Your company is paying a Singapore design studio USD 12,000 for a website rebuild. Your relationship manager asks for "the 15CB". Your CA sends a PDF. The wire goes out. Nine months later an assessment notice arrives asking why tax was not withheld on a payment the department has classified as fees for technical services — and separately, why the declaration was filed on a form that was superseded five months before the remittance.

Both problems trace back to the same mistake: treating foreign remittance certification as paperwork rather than as a self-assessment of taxability that binds the company.

What the law actually requires

The foundation is the withholding obligation on payments to non-residents. Under the erstwhile Section 195 of the Income Tax Act 1961 — now carried into Section 393 of the Income Tax Act 2025 — any person responsible for paying a sum to a non-resident that is chargeable to tax in India must deduct tax at the time of credit or payment, whichever is earlier. There is no basic exemption limit and no minimum threshold. A single rupee of chargeable income triggers the obligation.

Layered on top of that withholding duty is a separate information obligation. The payer must furnish details of the remittance to the Income Tax Department before the money leaves. This is the rule that produces the forms. It was Section 195(6) read with Rule 37BB of the Income Tax Rules 1962; it is now the corresponding provision read with Rule 37BB of the Income Tax Rules 2026.

The form renumbering effective 1 April 2026

This is the single most important operational change for anyone who has been running a foreign payments process for more than a year:

Until 31 March 2026	From 1 April 2026
Form 15CA (remitter declaration)	Form 145
Form 15CB (chartered accountant certificate)	Form 146
Penalty under Section 271-I	Section 462
TDS on non-resident payments — Section 195	Section 393

Forms 15CA and 15CB filed for remittances initiated before 1 April 2026 remain valid evidence of compliance. You do not need to re-file historic remittances. But every remittance initiated on or after that date must go on Form 145 / Form 146.

The substance is unchanged. The structure, the four Parts, the CA certification requirement, the pre-remittance timing — all carried forward. What changed is the number on the form and the section you cite in your own documentation. Companies that copy-paste last year's engagement letter or bank covering note are the ones that get caught, because the acknowledgment number format and the portal submission path both changed.

The four Parts — and why "above five lakh needs 15CB" is wrong

The four-Part structure survives the renumbering. Founders routinely collapse it into a single five-lakh rule. It is actually a two-axis test: is the remittance chargeable to tax, and does the aggregate exceed five lakh in the financial year.

Part A — remittance is chargeable to tax, and the aggregate of such remittances does not exceed ₹5,00,000 during the financial year. Remitter files Part A alone. No CA certificate required.

Part B — remittance is chargeable to tax, aggregate exceeds ₹5,00,000, and the remitter has obtained a certificate or order from the Assessing Officer under Section 197 (lower/nil deduction certificate) or under the corresponding provision for determination of the appropriate proportion of income chargeable. Remitter files Part B, attaching the AO's order. No CA certificate required — because the AO has already determined the withholding.

Part C — remittance is chargeable to tax, aggregate exceeds ₹5,00,000, and there is no AO certificate. This is the case that requires Form 146 (formerly 15CB) from a chartered accountant, obtained before Part C is filed. The Part C acknowledgment cannot be generated without the Form 146 acknowledgment number.

Part D — remittance is not chargeable to tax under the Act. Remitter files Part D. No CA certificate required. Part D also covers remittances falling within the specified exempt list in Rule 37BB.

Three consequences follow, and each one is a live audit exposure:

A ₹40,00,000 remittance that is genuinely not chargeable to tax — a repayment of principal on an external commercial borrowing, for example — goes on Part D, not Part C. It needs no CA certificate at all, despite being eight times the five-lakh figure. Bankers who insist on a CA certificate for every large transfer are applying a bank policy, not the law.
A ₹2,00,000 royalty payment is chargeable to tax. It goes on Part A. It needs no CA certificate — but tax must still be withheld under Section 393. Filing Part A does not relieve you of the withholding obligation. The two are independent duties, and founders conflate them constantly.
The five-lakh test is on the aggregate during the financial year, not per transaction. Twelve monthly payments of ₹50,000 each to the same foreign consultant cross the threshold at the eleventh payment. If you were filing Part A each month, the eleventh must move to Part C with a Form 146 attached. Systems that evaluate each invoice in isolation fail here.

The exemption list under Rule 37BB

Rule 37BB carries a specified list of remittance purposes for which no Form 145 or Form 146 is required at all — these are the "Part D, nothing further" cases. The list historically ran to 28 purpose codes. Under the Income Tax Rules 2026 the list has been expanded to 33 categories, broadening relief for common cross-border payments.

Typical entries include indenting commission, remittances by Indian companies towards imports, advance payment against imports, payment towards imports settled through the Reserve Bank of India's Asian Clearing Union route, business travel, personal gifts and donations within the Liberalised Remittance Scheme, travel for education, and certain payments for the maintenance of close relatives abroad.

Two cautions. First, the exemption is by purpose code, and the purpose code your bank enters on the A2 form is what the department sees. A payment miscoded as a service fee when it is actually an import settlement will not carry the exemption, whatever your internal ledger says. Second, an exempt purpose code does not mean the payment is non-taxable for withholding purposes — it means the reporting form is dispensed with. Check the exemption list before you commission a Form 146 you do not need, and check chargeability separately before you skip a withholding you do owe.

What the CA actually certifies in Form 146

Form 146 is not a signature on a bank form. The chartered accountant certifies, on professional responsibility, a specific chain of reasoning:

the nature of the remittance — royalty, fees for technical services, interest, dividend, business profits, capital gains, reimbursement of expenses;
whether that nature makes the income chargeable to tax in India under the Act;
if a Double Taxation Avoidance Agreement is being invoked, the country of residence, the article of the treaty relied on, and confirmation that a valid Tax Residency Certificate and Form 10F are on record;
whether the non-resident has a Permanent Establishment in India — because a PE changes business profits from non-taxable to taxable;
the rate of tax deducted, the amount, and whether the beneficial treaty rate or the domestic rate applies;
the grossing-up position under Section 195A where the contract is net-of-tax.

The two documents that most often derail this: the Tax Residency Certificate, which must be issued by the tax authority of the payee's country and must be current for the relevant period, and Form 10F, which since the e-filing mandate must be filed electronically by the non-resident on the Indian income tax portal — which in turn requires the non-resident to hold a PAN or to be covered by the specific relaxation for non-PAN holders. Founders who plan a treaty-rate payment three days before the wire regularly discover that the payee cannot produce an electronic Form 10F in time, and the payment goes out at the higher domestic rate.

Practical implications

Higher withholding where the payee has no PAN. Under the provision corresponding to the erstwhile Section 206AA, where the non-resident payee does not furnish a PAN, tax must be deducted at the higher of the rate in the Act, the rate in force, or 20%. The relief for non-residents who furnish prescribed alternative details — name, email, contact number, address in the country of residence, TRC, and Tax Identification Number — is conditional. If those details are incomplete, 20% applies regardless of any treaty rate.

Penalty for not furnishing the information. Failure to furnish the information, or furnishing inaccurate information, in Form 145 attracts a penalty of ₹1,00,000. This sat at Section 271-I under the 1961 Act and now sits at Section 462 of the Income Tax Act 2025. It is a flat penalty per default — not a percentage of the remittance — which means a ₹60,000 payment reported on the wrong Part can attract a penalty larger than the payment itself.

Disallowance of the expense. This is the cost founders underestimate. Where tax was deductible on a payment to a non-resident and was not deducted, or was deducted and not paid, the entire expenditure is disallowed in computing business income under the provision corresponding to Section 40(a)(i). A ₹50,00,000 offshore development contract on which no TDS was deducted becomes ₹50,00,000 of non-deductible expense — at the 25% or 30% corporate rate, roughly ₹12,50,000 to ₹15,00,000 of additional tax, before interest.

Interest on late deposit. Interest under the provision corresponding to Section 201(1A) runs at 1% per month from the date tax was deductible to the date it was actually deducted, and at 1.5% per month from deduction to deposit. Part months count as full months.

Assessee-in-default. Where tax was not deducted at all, the company itself is treated as an assessee-in-default for the tax amount plus interest, unless it can establish that the payee has itself filed a return, offered the sum to tax and paid the tax — evidenced by a chartered accountant's certificate in the prescribed form. Obtaining that evidence from a foreign payee two years after the fact is, in practice, very difficult.

The FEMA layer sits alongside, not instead. The authorised dealer bank will require the A2 form and the purpose code under the Foreign Exchange Management Act framework. Satisfying your banker's FEMA checklist is not the same as satisfying the Income Tax Act. Both apply to the same wire, independently.

Step-by-step: what to do

Classify the payment before you negotiate the contract, not before the wire. Decide whether it is royalty, fees for technical services, business profits, interest, or a reimbursement. This determines chargeability, and chargeability determines everything downstream. A contract drafted as "consulting" that is functionally a licence to use software will be reassessed as royalty.
Check the Rule 37BB exemption list — now 33 categories. If the purpose falls inside it, no Form 145 or 146 is required. Confirm the purpose code your bank will use matches the exemption you are relying on.
Determine chargeability. If not chargeable to tax under the Act, and not on the exemption list, file Part D of Form 145. Document the reasoning in a file note; you will be asked for it.
If chargeable, compute the financial-year aggregate. Include every prior remittance to non-residents in the same financial year, not just to this payee. Under ₹5,00,000 → Part A. Over ₹5,00,000 with an AO order → Part B. Over ₹5,00,000 without an AO order → Part C.
For Part C, collect the treaty pack early. Tax Residency Certificate valid for the relevant period, electronically filed Form 10F, a no-PE declaration from the payee, and the executed agreement. Start this at contract signature, not at payment date.
Obtain Form 146 from your chartered accountant. The CA files it on the income tax portal and gives you the acknowledgment number. Form 146 must precede Form 145 Part C.
File Form 145 with the Form 146 acknowledgment number. Download the acknowledgment. Both the remitter and the CA must have valid Digital Signature Certificates — Class 3, and DSC expiry mid-filing is a routine cause of missed deadlines.
Give the bank the Form 145 acknowledgment with the A2 form. The authorised dealer will not release the SWIFT transfer without it.
Deposit the TDS by the 7th of the following month and report the payment in the quarterly Form 27Q — the non-resident TDS return. Issue Form 16A to the payee. Companies file Form 145 diligently and then forget Form 27Q, which is where the mismatch surfaces at assessment.
Update your SOP, bank templates and engagement letters to say Form 145 and Form 146, and to cite Section 393 and Section 462. Documents still referencing 15CA, 15CB, Section 195 and Section 271-I for a post-April-2026 remittance signal to an assessing officer that the process was not reviewed.

FAQ

We paid a foreign vendor without filing anything. What is the exposure?
Three separate liabilities. A ₹1,00,000 penalty under Section 462 for the information failure. Disallowance of the entire expenditure under the provision corresponding to Section 40(a)(i), costing roughly 25–30% of the payment in additional corporate tax. And the unpaid TDS plus interest at 1% and 1.5% per month, with the company treated as an assessee-in-default. File the pending forms and deposit the tax voluntarily before a notice issues — that improves the position on penalty, though it does not extinguish it.

Does a reimbursement of expenses need a form?
Chargeability depends on whether the reimbursement carries an income element. A pure cost-to-cost reimbursement with documentary support and no mark-up is generally not chargeable — file Part D. A reimbursement with an embedded mark-up, or one where the underlying service is itself taxable, is chargeable. This is one of the most litigated areas; document the underlying invoices, do not rely on the label in the contract.

Do we still say 15CA and 15CB?
Colloquially, yes — bankers and CAs will use both names for some time. Formally, for any remittance initiated on or after 1 April 2026, the forms are Form 145 and Form 146. Use the new numbers in every filing, contract, and internal document. Historic 15CA/15CB filings for pre-April-2026 remittances remain valid.

Our payee is in a country with a DTAA and claims zero tax. Can we remit without deduction?
Only with the full evidentiary pack: a valid Tax Residency Certificate for the relevant period, an electronically filed Form 10F, a no-PE declaration, and a Form 146 from your CA confirming the treaty article relied on. Without all four, deduct at the domestic rate — or at 20% if the payee has no PAN and has not furnished the prescribed alternative details. A payee's assertion of treaty relief is not evidence of it.

Getting this right

Foreign remittance compliance fails in a predictable pattern: the classification is decided by whoever raises the purchase order, the treaty documents are chased the week of payment, and the form is filed to satisfy a banker rather than to record a considered tax position. The 2026 renumbering is a useful forcing function — if your process documents still say 15CA, they have not been reviewed since the law changed, and that is worth fixing before an assessing officer notices it for you.

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