Form 145 and Form 146: Complete Guide

Introduction

As a Non-Resident Indian (NRI), there may be situations where you need to transfer funds from India to your overseas bank account, whether the money comes from investments made in India or is required to meet significant expenses.

The transfer of money from your Indian Non-Resident Ordinary (NRO) account to an overseas bank account is referred to as repatriation. This process involves certain legal and tax compliances, including the submission of Form A2, which is an application for outward remittance.

Another requirement may involve submitting Form 145 or Form 146 to your bank in India. Understanding these forms and when they are required can help you complete the repatriation process correctly.

What is Form 145?

Form 145 helps the Indian government ensure that the applicable tax requirements have been addressed before funds are remitted from India. It is a declaration made by the remitter for sending the funds.

The form contains details such as the purpose of the remittance, the amount being transferred, and information about the sender and recipient. Depending on the nature of the remittance, the applicable section of the form needs to be selected.

Form 145 consists of Part A, Part B, Part C, and Part D. These parts are classified according to the amount of the remittance and whether the amount is taxable.

When do you need Form 146?

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

The CA verifies whether the remittance complies with the applicable TDS rate and deduction provisions under the Income Tax Act, as well as the relevant provisions of the Double Taxation Avoidance Agreement (DTAA).

Rules for repatriating funds through Form 145 and 146

Understanding the applicable rules for Form 145 and Form 146 is important to avoid errors during the repatriation process.

Rules for Form 145

• The person making the remittance must be registered on the e-Filing portal.
• The appropriate part of the form 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 remittance exceeds Rs. 5 lakhs and the remittance has been certified through Form 146.
• Part D applies when the remittance is not taxable under the Income Tax Act, 1961.
• If Form 145 needs to be withdrawn because of discrepancies, the withdrawal must be made within 7 days of submission.

Rules for 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 have a valid Digital Signature Certificate.
• Form 146 under Part C must be assigned to the CA for certification and processing.
• Details including the CA’s membership ID, address, firm information, and other relevant particulars must be valid and updated.

How to submit Form 145 and 146?

The online process for submitting Form 145 can be completed through the Income Tax e-Filing portal.

1. Visit the Income Tax e-Filing portal and log in using your user ID and password.
2. Go to the ‘e-File’ menu and select ‘Income Tax Forms’, followed by the ‘File Income Tax Forms’ option.
3. Select Form 145 from the list of available forms and click ‘Let’s Get Started’.
4. Choose the relevant section—Part A, Part B, Part C, or Part D—depending on the nature and taxability of the remittance.
5. Review the information entered and complete the e-verification process to confirm that the details are accurate and complete.
6. After successful submission, a pop-up will display the transaction ID and acknowledgement number.

If Form 146 is applicable, the following process needs 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 with Form 145 and select Part C.
3. Review the Form 145 details and either accept or reject the submission.
4. If you accept it, enter the required additional information and complete e-verification. If you reject it, provide the reason for rejection.

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

Form 145 can also be submitted offline using the offline utility available for statutory forms. The form can be downloaded, completed with the required information, and subsequently uploaded.

Instances where you don’t need to file Form 145 or 146

There are certain situations where Form 145 or Form 146 may not be required.

Exceptions for filing Form 145

Form 145 is not required in the following circumstances:

• When the remittance does not require prior approval from the RBI.
• When the nature of the remittance falls under a purpose code specified by the RBI.
• When the remittance is made by a Unit of an International Financial Services Centre.

Exceptions for filing 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 help ensure that the applicable Indian tax requirements have been complied with before funds are remitted overseas. Understanding the relevant requirements and following the prescribed process can help ensure a smoother foreign remittance process and proper tax compliance.