The Income Tax Department has launched a nationwide verification exercise into suspicious foreign remittances after its data analysis and ground intelligence identified several entities that allegedly remitted substantial amounts of foreign exchange abroad despite having limited or apparently inconsistent financial profiles.
The exercise, announced by the Central Board of Direct Taxes (CBDT) on August 18, 2026, is focused on entities suspected of acting as shell or accommodation structures, the persons behind such entities and professionals who issued certificates in Form 15CB for the outward remittances.
According to the CBDT, the Income Tax Department analysed data relating to outward foreign remittances over the past three years and identified several entities that had transferred large amounts of foreign exchange outside India.
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Preliminary ground verification reportedly indicated that some of these entities were either non-filers of income-tax returns or had filed returns showing very small turnovers. The Department found the reported financial profiles difficult to reconcile with the substantial sums being remitted abroad.
The Department also found that the entities did not appear to have a clear correlation between their declared business activities and the large foreign remittances made by them.
In several cases, the stated purposes of remittances included payments relating to freight, import of software and import of consulting services. However, ground-level intelligence allegedly indicated that some of the entities were not actually operating from the addresses declared in their statutory records.
These findings have prompted the Department to undertake a detailed verification of the underlying transactions and the persons and entities associated with them.
The CBDT said that a nationwide network of entities involved in remitting funds abroad had earlier come to light during a search operation conducted against a group of allegedly fictitious charitable trusts.
According to the Department, these trusts were allegedly involved in providing accommodation entries against bogus donations or contributions.
The subsequent analysis of foreign-remittance data revealed connections involving entities that were sending significant sums abroad despite having financial and operational profiles that, on the face of it, did not justify such transactions.
The Department’s latest exercise is therefore aimed not merely at examining individual remittances but at tracing the broader network of shell entities, persons controlling or operating them and professionals involved in certifying the transactions.
A significant aspect of the verification exercise concerns the large number of Form 15CB certificates issued by a relatively small group of professionals.
Form 15CB is a certificate issued by an accountant in connection with certain foreign remittances and contains an assessment of the taxability of the remittance, based on the relevant facts, books of account and applicable tax provisions.
The CBDT has specifically raised concerns over whether adequate due diligence was undertaken by the accountants before issuing such certificates in the cases under examination.
The Department’s scrutiny is therefore expected to examine not only whether the underlying remittances were genuine, but also whether the documentation and factual basis relied upon for certifying the transactions were properly verified.
The CBDT has stressed that accountants issuing Form 15CB/Form 146 certificates are expected to exercise due care, diligence and professional judgment.
The Department has emphasised that professionals should properly examine the underlying transactions and relevant facts before certifying foreign remittances.
This aspect assumes importance because professional certification forms an important part of the compliance framework governing certain outward remittances. The Department’s statement indicates that certificates cannot be treated as merely procedural documents where the underlying transaction raises questions concerning its genuineness, taxability or commercial substance.
The verification exercise could consequently bring increased scrutiny of the supporting documents, books of account, nature of services or goods involved, commercial rationale for payments and the actual operations of the remitting entities.
The verification exercise formally commenced on August 18, 2026, and has been designed as a nationwide operation.
The Department stated that the exercise covers approximately 394 entities, including 117 entities located in districts along India’s land borders.
In addition, approximately 36 professionals who issued Form 15CB certificates have been brought within the scope of the verification exercise.
The inclusion of entities situated in land-border districts indicates that the Department is paying particular attention to businesses operating in geographically sensitive areas where cross-border financial transactions may warrant enhanced scrutiny.
However, the Department’s exercise is described as a verification and investigation process, and the identification of an entity or professional for verification does not by itself establish tax evasion or any other wrongdoing.
The Department’s exercise is expected to examine the complete chain surrounding suspicious remittances.
This includes determining whether the remitting entity actually carried on the business claimed by it, whether the recipient abroad actually provided the stated goods or services, whether the consideration paid was commercially justified and whether the transaction was appropriately accounted for.
The Department is also examining the persons operating or controlling the entities and the professionals who certified the remittances.
Such an approach could help authorities identify arrangements where apparently independent companies are used as conduits for moving funds abroad.
Cross-border payments can involve several layers of tax and regulatory compliance, particularly where the remittance relates to payments to non-residents.
The tax treatment of a foreign remittance can depend upon the nature of the payment, the status of the recipient, applicable provisions of the Income-tax Act and, where relevant, the provisions of an applicable tax treaty.
The certification process is therefore significant because it requires the professional examining the remittance to consider the relevant facts and determine the appropriate tax treatment.
The CBDT’s latest action signals that the Department intends to use data analytics and ground verification to identify situations where the stated nature of a transaction may not correspond with the financial capacity or actual activities of the remitting entity.
The latest exercise demonstrates the Department’s increasing reliance on the combination of data analysis and field-level intelligence.
The suspicious transactions were reportedly identified through analysis of outward foreign-remittance data covering a three-year period. The Department then used ground verification to assess whether the entities were genuinely operating from their declared locations and whether their reported business activities were consistent with the transactions identified.
This approach enables tax authorities to move beyond examination of isolated transactions and analyse patterns involving multiple entities, common professionals, declared business activities and financial flows.
The CBDT’s emphasis on the role of accountants also carries significance for professionals involved in foreign-remittance compliance.
The Department has reiterated that accountants issuing Form 15CB/Form 146 certificates are expected to exercise professional judgment and conduct appropriate verification before certification.
The latest exercise suggests that where multiple suspicious remittances are linked to certificates issued by a limited group of professionals, the Department may examine whether adequate verification was undertaken in each case.
This does not mean that every certificate issued by the professionals under scrutiny is incorrect or that every remittance certified by them is unlawful. The purpose of the present exercise is to determine the factual circumstances and compliance position of the transactions concerned.
The CBDT has stated that further investigations are currently underway.
The outcome of the verification exercise could determine whether the identified transactions require further tax proceedings, deeper investigation or action under other applicable provisions, depending upon the facts established in individual cases.
For the entities involved, the scrutiny is likely to focus on the genuineness and commercial substance of their foreign payments, their actual business operations, financial disclosures and the basis on which the remittances were classified and certified.
The exercise also reinforces the Department’s broader focus on identifying unexplained or suspicious cross-border financial flows through data-driven tax administration.
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