Form 145 and Form 146: Rules, Filing Process and Key Points

Introduction

Non-Resident Indians (NRIs) may need to transfer money from India to their overseas bank accounts for different reasons. This could include receiving proceeds from investments made in India or arranging funds for major personal expenses.

Moving money from an Indian Non-Resident Ordinary (NRO) account to an overseas bank account is known as repatriation. NRIs undertaking such transfers need to comply with certain legal requirements, including Form A2, which serves as an application for outward remittance.

In some cases, submitting Form 145 or Form 146 to the Indian bank may also be necessary. Understanding the purpose and filing requirements of these forms can help make the repatriation process easier.

What is Form 145?

Form 145 is used to help ensure that the applicable tax requirements have been addressed before funds are remitted from India. It is a declaration submitted by the person making the remittance.

The form captures details including the purpose of the remittance, the amount being transferred, and information about the sender and recipient. The relevant part of the form must be selected depending on the circumstances, amount of remittance, and its taxability.

Form 145 is divided into four parts:

• Part A
• Part B
• Part C
• Part D

The applicable part is determined based on the amount being remitted and whether the remittance is taxable.

When is Form 146 required?

Form 146 is required before uploading Form CA when the remittance amount is more than Rs. 5 lakhs. It is a certificate provided by a Chartered Accountant (CA).

The CA verifies whether the remittance follows the applicable TDS rate and deduction requirements under the Income Tax Act. The CA also checks the relevant provisions of the Double Taxation Avoidance Agreement (DTAA).

Rules for Repatriating Funds Through Form 145 and Form 146

Following the applicable requirements for Form 145 and Form 146 is important when repatriating funds from India.

Rules for Form 145

The key requirements for Form 145 are as follows:

• The person making the remittance must be registered on the e-Filing portal.
• The appropriate part of Form 145 must be selected based on the circumstances.
• Part A applies when the remittance is taxable and the amount is below Rs. 5 lakhs.
• Part B applies when the total remittance exceeds Rs. 5 lakhs and an assessment officer has issued an order under Sections 195(2) and 195(3), along with Section 197 of the Income Tax Act.
• Part C applies when the total amount of remittance exceeds Rs. 5 lakhs and the remittance has been certified through Form 146.
• Part D applies to remittances that are not taxable under the Income Tax Act, 1961.
• If Form 145 is withdrawn because of any discrepancy, the withdrawal must be completed within 7 days from the date of submission.

Rules for Form 146

The following requirements apply to Form 146:

• The Chartered Accountant certifying the taxability of the remittance must be registered on the e-Filing portal.
• The CA’s PAN status must be active.
• The CA must possess a valid Digital Signature Certificate.
• Form 146 under Part C must be assigned to the CA for certification and processing.
• Details such as the CA’s membership number, address, firm details, and other information must be valid and updated.

How to File Form 145 and Form 146?

Form 145 can be submitted online through the Income Tax e-Filing portal by following these steps:

1. Visit the Income Tax e-Filing portal and sign in using your user ID and password.
2. Under the ‘e-File’ menu, go to ‘Income Tax Forms’ and select ‘File Income Tax Forms’.
3. Choose Form 145 from the list of available forms and select ‘Let’s Get Started’.
4. Select the applicable part—Part A, Part B, Part C, or Part D—according to the nature and taxability of the remittance.
5. Check the information entered in the form and complete the e-verification process to confirm its accuracy and completeness.
6. Once the form has been successfully submitted, a confirmation pop-up will display the transaction ID and acknowledgement number.

Process for Form 146

When Form 146 is applicable, the following steps need to be followed:

1. Appoint a Chartered Accountant who meets the applicable requirements to file and certify Form 146.
2. After the CA completes the certification, proceed to Form 145 and select Part C.
3. Review Form 145 and choose whether to accept or reject it.
4. If you accept the form, enter the additional required information and complete e-verification. If you reject it, you must specify the reason for rejection.

If a CA has not been appointed before Form 145 is filed, the e-Filing portal provides an option to assign the form to a CA.

Form 145 can also be submitted offline through the offline utility available for statutory forms. The form can be downloaded, the required details can be entered, and the completed form can then be uploaded.

When is Form 145 or Form 146 Not Required?

There are certain circumstances in which these forms do not need to be submitted.

Exceptions to Form 145

Form 145 does not need to be filed in the following situations:

• When the remittance does not require prior approval from the Reserve Bank of India (RBI).
• When the nature of the remittance is covered under the relevant purpose code specified by the RBI.
• When the remittance is made by a Unit of an International Financial Services Centre.

Exception to Form 146

Form 146 is not required when the remittance does not fall under Part C of Form 145.

Conclusion

Form 145 and Form 146 play an important role in ensuring that the applicable Indian tax requirements are complied with before funds are remitted overseas. Completing the required forms and following the prescribed procedure can help ensure compliance and make the foreign remittance process smoother.

Frequently Asked Questions (FAQs)

1. What are Form 145 and Form 146?
Form 145 and Form 146 are prescribed forms used for reporting and compliance related to certain specified financial transactions and remittances, as applicable under Indian tax rules.

2. Who is required to file Form 145?
The requirement to furnish Form 145 depends on the nature of the transaction and the applicable provisions of the Income-tax Act and related rules.

3. Who is required to file Form 146?
Form 146 is applicable to specified taxpayers or transactions where the prescribed reporting requirements are triggered under the relevant tax provisions.

4. What information is required in Form 145?
The form generally requires relevant details of the taxpayer, transaction, amount involved, and other information prescribed by the tax authorities.

5. What information is required in Form 146?
The information required depends on the purpose of the form and may include details of the taxpayer, transaction, tax deducted or collected, and supporting information as prescribed.

6. How are Form 145 and Form 146 filed?
Where electronic filing is prescribed, the forms can be submitted through the applicable Income Tax Department or authorized reporting platform using the required credentials and information.

7. What is the filing deadline for Form 145 and Form 146?
The applicable deadline depends on the type of reporting requirement and the transaction involved. Taxpayers should follow the due date prescribed under the relevant rules.

8. Can Form 145 and Form 146 be revised after filing?
Where the applicable provisions permit correction or revision, errors in the submitted form may be rectified through the prescribed procedure.

9. What happens if Form 145 or Form 146 is not filed?
Failure to comply with applicable reporting requirements may result in fees, penalties, or other consequences under the Income-tax Act and related rules.

10. Are Form 145 and Form 146 applicable to NRIs?
Their applicability depends on the nature of the transaction, residential status, and specific reporting requirements. NRIs should verify whether the relevant provisions apply to their particular transaction.

11. What documents should be kept for Form 145 and Form 146 compliance?
Taxpayers should maintain transaction records, payment details, supporting documents, identification information, and other records relevant to the reporting requirement.

12. Why is professional assistance useful for Form 145 and Form 146?
Professional assistance can help determine applicability, prepare accurate information, meet filing deadlines, and reduce the risk of errors or non-compliance.