaction and determine its taxability using relevant documents. Rao specifically highlights agreements, invoices, Tax Residency Certificates and other supporting documents, along with the applicable domestic law and DTAA.

At the same time, the primary responsibility for the transaction itself doesn't disappear from the remitter.

If a company sends money abroad, it still needs to be able to explain why it paid the money, whom it paid, what it received in return and how the transaction was treated for tax purposes.

That's why the department has asked CAs to exercise due care, diligence and professional judgment before issuing these certificates.

What should a business worry about?

Not every foreign remittance is suspicious.

A genuine payment for software, consulting, freight, royalty or another legitimate business purpose can still be a perfectly normal transaction. The problem arises when the documentation, financial statements and actual business activity don't line up.

Think of it as a three-way check.

The commercial reality should match the documents, and the documents should match the tax and banking trail.

If a company claims it paid an overseas consultant, there should be an actual agreement, an invoice, evidence of the service and a tax position that makes sense. If the company has barely any business activity but is regularly sending large amounts abroad, the questions become harder to answer.

And data analytics makes those mismatches easier to spot.

There is another reason this timing matters

The verification drive comes shortly after the launch of the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS 2026).

Rao points out that businesses and individuals should therefore also consider what happened to the money after it left India. If a foreign remittance ultimately resulted in the remitter becoming the beneficial owner of a foreign asset, the taxpayer should check whether that asset was properly disclosed and whether they are eligible to use the FAST-DS 2026 route where required.

That makes the issue broader than just TDS on a foreign payment.

The department could potentially be looking at the entire journey of the money, where it came from, why it was sent, who received it and whether the resulting tax and foreign-asset disclosures are consistent.

The bigger picture

The interesting part of this development isn't really the number 394.

It's what the number tells us about the direction of tax administration.

The Income Tax Department is increasingly able to connect information from different parts of the financial system. A bank remittance doesn't exist in isolation anymore. It can potentially be compared with turnover, tax filings, stated business activity and other available information.

For businesses, that means compliance is slowly moving away from “Do we have the form?” towards “Can we defend the transaction?”

And that's an important distinction.

Because a well-documented foreign remittance shouldn't be frightening simply because the Income Tax Department is asking questions.

But if the numbers don't add up, the paperwork doesn't match the business reality, or the transaction has little commercial substance, a routine overseas payment can become something much bigger.

The money may have crossed the border. But the tax department is now looking at the story behind it.