Understanding the Role of Chartered Accountants in Form 146 Certification
Understand the role of Chartered Accountants in Form 146 certification, including taxability, DTAA review, TDS, UDIN verification and Form 145 Part C filing.
When an Indian business makes a taxable payment to a non-resident or foreign company, the tax treatment of the payment needs to be determined before the remittance is made.
Where the taxpayer chooses Form 145 Part C, a Chartered Accountant (CA) plays an important role by preparing and filing Form 146, the accountant's certificate under the new Income-tax Rules, 2026.
When Is Form 146 Required?
Form 146 is relevant when:
- The payment is being made to a non-resident or foreign company.
- The remittance is chargeable to tax.
- The remittance or aggregate of such remittances exceeds ₹5 lakh during the tax year.
- The taxpayer is using Part C of Form 145.
An important point under the new rules is that Form 146 is not required when the taxpayer files Form 145 Part B based on an Assessing Officer's certificate or order.
What Does the CA Check?
Form 146 is not merely a certificate confirming the payment amount. The CA reviews the tax aspects of the transaction.
The form covers:
Particulars of the Remitter – details of the Indian person or entity making the payment.
Particulars of the Remittee – details of the foreign recipient.
Particulars of the Remittance – details about the payment and fund transfer.
Taxability under the Income-tax Act – whether the payment is taxable in India without considering DTAA relief.
Taxability under the DTAA – whether treaty provisions affect the tax treatment.
Details of Tax Deducted at Source – relevant TDS information.
Verification – certification by the CA.
This makes Form 146 particularly important where the taxability of a foreign payment is not straightforward.
How Does DTAA Come Into the Picture?
A foreign recipient may be eligible to claim benefits under an applicable Double Taxation Avoidance Agreement.
For example, an Indian company may make a payment to a foreign service provider. The CA may need to examine:
- The nature of the payment
- Domestic tax provisions
- The applicable DTAA
- Tax residency documentation
- Whether the conditions for treaty relief are satisfied
- The resulting TDS position
A foreign recipient simply being located in a country that has a DTAA with India does not automatically establish entitlement to a treaty benefit.
What Information Should the Business Provide to the CA?
The CA will generally need transaction-related information to complete Form 146 accurately. Depending on the payment, this may include:
- Invoice
- Agreement or contract
- Foreign recipient details
- Nature of payment
- Amount and currency
- Payment details
- TRC, where relevant
- DTAA-related information
- TDS details
- Bank/remittance information
The exact documents will depend on the nature of the transaction.
How Is Form 146 Filed?
The taxpayer first assigns Form 146 to the CA through the e-Filing Portal.
The broad process is:
Taxpayer assigns CA → CA accesses Form 146 → CA enters/reviews information → CA completes all panels → Preview → e-Verify through DSC → Form 146 submitted → Acknowledgement generated
The CA must have the appropriate registration and a valid DSC for filing the form.
The new Form 146 also includes UDIN, which enables verification through the ICAI API.
What Happens After Form 146 Is Filed?
After successful submission, an Acknowledgement Receipt Number (ARN) is generated.
The taxpayer can then use the acknowledgement details while filing Form 145 Part C.
In simple terms:
CA prepares Form 146 → Form 146 is submitted → ARN is generated → Taxpayer uses ARN for Form 145 Part C
A Simple Example
Suppose an Indian company has to pay ₹25 lakh to a foreign company for a taxable service.
The company decides to use the Part C route.
The process would be:
1. Company provides the agreement, invoice and payment details to the CA.
2. CA examines the nature of the service and determines its taxability.
3. CA considers the applicable DTAA, if treaty relief is being claimed.
4. CA determines the relevant TDS treatment.
5. CA completes and submits Form 146.
6. The Form 146 acknowledgement is generated.
7. The company uses the acknowledgement details to complete Form 145 Part C.
The CA's role is therefore much broader than simply filling in information supplied by the taxpayer. The certificate connects the nature of the transaction with its tax treatment and TDS implications.
Form 146 vs Form 145 Part C
It is useful to remember the difference:
FormWho is responsible?PurposeForm 146Chartered AccountantAccountant's certificate for the taxable foreign remittanceForm 145 Part CTaxpayer/RemitterDeclaration submitted based on Form 146
Final Takeaway
Form 146 forms an important link between tax analysis and foreign remittance compliance.
For businesses using the Part C route, the process can be viewed simply as:
Transaction review → Taxability analysis → DTAA review, if applicable → TDS determination → Form 146 by CA → Form 145 Part C by taxpayer
The new framework also introduces UDIN-based verification and removes duplication where the taxpayer has already obtained an Assessing Officer's certificate and is filing Form 145 Part B.