394 Entities Under I-T Scanner: What It Means for Foreign Remittances
Compliance Watch

394 Entities Under I-T Scanner: What the New Foreign Remittance Drive Means for You

The Income Tax Department has launched a nationwide verification exercise into suspicious outward remittances. Here is what genuinely compliant taxpayers and businesses need to know before their next foreign payment.

If your business sends money abroad for imports, consulting fees, software subscriptions, or any other purpose this is a good week to double-check your paperwork. The Central Board of Direct Taxes (CBDT) has opened a detailed verification drive into foreign remittances that do not add up, and the scale of it is worth paying attention to.

What Exactly Happened

On August 18, 2026, the CBDT announced that it had identified a cluster of entities with little or no genuine business activity that had nonetheless sent large sums of foreign exchange abroad. The trigger appears to have been a search operation involving a set of fictitious charitable trusts that were allegedly generating fake donation receipts, which then led investigators to a wider pattern.

The verification exercise now covers roughly 394 entities, including 117 located in states along India's land borders, along with 36 professionals who certified these remittances. Several of these entities had declared minimal turnover, yet the amounts moving out of the country did not match the stated purpose things like freight payments, software imports, or consulting fees. In a number of cases, the entities were not even found operating from the addresses they had declared.

A striking pattern the department flagged: a small group of professionals had issued a disproportionately large number of certificates, and the funds appeared to be flowing to a clustered set of recipient entities abroad a red flag that pointed investigators toward the wider network.

Why Form 15CB / Form 146 Is at the Centre of This

Any taxable foreign remittance typically requires a certificate from a chartered accountant Form 15CB under the old framework, now Form 146 under the Income Tax Act, 2025 read with the corresponding remittance rules. This certificate confirms that the correct tax has been assessed and, where applicable, deducted before the money leaves the country.

The CBDT has been direct about its expectation here: professionals issuing these certificates are expected to exercise real due diligence examining the underlying transaction, the supporting documents, and the actual facts rather than treating the certification as a formality. That message is really the heart of this entire exercise.

What This Means If You Are a Genuine Taxpayer

To be clear, this drive is targeted at entities with little or no real business activity behind large remittances not at ordinary businesses making legitimate payments. But increased scrutiny in this space usually means two things for everyone: slower processing at the bank/AD level as checks tighten, and a higher chance of a query if your paperwork has gaps.

Before Your Next Foreign Remittance, Check:

  • Does the purpose code you're declaring actually match the invoice, contract, or agreement?
  • Do you have a genuine, dated contract or invoice backing the payment not just a bank instruction?
  • Is your Form 15CA/15CB (or Form 146) filed correctly, with TDS/TCS position clearly assessed?
  • Does your declared business turnover realistically support the size of the remittance?
  • Are you actually operating from the address on your PAN and GST records?
  • Has your CA actually reviewed the transaction, or just signed off on paperwork?

None of this is new law it is existing compliance, just under sharper scrutiny right now. Entities that have always kept clean documentation have very little to worry about. The ones who should be concerned are those who have been treating certification as a rubber stamp.

Frequently Asked Questions

Q. Does this affect individuals sending money abroad for personal reasons, like education or travel?

This particular drive is focused on business entities and their remittances, not personal remittances under the Liberalised Remittance Scheme. Still, any large or unusual outward transfer can draw a query, so keeping documentation ready is always sensible.

Q. What happens if my CA issued a certificate without proper checks?

The department has said professionals are also under review. If due diligence was lacking, both the entity and the certifying professional could face further scrutiny or questioning. It's worth asking your CA directly what checks were actually done.

Q. My business has a legitimate reason for a large remittance — should I be worried?

Not if your documentation matches your declared purpose and your turnover realistically supports the transaction. The risk is concentrated in mismatches small declared turnover with disproportionately large outward remittances, or purpose codes that don't align with actual invoices.

Q. What should I do right now?

Pull together your last few foreign remittance filings and cross-check the purpose code, invoice, and TDS/TCS treatment against each other. If anything looks inconsistent, get it reviewed before your next remittance rather than after a notice arrives.