Overseas Remittance (Form 145 & Form 146)
With increasing global business transactions and cross-border payments, the Indian Income Tax Act mandates specific compliance for foreign remittances. Two key forms – Form 145 and Form 146 – play a vital role in ensuring that taxes that may be applicable to the remittance are properly assessed and disclosed.
Form 145 – Online Declaration by Remitter
Form 145 is a declaration by the person making the remittance, stating whether the payment is chargeable to tax in India and the details of the remittance.
It acts as an information tool for the Income Tax Department and helps monitor foreign transactions.
Form 146 – Certificate by a Chartered Accountant
Form 146 is a certificate issued by a Chartered Accountant (CA) confirming:
- The nature of the remittance
- Taxability under the Income Tax Act
- Applicability of DTAA (Double Taxation Avoidance Agreement)
- Rate of tax to be deducted, if any
Why Are These Forms Required?
The purpose of the Form 145/146 mechanism is:
- To track foreign remittances from India
- To ensure correct tax deduction at source (TDS)
- To ensure adherence with DTAA provisions
- To prevent tax leakage on cross-border payments
Banks will not process most foreign remittances without receiving the required Form 145/146
Common Examples of Remittances Requiring Form 145/146
Likely to Form 145/146
- Royalty, fees for technical services
- Professional fees to foreign consultants
- Payments for software licenses
- Commission to foreign agents
- Interest payments
- Payment for online services not covered under exemption clauses
- Contract payments for services executed outside India, if taxable
Likely Exempt:
- Import of goods
- Travel, education, medical remittances under LRS
- Intermediary bank charges
- Refunds or reimbursements not considered taxable
Non-Compliance & Penalties
Failure to furnish Form 145/146 when required may result in:
- Penalty under Income Tax Laws
- Delays in remittance processing
- Additional scrutiny from authorities
- Possible tax and interest liabilities
Staying compliant ensures smooth financial operations and minimizes risk.
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