Form 146 for Foreign Remittances: Who Needs a CA Certificate?

Quick Summary: Form 146 Compliance

• Form 146 replaces the erstwhile Form 15CB under the new Income-tax Act, 2025.
• It is mandatory for taxable remittances exceeding ₹5 lakh per financial year to non-residents or foreign companies.
• Only a Chartered Accountant registered on the e-Filing portal with a valid Digital Signature Certificate (DSC) can issue it.
• CAs face a penalty of up to ₹10,000 under Section 463 for each inaccurate certificate issued.
• UDIN (Unique Document Identification Number) is strictly mandatory for real-time ICAI authentication.
• It is not required if an Assessing Officer (AO) certificate under Section 395/397 has been obtained.

When is Form 146 Mandatory for Foreign Remittances?

Form 146 becomes legally mandatory when three specific conditions converge under Rule 220 of the Income Tax Rules, 2026:

1. The payment must be chargeable to tax in India under the provisions of the Income-tax Act, 2025.
2. The recipient must be a non-resident (not being a company) or a foreign company.
3. The aggregate of such taxable payments must exceed ₹5 lakh during the financial year.

There is a critical exception to this rule to prevent dual compliance. If the remitter has already obtained a lower/nil deduction certificate from the Assessing Officer under Section 397, or an order determining the tax proportion under Section 395(1) or Section 395(2) for the exact same remittance, Form 146 is not required. In such cases, the remitter files Part B of Form 145 instead of Part C. The law explicitly provides this option to reduce the compliance burden for remitters who prefer obtaining a direct determination from the tax department.

Who Can Issue Form 146 and What Are the Prerequisites?

Only a practicing Chartered Accountant (CA) holding a full-time Certificate of Practice (CoP) can issue Form 146. Furthermore, the CA must be registered on the Income Tax e-Filing portal specifically under the “Chartered Accountant” tax professional user type.

The CA must possess a valid Class 3 Digital Signature Certificate (DSC) registered on the portal. Form 146 is one of the high-scrutiny forms that can only be e-verified through DSC; it cannot be verified using an Electronic Verification Code (EVC). This ensures absolute non-repudiation of the CA’s professional certification.

The CA must also generate a UDIN (Unique Document Identification Number) from the ICAI portal before submitting the form. The Income Tax portal validates this UDIN in real-time via an API link with the ICAI database. If the UDIN is invalid, mismatched, or revoked, the upload will immediately fail.

What Documents Must Be Gathered Before Applying for Form 146?

Before initiating the Form 146 certification process, the remitter must compile a robust documentation trail. The CA relies entirely on these documents to form a professional, legally binding opinion on taxability. The required dossier includes:

• Commercial Documents: The underlying invoice, agreement, or contract between the remitter and the non-resident that details the exact nature and purpose of the payment.
• Banking Details: Bank details of the remitter including the IFSC code, the name of the Authorised Dealer (bank) processing the remittance, and the specific RBI Purpose Code.
• Tax Residency Certificate (TRC): If the remitter is claiming relief (a lower tax rate) under a Double Taxation Avoidance Agreement (DTAA), a valid TRC from the government of the remittee’s home country is absolutely mandatory.
• Form 10F Equivalent: If the TRC does not contain all the prescribed details, the remittee must provide a self-certified equivalent of Form 10F.
• No-PE Declaration: For business income or royalties, a self-declaration from the foreign entity confirming they do not have a Permanent Establishment (PE) or fixed base in India.
• Foreign Tax Identification Number (TIN): Mandatory for remittees who do not possess an Indian PAN.

The CA must examine chargeability under the Income-tax Act, 2025, determine the applicable DTAA article, and compute the correct TDS liability (including applicable surcharge and health & education cess) before certifying the form.

How Has the Certification Evolved? (Old Act vs. Income Tax Act 2025)

With the transition to the Income Tax Act, 2025 and the Income Tax Rules, 2026, the procedural aspects of foreign remittance certification underwent a massive overhaul to enhance digital compliance, eliminate paper trails, and enforce CA accountability. Here is how the old regime compares to the new framework:

How Do You File Form 146 on the Income Tax E-Filing Portal?

The filing process requires a coordinated “handshake” between the taxpayer and the Chartered Accountant on the e-filing portal.

Step 1: The Taxpayer Assigns the Form

1. The remitter logs into the e-Filing portal using their PAN credentials.
2. Navigates to Authorized Partners → My Chartered Accountant(s) → Add CA.
3. Enters the CA’s ICAI Membership Number and validates the name.
4. Navigates to e-File → Income Tax Forms → File Income Tax Forms, searches for “Form 145”, and assigns the relevant Financial Year and “Form 146” task to the added CA.

Step 2: The CA Completes and Files Form 146

1. The CA logs into the portal using their own “Tax Professional” credentials.
2. Navigates to Pending Actions → Worklist → For Your Action and accepts the assigned Form 146.
3. The CA fills out the 7 main panels: Particulars of Remitter, Particulars of Remittee (including TIN), Remittance Details, Taxability under the Act, Taxability under DTAA, TDS Details, and Verification.
4. The CA logs into the ICAI UDIN portal, generates a specific UDIN for the certificate, and inputs this into the e-filing portal.
5. The CA affixes their DSC and submits the form. A unique Acknowledgement Number is generated.

Step 3: The Taxpayer Files Form 145 Part C

• The remitter logs back in, opens Form 145, selects Part C, and links it using the Acknowledgement Number of the Form 146 generated by the CA. Most details will auto-populate from the CA’s certificate. The bank will require the final printout of both Form 145 and Form 146 to release the foreign exchange via SWIFT.

How Does Form 146 Apply to Complex Payments (Royalties, FTS, Capital Gains)?

Sector-specific remittances present distinct certification challenges under Form 146, requiring deep analysis of Double Taxation Avoidance Agreements (DTAA) by the certifying accountant.

Fees for Technical Services (FTS): The CA must examine whether the income constitutes FTS under the charging sections of the Income-tax Act, 2025. Crucially, if DTAA relief is claimed, the CA must rigorously analyze the “Make Available” clause present in treaties like the India-USA or India-UK DTAA. If the technical service does not “make available” technical knowledge to the Indian entity, it may escape taxation in India entirely as business profits (assuming no PE). The CA must thoroughly document this reasoning in the DTAA taxability panel.

Royalty (Software & Patents): The CA must distinguish between the sale of a “copyright” versus a “copyrighted article” (like shrink-wrapped SaaS software). Following landmark judicial precedents, payments for the mere use of shrink-wrapped software are generally not royalties under DTAA, resulting in Nil TDS.

Capital Gains: For proceeds from the sale of property by a non-resident, the form requires the CA to classify the gain as long-term or short-term, state the sale consideration, date of transfer, and cost of acquisition. Taxability under the capital gains provisions of the Income-tax Act, 2025 must be clearly articulated, along with any DTAA relief claimed under the capital gains article of the applicable treaty.

What Penalties Apply for Inaccurate Certification in Form 146?

The Income-tax Act, 2025 places severe accountability on the certifying professional. Section 463 imposes a flat penalty of ₹10,000 for each certificate furnished that the accountant knows to be false, or does not believe to be true. This penalty applies per instance — a CA issuing five erroneous Form 146 certificates for a single client faces a cumulative ₹50,000 penalty. This provision targets both deliberate misrepresentation and gross professional negligence.

For the taxpayer/remitter, the consequences of a bad certificate are worse. If the CA certifies an incorrect (lower) TDS rate based on a flawed reading of a DTAA, the remitter faces demand proceedings for short-deduction of tax under the assessee-in-default provisions of the Act, along with heavy penal interest, and the potential disallowance of the entire business expense under the Act.

Worked Example: A Software Royalty Payment with DTAA Relief

XYZ Limited (an Indian company) pays USD 80,000 (equivalent to ₹66 lakh) as a royalty to a US-based technology firm for patent usage. The aggregate taxable remittances to this entity during the tax year are ₹66 lakh, well exceeding the ₹5 lakh threshold under Rule 220. XYZ Ltd. has not obtained an Assessing Officer certificate under Section 395(1), making Form 146 mandatory.

The assigned CA examines the agreement and determines the payment qualifies as royalty under the Income-tax Act, 2025. Under the domestic act, the TDS rate might be 20% (plus surcharge). However, under Article 12 of the India-USA DTAA, the tax rate on royalties is capped at a beneficial rate (e.g., 10% or 15% depending on the specific rights).

The CA verifies the US entity’s Tax Residency Certificate (TRC), confirms via a no-PE declaration that no Permanent Establishment exists in India, and certifies the lower TDS rate under the DTAA. The CA enters the grossed-up remittance amount of ₹66 lakh, records the DTAA article in the taxability panel, generates the UDIN, and e-verifies the form with their DSC. XYZ Ltd. then files Part C of Form 145, allowing the bank to process the SWIFT transfer at the lower DTAA tax rate without fear of default.

What Should You Do Next?

• Calculate the aggregate taxable remittances made to each non-resident during the current financial year to determine if the ₹5 lakh threshold under Rule 220 has been crossed.
• Verify if you have already obtained an Assessing Officer certificate under Section 397 or Section 395. If yes, Form 146 is not required — proceed directly to Part B of Form 145.
• Compile all supporting documents before the CA begins certification: commercial invoices, bank IFSC/Swift codes, RBI purpose codes, the payee’s TRC, and foreign TIN.
• Ensure your CA generates the UDIN, as certificates without a valid UDIN will cause the upload to fail on the e-filing portal.
• File Part C of Form 145 only after Form 146 has been successfully submitted by the CA. Download the PDF acknowledgements for both forms, as your bank will demand them before releasing the forex.

Frequently Asked Questions