Income Tax Dept Probes 394 Entities for Suspicious Foreign Remittances
By ThePip Desk
India’s Income Tax Department launches a nationwide probe into 394 entities over suspicious foreign remittances, targeting shell companies and facilitators.
The Income Tax Department has begun a nationwide verification drive targeting 394 entities due to suspicious foreign remittances. This action, which commenced on August 18, 2026, follows an extensive analysis of data concerning significant outward payments made over the past three years.
The Central Board of Direct Taxes (CBDT) indicated that many of these entities either did not file income tax returns or reported minimal turnovers, which stood in stark contrast to the substantial sums of money they sent abroad. The investigation specifically focuses on shell entities, the individuals behind them, and the professionals who certified these transactions.
Key Figures in the Verification Drive
- The exercise involves 394 entities across the nation.
- Of these, 117 entities are located in India’s border states.
- The probe also includes 36 professionals involved in issuing Form 15CB certificates for foreign remittances.
Some entities claimed these payments were for services such as freight, software imports, or consulting. However, preliminary checks revealed that many of these businesses were not operating from their declared addresses, raising significant red flags.
Understanding the Suspicion and Form 15CB
This verification effort also stems from an earlier investigation into fictitious charitable trusts that allegedly provided bogus donation entries. The department’s analysis highlighted a pattern where a small group of professionals issued a disproportionately large number of Form 15CB certificates.
Form 15CB requires an accountant to verify the tax treatment of a payment made to a non-resident, ensuring compliance with tax laws. The funds from these transactions were often received by a concentrated group of overseas entities, further intensifying scrutiny.
The CBDT has expressed concerns regarding the diligence exercised before these critical certificates were issued, underscoring the necessity for robust professional judgment. In border states, the verification specifically aims to confirm the actual existence of businesses, the accuracy of reported turnovers against remittances, and the legitimacy of the payment purposes.
Officials clarify that this is currently a verification process, not an accusation of violation against every entity or professional involved. Investigations remain ongoing as the department seeks to clarify the nature of these financial flows.