- Income Tax Department targets 394 entities for suspicious overseas transfers across India.
- Authorities are scrutinizing 36 professionals who certified foreign remittances over the last three years.
- Investigation focuses on shell entities and mismatches between reported turnover and large outward payments.
Investigators found large overseas transfers that did not match reported business activity as the Income Tax Department opened a nationwide review of 394 entities and 36 professionals on August 18, 2026.
The exercise covers outward remittances made during the past three years. Officials are comparing payment records with each entity’s declared operations, reported turnover and income-tax filings.
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Some entities sent substantial sums for freight, software imports and consultancy services while reporting very little business activity. Others had not filed income-tax returns.
The review also covers Chartered Accountants who issued Form 15CB certificates for the transactions. Those certificates address whether tax is payable when money leaves India.
The department is checking more than the firms themselves. It is examining the people behind the entities, the underlying transactions and the professionals who certified them.
Officials also identified 117 entities in states or districts along India’s land borders. The geographic concentration forms one part of the broader verification exercise, which began after data analysis and ground intelligence pointed to suspicious transfers.
V. Rajitha, Commissioner of Income Tax and official spokesperson for the Central Board of Direct Taxes, described the initial mismatch in a statement:
“Preliminary verification found that the amounts remitted abroad did not appear to have a clear correlation with the entities' reported turnovers. The turnovers had no apparent correlation with the large amounts of money being remitted abroad.”
The review remains a verification process. It does not establish that every entity or professional under scrutiny committed an offence.
Officials are comparing overseas payments with the businesses that reported them
The transactions flagged by investigators span several commercial descriptions. In each category, officials are testing whether the stated payment corresponds with the entity’s business activity and financial records.
| Payment description | Issue identified in the verification exercise |
|---|---|
| Freight | Large overseas transfers by entities reporting limited activity |
| Software imports | Remittances that appeared out of proportion to reported turnover |
| Consultancy services | Payments linked to entities with very small activity or no filed returns |
The department also found entities operating from locations different from the addresses recorded in their declarations. That finding has added a physical-location check to the review of remittance records.
Premises searched in Mumbai included a software business in the suburbs and an engineering firm, according to additional reporting on the exercise. The names of the 394 entities have not been publicly disclosed.
Gaurav Makhijani, managing partner at MGA, said the department is using advanced data analytics to identify mismatches at the transaction level in real time. His assessment is an outside expert’s view of the department’s methods, not a finding issued by the tax authority.
The official exercise is instead centered on matching the money trail to declared activities, filings and supporting certificates.
The inquiry reaches the accountants who certified the transfers
The CBDT said the review is focused on shell entities, the people connected to them and professionals who certified the outward payments. The 36 professionals under scrutiny are Chartered Accountants.
An official statement said:
“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 board also set out the standard expected from accountants who issue the certificates:
“Accountants issuing certificates in Form 15CB/Form 146 are expected to exercise due care, diligence, and professional judgment. They should properly examine the underlying transactions and relevant facts. as these certifications play an important role in maintaining trust in the system.”
The department is tracing the transfers’ backward and forward linkages to foreign jurisdictions. Officials estimate that the connections could involve roughly a dozen countries.
Aarjav Jain, a tax expert, advised entities receiving notices to respond promptly to avoid a full reassessment. He also said the newer forms are designed for backend cross-verification. That guidance came from an outside expert, while the department’s official action remains an information-gathering and verification exercise.
The new certificate framework overlaps with older transactions
The inquiry covers transactions between 2023 and 2026, a period that crosses India’s change in direct-tax legislation and remittance forms.
| Before April 1, 2026 | From April 1, 2026 |
|---|---|
| The earlier framework used Form 15CB for relevant remittance certifications. | The Income Tax Act, 2025 replaced the 1961 Act. |
| The older system applied to transactions made before the new framework began. | Form 146 became the new form equivalent to, or replacing, the earlier certificate. |
| The investigation can examine older outward payments. | Rule 220 appears in the Income Tax Rules, 2026. |
Under the current rules described in the research, Form 146 is mandatory for taxable payments exceeding ₹5 lakh in a financial year to a person outside India or a foreign company.
That threshold belongs to the current framework. The department’s review, however, reaches back across the three-year period identified in its verification exercise.
The legal change took effect on April 1, 2026. Investigators are therefore examining records generated under both the earlier certificate system and the new regime.
A search involving charitable trusts broadened the financial trail
The wider inquiry followed a search involving fictitious charitable trusts that allegedly provided “accommodation entries” against bogus donations. Investigators then traced a network of shell entities allegedly used for illegal outward remittances.
The allegation about those trusts is part of the reported background to the exercise. The current verification is testing the transactions and entities connected to the outward payments.
The border-related strand followed a high-level security meeting in West Bengal in July 2026, where officials flagged suspicious cross-border financial trails. The review includes 117 entities in states or districts along India’s land borders.
Location alone does not prove wrongdoing. Officials are checking whether the entities operated as declared and whether the certificates reflected an examination of the underlying payments.
Possible tax action depends on what the verification establishes
Entities ultimately found guilty could face action under the Black Money Act and the Income Tax Act, 2025. The consequences described in the research include 30% tax and a 300% penalty on the taxable amount, along with possible prosecution.
Those consequences remain conditional while the department determines which transactions were genuine and whether professionals met the required standard of care.
The Appointments Committee of the Cabinet cleared three new CBDT members on August 14: Sunil Kumar Singh, IRS 1991; Pallavi Agarwal, IRS 1991; and Vatsalaa Jha, IRS 1992.
As of August 2026, investigators are continuing to trace the foreign jurisdictions tied to the remittances and establish the transactions’ backward and forward linkages.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
