Income Tax Department Probes 394 Entities, 36 Professionals Over Suspicious Foreign Remittances

The Income Tax Department opened a nationwide verification exercise on August 18, 2026, examining 394 entities and 36 professionals linked to suspicious foreign remittances.

The review also covers 117 entities in districts along India’s land borders. Officials said many transfers did not align with reported turnovers or the businesses’ declared activities.

V. Rajitha, a Central Board of Direct Taxes spokesperson, said the cases emerged from ground intelligence and analysis of outward remittances over the past three years. The exercise is examining shell entities, the people behind them and the professionals who certified the payments.

Some entities described transfers as payments for freight, software imports or consulting services. Preliminary checks found that those explanations sometimes conflicted with actual operations.

"On August 18, 2026, the Department launched a nationwide detailed verification exercise to verify these foreign remittances, focusing on shell entities, the persons behind them, and the professionals who have issued Form 15CB certificates."

The department also found cases in which entities were not operating from their declared addresses. The inquiry remains active.

Remittance amounts did not match reported business activity

Preliminary verification found “no apparent correlation” between the amounts sent abroad and the entities’ reported turnovers, officials said. Some entities did not file income tax returns, while others declared only limited business activity.

The review includes taxable payments above ₹5 lakh a year to non-residents or foreign companies. Such payments require certification under Rule 220 of the Income Tax Rules, 2026.

Investigators are comparing the purpose stated in remittance records with the companies’ operations on the ground. A freight payment, for example, is being examined against the entity’s actual business activity.

The same checks apply to payments described as software imports or consulting services. Field inspections found mismatches between those descriptions and the operations at some businesses.

Several entities also failed to operate from their registered locations. The department is examining whether those addresses concealed shell companies or other arrangements used to move funds overseas.

The review has a nationwide reach, including Mumbai. Six specific firms in the city are among the businesses being examined.

Accountants face scrutiny over certificates issued for the transfers

The investigation has placed 36 professionals, primarily Chartered Accountants, under review for issuing certificates connected to the outward payments. A relatively small group accounted for a large number of certificates, data analysis found.

The department is assessing whether those professionals applied adequate due care, diligence, and professional judgment before issuing the documents. The focus includes Form 15CB, which supported the earlier certification process.

The Income Tax Act, 2025 replaced the 1961 Act on April 1, 2026. Under the new framework, Form 146 succeeded Form 15CB, while Form 145 replaced Form 15CA.

The change has placed older certificates and newer forms within the same investigative trail. Makhijani, managing partner at MGA, said companies should be extremely particular about their compliances in India.

The newer forms are data-integrated for instant backend cross-verification, Makhijani said. That system allows reported remittances, business records and certification details to be compared more quickly.

The professional review does not stop at the number of certificates issued. Officials are also checking whether the underlying transactions existed and whether the documentation matched the companies’ actual activities.

A charitable-trust search led investigators toward the remittance network

The current exercise followed an earlier search involving fictitious charitable trusts. That operation exposed accommodation entries, described as hawala arrangements for bogus donations, which were then funneled abroad.

Investigators used those findings to examine entities that appeared separate but could be connected through funds, intermediaries or the people arranging the transactions. The inquiry is tracing both the remitters and the wider network around them.

The broad contours of the suspicious transactions were discussed at a high-level border security meeting in Siliguri, West Bengal, in July 2026. Home Minister Amit Shah chaired the meeting.

Officials were instructed to examine the “entire backward and forward linkages” of the funds. That direction expands the review beyond the companies named in individual remittance records.

The border component includes districts sharing land boundaries, including areas in states such as West Bengal. The department is examining 117 entities in those districts alongside the wider national group.

The geographic focus reflects the security concerns attached to some of the transactions. It does not replace the broader financial review, which covers entities and professionals across India.

Shell companies and fictitious addresses could bring further action

Entities found to have operated from fictitious addresses or used shell companies face heavy penalties under the Black Money Act. They could also face prosecution for money laundering.

The department has not finished its verification. “Further investigations are currently underway,” it said.

Aarjav Jain, an NRI tax expert, advised taxpayers who receive notices to respond promptly and preserve “source-of-funds proof.” He said that documentation could help taxpayers avoid a full reassessment.

The records under examination include the source of funds, the stated purpose of each payment and the relationship between the remitter and overseas recipient. Officials are also comparing those records with filed returns and declared business activity.

Entities that reported little or no business activity may face closer questions about the scale and frequency of their overseas transfers. The department is assessing each apparent mismatch through financial analysis and field verification.

The certification review could produce separate questions for professionals. Investigators are examining whether a certificate reflected adequate due diligence, even when the remitting entity existed at its declared address.

Two recent measures add pressure on foreign-fund reporting

The verification drive follows other steps involving overseas assets and foreign funds. On August 12, 2026, the Foreign Contribution (Regulation) Amendment Bill, 2026 was referred to a Joint Parliamentary Committee.

The bill is intended to tighten oversight of foreign funds. Four days later, on August 16, 2026, the CBDT notified the Foreign Assets of Small Taxpayers-Disclosure Scheme, or FAST-DS.

FAST-DS gives taxpayers a brief window to declare undisclosed overseas assets before the broader probe advances. The notification came two days before the nationwide verification exercise began.

The probe reaches back three years through its analysis of outward remittance data. That period includes transactions made before the Income Tax Act, 2025 took effect on April 1, 2026.

Officials can therefore compare older Form 15CB certifications with later records under Form 146 and Form 145. The review combines those documents with ground intelligence, address checks and reported business information.

The department’s next steps will depend on whether entities can explain the mismatches and support the stated purposes of their payments. The verification exercise continues as officials trace the entities, professionals and funds identified in the initial analysis.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.