Form 145 and Form 146 in October 2026: Foreign Remittance TDS, ₹5 Lakh Test and Rule 220

Summary: From 1 April 2026, foreign-remittance reporting under the Income-tax Act, 2025 uses Form 145 and, where necessary, Chartered Accountant certification in Form 146, broadly replacing Forms 15CA and 15CB. Rule 220 of the Income-tax Rules, 2026 distinguishes taxable remittances up to ₹5 lakh, larger taxable remittances with an Assessing Officer certificate, larger taxable remittances requiring an accountant’s certificate, and non-chargeable remittances. Certain non-chargeable remittances are exempt from reporting under specifically stated conditions and purpose codes. The taxability test must be completed before choosing the form, and a bank’s FEMA documentation does not replace income-tax withholding analysis. This article explains the October 2026 operational framework, practical examples, tax treaty evidence, portal filing and the separate quarterly reporting obligation of authorised dealers.

Why October 2026 Remittances Need the New Forms

Indian businesses routinely pay foreign software vendors, consultants, group companies, licensors, freight operators and overseas service providers. The banking instruction may be simple, but the income-tax question is not: does the amount contain income chargeable to tax in India, and if so, what withholding obligation arises? For remittances processed from 1 April 2026 under the Income-tax Act, 2025, the reporting format is Form 145, with Form 146 serving as the accountant’s certificate where Rule 220 requires it. Reusing a prior-year Form 15CA checklist without checking the new forms can cause avoidable rework.

The legal foundation includes section 397(3)(d) of the 2025 Act and Rule 220 of the Income-tax Rules, 2026. The underlying withholding analysis must also examine section 393 and, where relevant, certificates or orders under section 395. A form is not itself a tax-exemption certificate. If the payment is chargeable to tax, the remitter must consider deduction at the appropriate rate and compliance timing. Conversely, a payment genuinely not chargeable to Indian tax should not be treated as taxable merely because a bank asks for a declaration.

Four Parts of Form 145: Correct Decision Tree

Taxable remittances and the ₹5 lakh aggregate

Rule 220(1) requires Part A when a chargeable payment, or aggregate of relevant chargeable payments during the tax year, does not exceed ₹5 lakh. Part B applies where that amount exceeds ₹5 lakh and the payer has obtained the prescribed Assessing Officer certificate or order under section 395(1) or 395(2). Part C applies to a larger taxable remittance supported by Form 146 from an accountant, except that filing Part B removes the need to duplicate Part C. The test uses the tax-year aggregate rather than assuming that each bank transfer is an isolated ₹5 lakh transaction.

Part D applies where the payment is not chargeable under the Income-tax Act, subject to the explicit no-reporting exceptions in Rule 220(3). This means the remitter should first decide chargeability, then test the ₹5 lakh threshold where the payment is taxable, then determine whether an Assessing Officer certificate is available, and only then choose the form part. A business that begins with the form number rather than the underlying legal analysis can mistakenly treat a taxable royalty as a non-taxable reimbursement or file a CA certificate when an existing AO order makes Part B appropriate.

What Does “Chargeable to Tax” Actually Mean?

The decisive inquiry is whether the non-resident recipient derives income chargeable in India under the applicable substantive provisions, read with the relevant tax treaty where its benefits are available. The contract label is not conclusive. A licence fee may involve royalty; a technical service fee may involve domestic-law or treaty concepts; a purchase of goods may have different consequences. Payments for advertising, cloud services, management support or software require a fact-specific analysis of what rights and services are actually supplied. A payer should record its classification, place of use, business connection and any applicable treaty provision.

A Double Taxation Avoidance Agreement may restrict Indian taxation where treaty eligibility, residence and beneficial-ownership conditions are satisfied. Tax residency certificates, Form 10F or the applicable new-form equivalent where required, beneficial-ownership evidence and no-permanent-establishment declarations should be evaluated in context. These documents are evidence, not automatic immunity from withholding. The rate may also be affected by the character of income, surcharge, cess and treaty conditions. A CA certification should explain the legal conclusion and calculation rather than merely reproduce the invoice value.

When Form 146 Is Needed and Who Signs It

Form 146 is required for a chargeable remittance exceeding the ₹5 lakh tax-year threshold where the payer does not have the specified Assessing Officer certificate and must file Form 145 Part C. It is filed by an eligible accountant under section 515(3)(b), typically a registered Chartered Accountant authorised by the taxpayer through the income-tax e-filing portal. The accountant evaluates the remitter and recipient details, remittance nature, domestic-law taxability, treaty analysis and withholding computation. The e-filing system generates an acknowledgement that is then used in Part C.

The Department’s Form 145 user manual states that Part C panels are prefilled from the Form 146 acknowledgement. The payer must still review that information: delegating the certificate does not remove the payer’s responsibility to furnish accurate remittance particulars and deduct tax correctly. The certificate is event-based and should be completed before the relevant remittance. For practical reference, TaxGuru’s Form 146 guide discusses the accountant’s workflow, while the official Rule 220 and current portal instructions remain the controlling references.

Non-Chargeable Payments and Rule 220(3) Exclusions

Rule 220(2) normally requires Part D for a payment that is not chargeable to income tax. Rule 220(3), however, creates specified exceptions to furnishing information. One applies to a remittance made by an individual where prior Reserve Bank approval is not required under the identified FEMA current-account framework. Another applies to a qualifying International Financial Services Centre unit. A third covers a statutory list of specified RBI purpose codes, but only where the payment is not chargeable. The exception cannot be used merely because a bank happens to select a listed code for a payment that is actually taxable.

The list includes specified import advances and import-invoice settlements, certain business and personal travel payments, medical treatment, education, some investments and specified donations, among other entries. Each purpose code has a defined description. For example, S0102 relates to settlement of an import invoice, while S0305 relates to education. The presence of such codes is not a blanket exemption from tax, TCS, FEMA or anti-money-laundering checks. A taxpayer should retain the invoice, outward remittance application, purpose-code support and the reason the income-tax reporting exception applies.

FEMA, TCS and GST: Three Different Compliance Questions

FEMA controls whether a foreign-exchange transaction is permitted and what bank documentation is required. Income-tax withholding controls whether the payer must deduct tax from a chargeable sum to a non-resident. Tax collection at source under the Liberalised Remittance Scheme and overseas tour package provisions may arise in a separate context, and cannot be inferred solely from Form 145. A payment can be permitted under FEMA but still carry withholding. Likewise, an income-tax non-chargeability conclusion does not by itself establish that every FEMA or bank-documentation requirement is satisfied.

Goods and Services Tax can be another independent question. An Indian recipient of imported services may need to examine reverse-charge liability under the IGST Act, place-of-supply rules and the relevant notification. The existence of a Form 145 Part C filing does not establish whether the transaction is an import of services, whether consideration is taxable under GST, or whether any ITC is available. Businesses should maintain separate income-tax, FEMA and GST analyses instead of copying the conclusion from one regime into another. The same contract may require three distinct legal classifications.

Illustrations for Common October 2026 Payments

These examples assume the stated tax classification is already correct; they do not determine whether consulting, royalty, technical fees or goods purchases are actually taxable. The tax-year aggregation may change the form part when earlier payments to the relevant recipient or otherwise relevant aggregates exist. A ₹4 lakh payment followed by another ₹4 lakh taxable payment should not be split solely to preserve a Part A result. Conversely, the fact that an overseas transfer exceeds ₹5 lakh does not automatically require Form 146 when an appropriate AO certificate or a statutory non-chargeable exclusion applies.

Filing Sequence and October 15 Reporting Distinction

The payer selects the relevant form under the “Forms as per Income Tax Act 2025” section of the e-filing portal, completes the remitter and recipient details, selects the correct part and e-verifies the form. For Part C, the accountant files Form 146 first, and the payer uses its acknowledgement number to populate Form 145. The submitted form is then provided to the authorised dealer through the prescribed electronic or documentary process before the remittance. Portal validation errors should be investigated through official helpdesk guidance rather than bypassing the required legal checks.

Rule 220(6) separately requires authorised dealers to furnish Form 147, and specified IFSC units to furnish Form 148, within 15 days after the end of each tax-year quarter for covered remittances. For the July–September 2026 quarter, the ordinary 15-day point is 15 October 2026, subject to any valid change. This quarterly reporting duty belongs to the specified reporting institution, not to every ordinary remitter filing Form 145. The distinction is important for banks and compliance teams planning October workflows.

Records, Audit Trail and Consequences of Wrong Classification

A defensible remittance file should include the agreement, invoice, service description, recipient residence details, tax residency certificate where relevant, permanent-establishment representations, withholding computation, AO order if any, CA certificate where required, form acknowledgement, bank advice and proof of tax deposit. Cross-check the currency amount, exchange rate, gross-up clause, payer and payee names, purpose code and amount actually remitted. Differences between the contract amount and bank remittance should be explained, particularly where withholding is borne by the Indian payer.

An incorrect non-chargeability conclusion can create short-deduction exposure, interest, penalty and possible expense-deduction implications under the applicable law. An incorrect Form 145 declaration may also generate audit or inquiry issues. The taxpayer should not assume that a CA certificate eliminates these risks, or that a successful portal submission means the tax treatment has been approved. TaxGuru’s Form 145/146 framework explainer and portal troubleshooting discussion provide contextual reading, but primary statutory provisions and actual remittance documents determine the position.

Frequently Asked Questions

1. Which forms replace 15CA and 15CB from April 2026?

Form 145 is the remitter’s information statement and Form 146 is the accountant’s certificate for specified taxable remittances. Their use is governed by the Income-tax Act, 2025 and Rule 220 of the Income-tax Rules, 2026.

2. Is Form 146 compulsory for every outward remittance over ₹5 lakh?

No. The amount must be chargeable to tax and the Part C conditions must be met. An applicable Assessing Officer certificate can move the case to Part B, and a genuinely non-chargeable remittance is assessed under Part D or a specified exclusion.

3. Is ₹5 lakh calculated per transaction?

Rule 220 uses the payment or aggregate of relevant payments during the tax year. Splitting a chargeable remittance into smaller transfers does not automatically keep the reporting in Part A.

4. When does Part D apply?

Part D generally covers payments to the specified non-resident recipients that are not chargeable under the Act. Rule 220(3) separately exempts certain non-chargeable payments from furnishing information when its precise conditions are met.

5. Does an RBI purpose code automatically remove income-tax withholding?

No. A purpose code describes the foreign-exchange transaction. Income-tax chargeability must be independently analysed. The Rule 220(3) list is relevant only when the payment is not chargeable to income tax.

6. Does Form 145 replace the bank’s FEMA documents?

No. Form 145 addresses income-tax remittance information. Authorised-dealer declarations, permitted-transaction rules, KYC, FEMA documentation and possible GST reverse-charge analysis remain separate obligations.

7. Who files Form 147 by 15 October 2026?

The authorised dealer covered by Rule 220(6), not every business making a foreign payment. The corresponding IFSC reporting form is Form 148 for qualifying units; the due date is 15 days after the relevant quarter, subject to valid changes.

Key Takeaways

• Form 145 and Form 146 govern relevant outward remittances from 1 April 2026.
• Chargeability comes first; the ₹5 lakh aggregate decides Part A versus the larger-taxable-payment branches.
• Part B uses the prescribed AO certificate; Part C uses Form 146; Part D addresses non-chargeable sums.
• Rule 220(3) exclusions require precise facts and do not confer blanket tax immunity.
• Form 147/148 quarterly filing by specified institutions is distinct from the payer’s pre-remittance Form 145.

Primary Sources Reviewed

• Income Tax Department: Rule 220
• Income Tax Department: Form 145 user manual
• Income Tax Department: Form 146 portal guidance
• Income Tax Department: Section 393

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Disclaimer: This article is an educational compliance explanation prepared from official materials checked on 14 October 2026, and is not legal advice, a withholding-tax certificate, a FEMA opinion, GST advice, banking authorisation or a substitute for a professional review of a particular remittance. Actual liability depends on the contract, payee residence, domestic-law chargeability, treaty eligibility, documentation, section 395 orders, aggregate payments, currency conversion, relevant exemptions, bank requirements and subsequent amendments or official instructions. The illustrations assume the stated chargeability solely to explain the reporting decision tree. A successful portal filing does not constitute tax approval. Readers should verify the current Act, Rule 220, official forms and authorised-dealer instructions before payment. TaxGuru, its owners, management, editors, authors, employees and associated persons accept no responsibility or liability for any loss, tax demand, interest, penalty, rejected transfer, regulatory proceeding or decision arising from reliance on this article.