Summary: Section 397(3)(d) of the Income-tax Act, 2025 introduces the procedure for furnishing information for payments to non-residents, replacing the compliance mechanism under Section 195(6) of the Income-tax Act, 1961. Form 15CA is replaced by Form 145 and Form 15CB by Form 146. Where a payment is not chargeable to tax and is covered by the notified specified list, no reporting is required; otherwise, Form 145 Part D is required. For taxable payments, aggregate remittances up to Rs. 5 lakh require Form 145 Part A. Where aggregate remittances exceed Rs. 5 lakh, Form 145 Part B applies if an Assessing Officer’s certificate is available. Without such a certificate, the payer must obtain Form 146 from a Chartered Accountant and file Form 145 Part C. Form 146 covers the nature of remittance, applicable provisions, DTAA, taxability, withholding rate, surcharge, cess, and amount liable for deduction. The framework retains the decision-making approach of the earlier provisions while updating statutory references and replacing Forms 15CA and 15CB.
Section 397(3)(d) of the Income-tax Act, 2025 – Detailed Procedure for Form 145 & Form 146 (Replacement of Form 15CA & Form 15CB)
Introduction
The Income-tax Act, 2025 has introduced Section 397(3)(d), which prescribes the procedure for furnishing information while making payments to non-residents. This provision substantially replaces the existing compliance mechanism under Section 195(6) of the Income-tax Act, 1961.
Under the new law:
- Form 15CA has been replaced by Form 145, and
- Form 15CB has been replaced by Form 146.
Although the form numbers have changed, the fundamental objective remains the same—to ensure that tax is appropriately deducted on payments to non-residents before remittance outside India.
Legislative Intent
Payments made to non-residents are governed by the provisions relating to withholding tax.
The Government has introduced Form 145 and Form 146 to:
- ensure proper tax deduction on foreign remittances;
- collect information regarding international payments;
- prevent tax leakage;
- facilitate monitoring of cross-border transactions; and
- ensure compliance with the provisions of the Income-tax Act and applicable DTAAs.
Understanding the Flow Chart
Step 1 – Determine Whether the Payment is Chargeable to Tax in India
The first question to be examined is:
Is the payment to the non-resident chargeable to tax under the Income-tax Act, 2025?
If the Payment is Not Chargeable to Tax
The next question is:
Whether RBI approval is not required and the remittance falls under the specified list?
The specified list refers to transactions notified by CBDT where reporting is not required.
Case 1
RBI approval not required + transaction covered in specified list
Result:
No information is required to be submitted.
Neither Form 145 nor Form 146 is required.
Case 2
Transaction not covered under specified list
Result:
Form 145 – Part D is required.
Part D merely reports that the payment is not chargeable to tax.
No Chartered Accountant certificate is required.
If the Payment is Chargeable to Tax
Where the remittance is taxable in India, further compliance depends upon the aggregate amount of remittance during the financial year.
Step 2 – Aggregate Payment during the Financial Year
The payer has to determine:
Whether the aggregate amount of remittance during the financial year exceeds ₹5,00,000?
Case 1 – Aggregate Payment does not exceed ₹5 lakh
Result:
File Form 145 – Part A
Characteristics:
- Applicable only for taxable payments
- Aggregate remittance up to ₹5 lakh
- No CA certificate required
This is the simplest compliance requirement under Section 397(3)(d).
Case 2 – Aggregate Payment exceeds ₹5 lakh
Further verification is required.
Step 3 – Whether Certificate/Order of Assessing Officer has been Obtained?
The payer should examine whether any certificate has been obtained from the Assessing Officer.
Examples include:
- lower deduction certificate;
- nil deduction certificate;
- certificate determining appropriate proportion of income chargeable to tax.
AO Certificate Available
Result:
File Form 145 – Part B
Since the Assessing Officer has already determined the withholding requirement, no CA certificate is necessary.
AO Certificate Not Available
Result:
The payer is required to obtain
Form 146
from a Chartered Accountant.
Thereafter,
File Form 145 – Part C
This is the most common situation encountered in practice.
What is Form 146?
Form 146 is the Chartered Accountant’s certificate replacing the existing Form 15CB.
The CA certifies:
- nature of remittance;
- relevant provisions of the Act;
- applicability of DTAA;
- taxability in India;
- applicable withholding rate;
- surcharge and cess;
- amount liable for deduction;
- compliance with Section 397.
Banks generally rely upon this certificate before processing foreign remittances.
Summary of Compliance
| Nature of Payment | Applicable Form |
| Payment not chargeable and covered under specified list | No reporting required |
| Payment not chargeable but not covered under specified list | Form 145 – Part D |
| Taxable payment up to ₹5 lakh | Form 145 – Part A |
| Taxable payment above ₹5 lakh with AO certificate | Form 145 – Part B |
| Taxable payment above ₹5 lakh without AO certificate | Form 145 – Part C + Form 146 |
Key Differences Between the Old and New Law
| Income-tax Act, 1961 | Income-tax Act, 2025 |
| Section 195(6) | Section 397(3)(d) |
| Form 15CA | Form 145 |
| Form 15CB | Form 146 |
| Rule 37BB | Corresponding rules under the Income-tax Rules, 2025 |
| Same decision-making framework | Same framework with updated statutory references |
Important Practical Points
- Taxability must always be determined before deciding the applicable compliance.
- DTAA provisions should be examined wherever applicable.
- The ₹5 lakh threshold is computed on the aggregate remittance during the financial year.
- Where an Assessing Officer’s certificate is available, Form 146 is not required.
- Form 146 is mandatory only in cases falling under Form 145 – Part C.
- Transactions covered under the notified specified list are exempt from reporting, subject to the prescribed conditions.
Conclusion
Section 397(3)(d) of the Income-tax Act, 2025 largely preserves the compliance framework that taxpayers are familiar with under Section 195(6), while introducing new statutory references and replacing Forms 15CA and 15CB with Forms 145 and 146. The key to compliance remains the correct determination of taxability, the aggregate value of remittances, and the availability of an Assessing Officer’s certificate. Tax professionals and businesses making foreign remittances should familiarize themselves with the revised forms to ensure timely and accurate compliance under the new law.
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Disclaimer: This article is intended solely for educational and informational purposes and reflects the author’s personal understanding of the law as on the date of publication. Readers are advised to refer to the relevant statutory provisions, rules, notifications, and judicial precedents or seek professional advice before acting on the basis of this article. Neither the author nor the publisher shall be responsible for any loss or liability arising from reliance on the contents of this article.
