Form 146 Mandatory New CA Certificate Rules For Foreign Remittances In 2026

The introduction of mandatory CA certification via Form 146 for specific foreign remittances is set to tighten compliance for cross-border transactions. This new rule, applicable from today, targets remittances exceeding ₹15 lakh, requiring a certified assurance of tax compliance. The directive aims to curb tax evasion through enhanced scrutiny of foreign exchange outflows. The Income Tax Department, acting on intelligence regarding inflated or dubious remittances, has mandated this certification to ensure proper tax deduction at source (TDS) and reporting. Businesses and individuals engaging in significant foreign transactions must now obtain this certificate before initiating remittances. Failure to comply could lead to delays in processing remittances and potential penalties under Section 271H of the Income Tax Act.

Section 195 of the Income Tax Act mandates TDS on payments made to non-residents. The introduction of Form 146 adds an additional layer of scrutiny, requiring a CA to certify that the remittance complies with Section 195 and other relevant provisions. Non-compliance can attract penalties under Section 271H, potentially leading to a levy of ₹500 per day of default.

The mandatory CA certification in Form 146 will likely increase compliance costs for businesses, especially those with frequent foreign transactions. Tax authorities may use this as a tool to identify discrepancies and initiate audits, focusing on the valuation of transactions and the applicability of TDS. Businesses should proactively review their foreign remittance processes and ensure robust documentation to mitigate potential risks.

This change increases compliance burdens for businesses and individuals involved in foreign transactions, requiring them to engage CA services and ensure meticulous documentation.