Sending money abroad? Know new income tax forms 145 & 146 first

Sending money outside India to a non-resident individual (NRI) or the NRI remitting funds abroad will now require a slightly different compliance process.

The income tax department has introduced Form 145 and Form 146 for reporting foreign remittances, replacing the earlier Forms 15CA and 15CB.

These forms must be furnished before making a payment to a non-resident or foreign entity, and banks may require them before processing international transfers.

What has changed

The basic requirement remains the same. Foreign remittances must be reported, and tax compliance must be ensured before the money leaves the country.

However, the reporting format has now been revised under the updated rules, bringing all disclosures into Form 145 and Form 146.

What Form 145 covers

Form 145 is a declaration to be filed by the person making the payment. It includes details such as:

Nature of remittance

• Amount being sent abroad

• Applicable tax deduction details

It is required before the transaction is processed.

What Form 146 is for

Form 146 is a certificate issued by a Chartered Accountant in specified cases. It confirms:

• Whether the remittance is taxable

• The applicable tax provisions

• The correct rate of tax deduction

It is generally required for transactions where professional certification is needed for compliance.

Who needs to file these forms?

• Sending money abroad to a non-resident or foreign company

• Making taxable remittances, such as fees, services, or payments linked to income

Banks and authorised dealers typically ask for these forms before approving the transfer.

Who may not need Form 146

• The transaction is not taxable, or

• The nature of the payment does not require CA certification

Why this matters

Foreign remittances are closely monitored for tax compliance. Incorrect or missing documentation can delay transfers or lead to additional verification at the bank level.

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