By CA Surekha Ahuja
A practical guide to FTS payments to foreign companies from FY 2026-27
PAN should not become the bottleneck to a legitimate treaty claim. But before money crosses the border, the tax, treaty and remittance trail must tell the same story.
More than a change in form numbers
From 1 April 2026, the Income-tax Act, 2025 replaces the earlier framework. For cross-border payments:
| Earlier | New | Purpose |
|---|---|---|
| Form 10F | Form 41 | Treaty-related information |
| Form 15CA | Form 145 | Remittance reporting |
| Form 15CB | Form 146 | CA certification, where applicable |
The larger change is the move towards a connected transaction trail:
Identity → Residence → Treaty → Taxability → Withholding → Certification → Remittance
FEMA/banking and transfer pricing operate alongside this chain.
Foreign company without PAN: can Form 41 still be filed?
Yes, where the non-resident is eligible for the prescribed non-PAN route.
The Income Tax Department provides a separate NR-ID registration/login for a non-resident who does not hold PAN and is not required to have PAN. The prescribed information includes foreign TIN and the certificate referred to in section 159(8).
Therefore: PAN pending does not automatically mean that Form 41 must wait.
But Form 41 is an information filing supporting the treaty claim—not a grant of treaty benefit. The actual entitlement depends on the applicable DTAA and facts.
Keep ready
TIN + TRC + entity details + agreement/invoice + treaty analysis + Form 41 acknowledgement
The core particulars should remain consistent across Form 41, Form 146, Form 145 and the remittance documents.
FTS: determine taxability before choosing the form
For Fees for Technical Services, the correct sequence is:
Nature of service → Domestic-law taxability → DTAA article → Treaty conditions → Withholding rate
The core domestic definition of FTS has substantially been carried forward into section 9(7)(b) of the 2025 Act.
However:
Domestic-law FTS does not automatically mean taxable FTS under the DTAA.
The treaty must be separately examined, including make-available or PE conditions where relevant.
Form 145 and 146: the ₹5 lakh decision point
| Taxable remittance | Route |
|---|---|
| Up to ₹5 lakh | Form 145 – Part A |
| Above ₹5 lakh + AO certificate | Part B |
| Above ₹5 lakh + CA certificate | Part C + Form 146 |
| Not taxable, subject to conditions | Part D |
The ₹5 lakh limit is a procedural threshold, not a taxability threshold, and the prescribed framework considers the payment/aggregate during the tax year.
Form 146 is the CA's certificate covering, among other matters, domestic-law taxability, DTAA taxability and TDS. The prescribed process contemplates it for each qualifying payment.
Case study: ₹2 crore FTS to a foreign parent without PAN
Facts
Fco, resident in a treaty country, provides technical services to its Indian subsidiary Ico.
- Fco has a valid TRC and foreign TIN.
- Indian PAN is still pending.
- Annual fee: ₹2 crore.
- Ico intends to claim DTAA benefit.
Correct sequence
1. Characterise the service
→ Is it FTS?
2. Determine taxability
→ Domestic law + DTAA
3. Establish treaty documentation
→ TRC + eligible NR-ID/Form 41
4. Certification
→ Form 146, where Part C applies
5. Remittance reporting
→ Form 145 – Part C
6. Withholding
→ Apply the correctly determined domestic/DTAA rate
7. Remittance
→ Complete applicable FEMA/AD-bank requirements
8. Group transaction
→ Separately examine transfer pricing
Key point
Fco need not necessarily wait for PAN merely to complete the prescribed Form 41 process, if it qualifies for the NR-ID route.
But: Form 41 does not, by itself, establish the DTAA rate.
Eight defaults finance teams should avoid
⚠️ Waiting for PAN unnecessarily when the NR-ID route is available.
⚠️ Treating Form 41 as treaty approval.
⚠️ Testing ₹5 lakh invoice-by-invoice instead of considering the prescribed aggregate.
⚠️ Treating Form 146 as an annual certificate covering all future payments.
⚠️ Using the wrong Form 145 route—AO certificate means Part B; CA certificate means Part C + Form 146.
⚠️ Assuming Form 145 completes FEMA compliance.
⚠️ Assuming TDS compliance proves transfer-pricing compliance.
⚠️ Assuming NR-ID and later PAN will automatically merge—profile linkage is an administrative issue and no statutory SLA should be promised.
The compliance chain that should exist before payment
| Workstream | Core evidence |
|---|---|
| Income-tax | Taxability + withholding analysis |
| DTAA | TRC + Form 41 + treaty analysis |
| Remittance | Form 145 + Form 146, where applicable |
| FEMA / Bank | AD-bank documents + purpose classification |
| Transfer pricing | Arm's-length analysis, where applicable |
The ideal audit trail
Contract → Invoice → Tax analysis → TRC/Form 41 → Form 146 → Form 145 → TDS → Bank remittance → TP file
If these documents do not describe the same transaction, the compliance file is vulnerable.
Penalty: Form 145 is not merely a bank form
Failure to furnish Form 145 or furnishing inaccurate information can attract a penalty up to ₹1 lakh under section 462.
This is apart from possible consequences relating to TDS, incorrect treaty claims, transfer pricing or other applicable requirements.
The larger message
The Income-tax Act, 2025 is not simply replacing old forms.
It is building a more structured cross-border trail:
Who → Where resident → What income → Why taxable/not taxable → Why treaty benefit → What was certified → What was reported → What was withheld → What was remitted
The policy direction is therefore clear: Less friction for genuine non-residents, but greater consistency and traceability for tax administration.
Final takeaway
The question should not be: “Which form do we file?”
It should be: “Can we defend the entire transaction from contract to cross-border remittance?”
If yes, the forms become the output of sound tax analysis—not a substitute for it.
The safest foreign remittance is one where every document tells the same story.
Position as of September 2026. This article is for general professional information. The applicable Act, Rules, DTAA, CBDT instructions, portal procedures and AD-bank/FEMA requirements should be verified for the specific transaction before remittance.
