Sending money overseas? New tax rules could delay transfers if done wrong

Sending money abroad from India has undergone a structural compliance shift from April 1, 2026, with the introduction of a revised reporting framework under the Income Tax Act, 2025 and Income-tax Rules, 2026. While the core process of foreign remittance continues, the documentation and filing structure have been updated—making it essential for taxpayers to understand the new system before initiating transfers.

Key change in forms

Earlier, foreign remittances required Form 15CA (taxpayer declaration) and Form 15CB (CA certificate). From April 1, 2026, these have been replaced with:

Form 145 (replacing Form 15CA)
Form 146 (replacing Form 15CB)

Tax Buddy founder Sujit Bangar cautioned that this is not merely a cosmetic change. “If you file the wrong form, your remittance can get stuck,” he noted, highlighting the importance of understanding the updated compliance framework.

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Understanding Form 145

Form 145 is now the primary declaration required before making payments to a non-resident or foreign entity. It is governed by Sections 393, 395, 397, and 462 of the Income Tax Act, 2025, along with Rule 220 of the 2026 Rules.

The form is divided into multiple sections depending on the transaction type, including:

Taxable vs non-taxable payments
Small vs large remittances
Payments backed by Assessing Officer approval

This structured approach aims to align compliance with the nature and size of the transaction.

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What is Form 146?

Form 146 is the Chartered Accountant certificate, required in specific scenarios. It validates:

Nature and purpose of remittance
Taxability under Indian law
DTAA applicability
TDS rate and deduction
Tax Residency Certificate (TRC) details
UDIN for authenticity

However, Bangar clarified that not all remittances require this certificate. It becomes applicable when:

The payment is taxable in India
The amount exceeds ₹5 lakh in a financial year
No Assessing Officer certificate is available

When do you need both forms?

In cases where remittances are taxable and exceed ₹5 lakh, taxpayers may need to file Form 145 along with Form 146. However, if prior approval from the tax officer exists, the CA certificate requirement may be waived.

Where things can go wrong

Bangar emphasized that incorrect compliance can delay transactions. Common mistakes include:

Selecting the wrong form or section
Missing the CA certificate where required
Incorrect TDS computation

Banks (Authorised Dealers) will not process remittances without proper documentation, meaning even minor errors can lead to delays.

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Penalty and compliance impact

Non-compliance is not just procedural—it carries financial consequences. Failure to file Form 145 or furnishing incorrect details can attract a penalty of up to ₹1 lakh under Section 462. Additionally, incorrect TDS can trigger tax demands and interest liabilities.

Timing matters

The new framework applies based on the date of remittance. Any transfer executed on or after April 1, 2026 must comply with the Form 145/146 system, regardless of when it was planned.

Taxpayers should note

The updated system makes foreign remittance compliance more structured and data-driven. While the underlying process remains familiar, execution has become more precise. As Sujit Bangar highlighted, understanding the correct form and requirements is now critical — because even a small mistake can disrupt your international transfer.