The Income Tax Department has launched a nationwide verification exercise into certain foreign remittances after data analytics and ground-level intelligence identified cases where significant amounts were remitted overseas despite little or no reported business activity. The exercise, launched on 18 August 2026, is examining the entities making such remittances, persons connected with them and professionals who issued the relevant tax-certification forms.
An important focus is the certification supporting overseas payments. Under the earlier framework, Form 15CB read with Rule 37BB required the accountant to examine the taxability of applicable foreign remittances with reference to the books and relevant documents. Under the Income-tax Rules, 2026, the corresponding framework is Form 146 read with Rule 220. The Department’s exercise highlights the increasing importance of establishing not merely the tax treatment of an overseas payment, but also the commercial substance and supporting documentation behind the transaction

What does this mean for businesses making overseas payments?

For genuine businesses, foreign remittances for imports, software, consultancy, professional services, royalties, technical services and other commercial transactions remain normal business activities. The practical lesson is that the financial statements, underlying agreement, invoice, nature of payment, tax position, DTAA analysis where applicable, withholding-tax treatment, remittance documentation and banking records should tell one consistent story.

This is particularly relevant for Indian companies dealing with overseas group entities or international service providers. Tax teams should therefore review the substance and documentation of a transaction before the remittance is processed, rather than treating the applicable remittance form as an isolated procedural requirement.

The development also reflects a wider change in tax administration: data from returns, banking channels and cross-border transactions is increasingly capable of being analysed together. Businesses with regular international payments should therefore build foreign-remittance review into their internal tax controls.

Mardia Global | Income Tax Insights for Businesses in India