Withholding on overseas payments

Start with the payment, not the bank destination

An overseas bank account does not by itself determine the Indian tax treatment. Identify the recipient, residence, contractual rights and nature of the amount. Separate goods, services, royalties, interest, reimbursements and capital transactions for analysis.

Document what was supplied, where activities occurred and how the payment relates to Indian operations. The invoice description is evidence, but it is not the whole tax conclusion.

Build the taxability and treaty assessment

• Identify the relevant domestic-law provision and tax period.
• Review whether a treaty applies and which article addresses the actual income.
• Obtain current residence and other prescribed evidence before relying on treaty relief.
• Assess permanent-establishment, beneficial-ownership and other relevant conditions where applicable.
• Document the withholding rate or reason for no deduction, including any order or certificate relied upon.

Check the contractual cash amount

Determine whether the contract states a gross payment or promises a net amount after tax. Review any gross-up obligation before approving the remittance. Keep the tax calculation, exchange-rate basis and accounting entries with the payment instruction.

If the facts are uncertain, resolve the classification and available statutory procedure before treating a bank checklist as a tax opinion.

Use the current remittance forms

Under the 2026 rules, Form 145 corresponds to the former Form 15CA, and Form 146 is the accountant certificate corresponding to Form 15CB. Select the applicable part and assess exceptions using the current instructions.

Form 145 Part C concerns taxable remittances exceeding ₹5 lakh in aggregate for the tax year where the relevant accountant certificate is obtained. Other circumstances, including specified orders and non-chargeable payments, require their own assessment. A certificate is not automatically required for every overseas payment.

Prepare the remittance file

• Agreement, invoice and explanation of the deliverables or rights.
• Recipient identity, residence evidence and relevant declarations.
• Taxability note, treaty analysis and calculation of deduction or gross-up.
• Applicable information form, accountant certificate or authority order.
• Bank instructions, remittance confirmation, tax-payment evidence and subsequent reporting reconciliation.

Example: a foreign software invoice

A business receives an invoice described as software support. Before choosing a withholding treatment, review whether the agreement provides a service, a licence, rights to reproduce or distribute software, or a combination. The rights granted and treaty conditions can matter more than the short invoice label.

Coordinate the full workflow

Approve the tax analysis, complete the applicable information and certification process, instruct the bank and track deduction, deposit and reporting. Keep the remitted amount and tax entries reconciled to the supplier balance.

For recurring payments, establish a review trigger when contract terms, recipient residence, services or the law change. A prior payment file should be refreshed rather than reused without checking those facts.