- Income Tax Department launched verification on entities with large foreign remittances despite low turnover
- Entities identified through intelligence and data analysis following searches on fictitious charitable trusts
- Many entities were non-filers or showed low turnover inconsistent with large overseas remittances
The Income Tax Department has launched a nationwide verification exercise after identifying several entities that allegedly remitted large amounts of foreign exchange over the past three years despite reporting little or no turnover. The entities were identified through ground intelligence and analysis of data on outward foreign remittances.
The investigation followed a search operation conducted on a group of fictitious charitable trusts allegedly involved in providing accommodation entries against bogus donations and contributions. The operation led investigators to a wider network of entities involved in remitting funds abroad.
Preliminary ground verification found that the entities making the remittances were either non-filers or had filed income tax returns showing very small turnovers. The reported turnovers appeared to have no apparent correlation with the large sums being sent overseas.
The remittances also did not appear to match the stated purposes for which the money was being sent, including payments for freight, software imports and consulting services.
Further ground-level intelligence suggested that the entities were not actually operating from the addresses declared by them.
Analysis of the data also found that a large number of Form 15CB certificates had been issued by a relatively small group of professionals. The funds being remitted were also received by a clustered group of entities.
Under Form 15CB, read with Rule 37BB of the Income-tax Rules, 1962 - corresponding to Form 146 read with Rule 220 of the Income-tax Rules, 2026 - the Accountant certifying a foreign remittance is required to verify its taxability with reference to the books of account and other relevant documents.
The findings have raised concerns over whether adequate due diligence was carried out by the accountants before issuing these certificates.
On August 18 (Tuesday), the department launched a nationwide detailed verification exercise covering the foreign remittances. The exercise is focused on shell entities, the people behind them and the professionals who issued Form 15CB certificates.
Entities located in districts along India's land borders and found to have remitted significant amounts of money abroad have also been covered.
The exercise covers approximately 394 entities, including 117 entities located in states along the country's land borders, as well as 36 professionals.
The department said Accountants issuing certificates in Form 15CB or Form 146 are expected to exercise due care, diligence and professional judgment.
They are required to properly examine the underlying transactions and relevant facts before certifying remittances, the department said, adding that such certifications play an important role in maintaining trust in the system.
Further investigations are underway.
