Cross-border payments are common today. Indian businesses may hire overseas consultants, pay royalties to foreign companies, or make interest payments to lenders outside India.
Whenever money is sent outside India, the Income Tax Department needs a way to track these remittances (money) and ensure that the applicable tax has been properly deducted.
Form 145 is where this information is reported.
What is Form 145?
Form 145 is a declaration filed by a remitter (the person sending money) to report payments made to a non-resident or foreign entity and the tax deducted on those payments.
It informs the ITD about the nature of the remittance and ensures that the applicable TDS has been properly deducted before the money is transferred outside India.
Who needs to file it?
Generally, any person responsible for making a payment from India to a non-resident or foreign company may need to file Form 145.
This includes individuals, companies, LLPs, and partnership firms.
Which remittances does it cover?
Form 145 applies to payments made to non-residents that are taxable in India. Some of the popular ones are:
- Professional or consultancy fees
- Royalties or technical service fees
- Interest payments
- Dividends
Once a remittance falls under these categories, the next step is to know when Form 145 must be filed.
When should you submit it?
Form 145 must be submitted electronically on the income tax portal before the remittance is processed by the bank. Hence, the bank will require the acknowledgement number of the filed Form 145 to process the transfer.
In certain cases, where the remittance exceeds ₹5 lakhs and is taxable, a Chartered Accountant’s certificate in Form 146 must be obtained before filing Form 145.
What is the format of Form 145?
Form 145 is divided into four parts — Part A, Part B, Part C, and Part D.
The part that needs to be filled depends on whether the remittance is taxable and on the total amount remitted during the tax year.
Since each part of the form asks for broadly similar details about the remitter, the recipient, and the remittance itself, we’ve explained them once below to avoid repetition.
1. Participant details
The form requires complete details of both parties involved in the remittance.
Remitter details include:
- Name and address
- PAN
- Residential status (Resident / Non-resident / Not Ordinarily Resident)
- TAN, if applicable
Remittee details include:
- Full name
- Address in the country of residence
- Tax Identification Number (TIN) or similar tax identifier in that country
2. Remittance details
You must also report details about the remittance, including:
- Bank information, such as IFSC code, BSR code, and the authorized dealer bank
- Nature of remittance, selected from a list of specified categories (such as royalty, dividend, or professional services)
- Purpose codes, which must match the purpose and sub-codes prescribed by the Reserve Bank of India (RBI)
3. Declaration
Finally, the person responsible for making the remittance must sign a declaration confirming that:
- The information provided is true and correct
- No material facts have been concealed
- Additional documents will be provided if requested by tax authorities
Now, the part that needs to be filled depends on the taxability of the remittance, the total amount sent during the tax year, and the type of certification available.
Part A: Taxable remittances up to ₹5 lakhs
Part A applies when the remittance is taxable, but the total amount sent during the tax year (including the current remittance) does not exceed ₹5,00,000.
This section captures the basic details of the transaction, including:
- Remitter and Remittee details
- Bank and remittance information
- Nature of the payment
Because the remittance is taxable, this section also requires TDS-related details such as:
- Amount of tax deducted
- Applicable TDS rate
- Date of tax deduction
Part B: Taxable remittances above ₹5 lakhs with AO certificate
Part B is used when the remittance is taxable and exceeds ₹5,00,000 during the tax year, and the remitter has obtained a certificate from the Assessing Officer (AO) under section 395(1) or 395(2).
In this section, you need to provide details of the certificate issued by the tax authorities, including:
- Certificate number
- Date of issue
- Designation of the Assessing Officer
This certificate generally specifies the appropriate rate at which tax should be deducted or whether a lower rate applies.
Part C: Taxable remittances above ₹5 lakhs with CA certificate
Part C also applies when the remittance exceeds ₹5,00,000 and is taxable, but instead of an AO certificate, the remitter has obtained a certificate from a chartered accountant in Form 146.
This section requires more detailed tax information, including:
- Taxability of the remittance under the Income Tax Act
- Applicability of a Double Taxation Avoidance Agreement (DTAA), if relevant
Details of the accountant issuing the certificate must also be provided, such as:
- Name and PAN
- Registration number
- UDIN (Unique Document Identification Number)
Part D: Remittances not taxable in India
Part D is used when the remitter believes the payment is not chargeable to tax in India, and therefore no tax has been deducted on the remittance.
In such cases, the remitter must provide the necessary details and confirm that the payment does not attract tax liability under the Income Tax Act.
You can also refer to the official draft of Form 145 we’ve attached below.
Draft Form 145.pdf (673.6 KB)
Questions? Let’s sort them out.