Your Bank Will Handle the CA Certificate for NRI Transfers: What Form 146 Under ITA 2025 Actually Requires

Your Bank Will Handle the CA Certificate for NRI Transfers: What Form 146 Under ITA 2025 Actually Requires

Every week, NRIs and their families in India act on one of two myths about CA certification for foreign remittances: either that the bank handles everything automatically, or that a CA certificate is only needed for large corporate transfers. Both beliefs are wrong — and acting on them can result in tax department notices, penalties under Section 271C of ITA 1961, and blocked remittances sitting at your bank for weeks.

From 1 April 2026, Form 15CB has been replaced by Form 146 under the Income Tax Act, 2025 (ITA 2025). The rules have been clarified, a new UDIN verification requirement has been added, and the threshold logic is now in force. Here is exactly what the law says, when Form 146 is mandatory, and what you need to do before your next transfer.

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What the Law Actually Says

Under the Income Tax Act, 1961, Section 195 required any person making a payment to a non-resident — or to a foreign company — to deduct tax at source if the payment was "chargeable to tax" in India. To operationalise this, Rule 37BB of the Income Tax Rules required the payer to file Form 15CA (a declaration) and, in specified cases, obtain Form 15CB — a certificate from a Chartered Accountant confirming the nature of the remittance and the applicable tax rate.

Under the Income Tax Act, 2025, effective 1 April 2026:

• Form 15CA is now Form 145


• Form 15CB is now Form 146

The underlying obligation has not changed; only the form numbers and the rules framework have been renumbered under the new Act. ITA 2025 also replaces "Previous Year" and "Assessment Year" with the single term Tax Year — so references to "Tax Year 2025-26" are the correct way to describe the year beginning 1 April 2025.

Form 146 (previously Form 15CB) is an Accountant's Certificate. It is issued by a practising Chartered Accountant who examines the remittance and certifies:

• The nature and purpose of the payment


• Whether it is taxable in India under ITA 2025 provisions (equivalents of Sections 5 and 9, ITA 1961)


• The applicable DTAA provisions, if any


• The rate of TDS that must be applied


• The amount of TDS to be deducted before the remittance is made

A key addition under ITA 2025 rules: Form 146 now includes UDIN-based real-time verification through the ICAI API. The CA must generate a Unique Document Identification Number (UDIN) that is validated live at the time of filing. A Form 146 submitted without a valid UDIN will be rejected on the income tax portal — it cannot be corrected after the fact.

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When Is Form 146 Mandatory?

The requirement depends on three conditions working together:

Condition 1 — The payment is taxable in India.
If the remittance is genuinely not taxable in India (for example, repayment of a loan principal to an NRI, or a maintenance payment to an NRI spouse that falls under an exemption), only Part A of Form 145 may be required — filed as a self-declaration by the payer, without a CA certificate.

Condition 2 — The aggregate payment in the Tax Year exceeds ₹5 lakh.
This is the threshold most people misunderstand. Below ₹5 lakh in aggregate during the Tax Year, the payer can file Part A of Form 145 as a self-declaration. At ₹5 lakh and above, Form 146 from a CA is mandatory.

The ₹5 lakh threshold is aggregate for the Tax Year, not per transaction. Three payments of ₹2 lakh each to the same NRI in the same Tax Year total ₹6 lakh — Form 146 becomes mandatory from the point the aggregate crosses ₹5 lakh, even if no single payment exceeded it.

Condition 3 — No Assessing Officer certificate exists.
Where the remitter has obtained a certificate from the Assessing Officer (AO) specifying a lower or nil rate of TDS, that AO certificate substitutes for Form 146. In that case, Part B of Form 145 is filed using the AO certificate, and a separate Form 146 is not required.

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Practical Implications for NRIs and Their Families

Scenario 1: Indian family paying rent to NRI landlord — ₹80,000/month
Annual rent = ₹9.6 lakh. This exceeds the ₹5 lakh threshold. The tenant (payer) must obtain Form 146 from a CA before filing Form 145 and making each remittance. TDS at 30% (plus applicable surcharge and cess) must be deducted unless a DTAA benefit applies and is specifically certified in Form 146. The tenant cannot simply pay the full rent and "sort out the tax later."

Scenario 2: Indian resident sending ₹3 lakh to NRI spouse abroad
If this is a genuine maintenance payment and the aggregate in the Tax Year is below ₹5 lakh, the payer can file Part A of Form 145 as a self-declaration without Form 146. No CA certificate is needed. However, if the payer is unsure whether the amount is taxable, they should not skip a CA review — the self-declaration in Part A carries full legal responsibility if the characterisation is wrong.

Scenario 3: Sale of Indian property by NRI — buyer remitting sale proceeds
This is one of the most common and highest-risk scenarios. The buyer in India is responsible for TDS under the Section 195 equivalent in ITA 2025. Sale proceeds almost always exceed ₹5 lakh. The buyer must engage a CA, obtain Form 146 certifying the applicable TDS rate (which may be reducible under the applicable DTAA — for example, the India-UAE or India-UK DTAA), deduct TDS at the certified rate, file Form 145 Part B, and then remit only the net amount to the NRI seller.

If the buyer remits the full amount without deducting TDS, they become personally liable for the TDS amount plus interest at 1.5% per month — even after the NRI seller has received the money.

Scenario 4: Company paying technical fees to NRI consultant — ₹4 lakh
Below ₹5 lakh for the Tax Year. The payer may file Part A of Form 145 as a self-declaration without Form 146. Many companies obtain Form 146 anyway as a matter of internal compliance policy — this is prudent but is not legally required at this threshold.

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Step-by-Step: What to Do Before a Foreign Remittance

Step 1 — Determine if the payment is taxable in India.
Ask: Is this income that arises or accrues in India? Interest on NRO accounts, rent from Indian property, capital gains on Indian assets, and fees for professional services rendered in India are all taxable. Loan principal repayments, return of capital, and intra-family gifts within defined exemptions may not be. If you are not certain, treat it as taxable and proceed accordingly.

Step 2 — Calculate the aggregate for the Tax Year.
Sum all payments made to the same NRI payee in Tax Year 2025-26. If the total is below ₹5 lakh and you are confident the payment is exempt or covered under a DTAA nil-deduction scenario, you may file Part A of Form 145 as a self-declaration.

Step 3 — Engage a CA for Form 146 if the ₹5 lakh threshold is crossed.
The CA will need: the remittance details, the NRI's Tax Residency Certificate (TRC) from their country of residence, the applicable DTAA text, PAN details of both payer and payee, and the underlying transaction documents (sale deed, rent agreement, loan agreement, consultancy contract, as applicable).

Step 4 — CA prepares and files Form 146 with a valid UDIN.
The CA files Form 146 on the income tax portal with an ICAI-generated UDIN. You receive an acknowledgment with a reference number. This acknowledgment number is required for the next step and must be retained.

Step 5 — File Form 145 (Part B) online.
The payer files Form 145 Part B on the income tax e-filing portal (www.incometax.gov.in), referencing the Form 146 acknowledgment number. This creates the formal record of the remittance declaration.

Step 6 — Deduct TDS and deposit with the government.
Before making the remittance, deduct TDS at the rate certified in Form 146. Deposit it using Challan 281 within 7 days of the end of the month in which TDS was deducted (30 days if deducted in March). File the TDS return in Form 27Q for payments to non-residents.

Step 7 — Present the Form 145 acknowledgment to your bank.
The bank will verify that Form 145 has been filed before processing the international transfer. Some banks also request a copy of Form 146. Carry both. Without the Form 145 acknowledgment, the bank is required to decline the remittance.

Step 8 — NRI verifies TDS credit in Form 168 (formerly Form 26AS).
The NRI should check that the TDS deducted appears in Form 26AS (now Form 168 under ITA 2025) in their income tax account. This TDS credit can be claimed when filing the NRI's Indian income tax return, reducing the overall tax liability.

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FAQ

Q1: If my bank says it will handle Form 15CB / Form 146, does that mean I do not need my own CA?
No. Banks do not file Form 146 — they only verify that it has been filed before processing the remittance. Some banks have tie-ups with CA firms and will refer you, but the legal obligation to obtain Form 146 rests with the payer, not the bank. If a bank representative said they "handle it," ask them specifically: do they file Form 146 on the payer's behalf, or do they only check the filing? The answer will almost always be the latter.

Q2: Is Form 146 required when an NRI receives a gift from Indian relatives?
Usually no — if the gift is from a "relative" as defined under ITA 2025 (spouse, sibling, or lineal ascendant or descendant) and is a genuine gift. However, if the aggregate remittance for the Tax Year exceeds ₹5 lakh, the payer must still file Part A of Form 145 as a self-declaration. Gifts to non-relatives, or commercial transfers structured as gifts, do not escape the CA certification requirement.

Q3: What happens if a remittance is made without filing Form 145 or obtaining Form 146?
The bank is supposed to reject it, but if it goes through, the payer becomes liable for the full TDS amount that should have been deducted, plus interest at 1.5% per month from the date TDS was deductible, plus a penalty of up to the TDS amount under Section 271C of ITA 1961 (equivalent provisions apply under ITA 2025). The income tax department may also raise a demand directly on the NRI recipient treating the remittance as undisclosed income accruing in India.

Q4: Can the NRI apply for a lower TDS certificate to avoid obtaining Form 146 every time?
Yes. The NRI can apply to the Assessing Officer for a certificate specifying a lower or nil rate of TDS for the Tax Year. If granted, the payer in India can file Form 145 Part B referencing this AO certificate, and Form 146 from a CA is not required for that Tax Year. This is particularly useful for NRIs receiving regular Indian income — rental income, dividends, or recurring fees — where obtaining a fresh Form 146 for each payment would be impractical. The AO certificate is typically valid for one Tax Year and must be renewed annually.

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For your specific situation — whether you are the payer in India remitting funds to an NRI, or an NRI receiving income from India and needing the paperwork done correctly — the rules under ITA 2025 are now fully in force. The form numbers have changed, the UDIN requirement is live, and the ₹5 lakh aggregate threshold determines whether a CA certificate is mandatory. Book a consultation at harunraaj.com to get Form 146 handled correctly the first time.

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