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India launches probe against 394 firms, 36 individuals over suspect foreign remittances
Income Tax Department of India uncovers network of shell entities using bogus donations and fake certifications to move money abroad illegally, says a press statement
- PUBLISHED: Tue 18 Aug 2026, 5:19 PM
India’s Income Tax Department has launched a nationwide verification exercise targeting hundreds of entities suspected of routing large sums of foreign exchange abroad through a network of shell companies and fraudulent documentation, according to a statement issued by the Income Tax Department of India on Tuesday.
The Central Board of Direct Taxes (CBDT) said the crackdown followed ground intelligence and analysis of outward remittance data, which uncovered a network of entities involved in moving funds overseas.
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The trail was first identified during a search operation on a group of fictitious charitable trusts that were providing accommodation entries against bogus donations and contributions.
Preliminary verification found that many of the entities making these remittances were either non-filers of income tax returns or had declared very small turnovers that bore no relation to the large sums being sent abroad.
Officials also found that the stated purposes of the transfers – including payments for freight, software imports or consulting services – did not match the actual nature of the transactions. Further checks revealed that several of the entities were not operating from the addresses they had declared.
The department also flagged concerns over the certification process underpinning these remittances.
It found that a disproportionately large number of Form 15CB certificates, required to verify the taxability of foreign remittances, had been issued by a relatively small group of professionals, while the funds themselves were traced to a clustered group of recipient entities.
Under Rule 37BB of the Income-tax Rules 1962 – which corresponds to Form 146 under Rule 220 of the Income-tax Rules 2026 – accountants certifying a foreign remittance are required to verify its taxability against the entity's books of account and other supporting documents. The CBDT said its findings raised questions over whether adequate due diligence had been carried out before these certificates were issued.
The verification drive, launched on August 18, 2026, will focus on shell entities, the individuals behind them, and the professionals who issued the Form 15CB certificates. It also covers entities located in districts along India's land borders that have remitted significant sums abroad. In total, the exercise spans approximately 394 entities – including 117 based in border states – and 36 professionals.
The department reminded accountants issuing Form 15CB or Form 146 certificates that they are expected to exercise due care, diligence and professional judgment, and to properly examine underlying transactions before certifying remittances, given the role these certifications play in maintaining trust in the system.
Further investigations are underway, the CBDT said.
