Income tax department scrutinizes suspicious foreign remittances by shell entities

The income tax department has initiated a comprehensive verification exercise to examine suspicious foreign remittances sent by entities showing little or no legitimate business activity, officials said on August 18. The drive aims to identify shell companies, the individuals controlling them, and chartered accountants who have issued tax determination certificates for these entities.

The verification initiative covers approximately 394 entities, including 117 located in districts along India's land borders, as well as 36 professionals involved in certifying tax compliance. The department's focus on border-region entities reflects concerns that remittance corridors in these areas may be exploited for illicit fund transfers abroad.

The exercise follows data analysis and ground-level intelligence indicating substantial overseas money transfers by entities with questionable operational legitimacy. The income tax department has specifically targeted entities issuing Form 15CB certificates—documents certifying income determination for remittance purposes—that may lack proper substantiation.

The nationwide drive represents a coordinated effort to combat financial irregularities and prevent the misuse of formal banking channels for unauthorized overseas remittances. By cross-verifying entity credentials, beneficial ownership, and professional certifications, authorities aim to strengthen oversight of India's foreign exchange outflows.