Beware: IT Department launches nationwide probe into suspicious foreign remittances

The Income Tax Department has launched a nationwide verification exercise into suspicious foreign remittances after identifying entities that allegedly sent large amounts of money overseas despite reporting little or no business activity.The department announced the exercise in a post on X, saying it had identified significant overseas remittances that did not appear to match the reported financial activity of some entities.The exercise, launched on August 18, is based on data analysis and ground-level intelligence. The department is examining the entities making these remittances, the people behind them and professionals who issued certificates linked to the transactions.WHAT RAISED THE TAX DEPARTMENT’S CONCERNS?The investigation began after the department found several entities that had remitted significant amounts of foreign exchange over the past three years. According to the Finance Ministry, some of these entities were either not filing income-tax returns or were reporting very small turnovers. This appeared inconsistent with the large sums they were sending abroad.The department also found that the stated reasons for some remittances, such as payments for freight, software imports and consulting services, did not appear to match the actual activities of the entities. In some cases, ground verification showed that the entities were not operating from the addresses declared by them.LINK TO FICTITIOUS CHARITABLE TRUSTSThe investigation also followed a search operation involving a group of fictitious charitable trusts allegedly involved in providing accommodation entries against bogus donations and contributions.The search helped the department uncover what it described as a nationwide network of entities involved in sending funds overseas.Further analysis of the data raised additional questions about the professionals involved in certifying these transactions.FOCUS ON FORM 15CB CERTIFICATESThe Income Tax Department found that many Form 15CB certificates had been issued by a relatively small group of professionals.Form 15CB is used in connection with certain foreign remittances and requires the accountant issuing the certificate to examine the taxability of the transaction based on the taxpayer's books of account and other relevant documents.The department said its findings have raised concerns over whether adequate checks and due diligence were carried out before some of these certificates were issued.Under the new income-tax framework, the corresponding provision is Form 146 read with Rule 220 of the Income-tax Rules, 2026.394 ENTITIES AND 36 PROFESSIONALS UNDER VERIFICATIONThe nationwide exercise is focusing on shell entities, the people behind them and professionals who issued Form 15CB certificates. "The exercise has covered approximately 394 entities (including 117 entities located in land-border States), and 36 professionals," mentioned the department.The focus on entities in border districts comes as part of the wider verification exercise into significant overseas remittances.TAX DEPARTMENT'S MESSAGE TO PROFESSIONALSThe Income Tax Department has also issued a clear message to accountants and other professionals certifying foreign remittances.It said professionals issuing Form 15CB/Form 146 are expected to exercise proper care, diligence and professional judgement before certifying transactions.They are required to examine the underlying transactions and relevant documents rather than relying only on information provided by the entities.The department said such certifications play an important role in maintaining trust in the tax system.INVESTIGATION IS STILL UNDERWAYThe department said further investigations are currently underway.The exercise comes as tax authorities increasingly use data analysis and ground intelligence to identify transactions that do not appear to match the financial profile or stated activities of taxpayers.For businesses and professionals involved in overseas remittances, the latest action underlines the importance of maintaining proper records and ensuring that foreign transactions are backed by genuine business activity and supporting documents.- EndsPublished By: Jasmine anandPublished On: Aug 19, 2026 12:19 IST