Form 15CA and Form 15CB Replaced — Complete Guide to Form 145 and Form 146 Under the Income Tax Act 2025

 By CA Surekha Ahuja

From 1 April 2026, every Indian company or individual making a payment to a non-resident must use Form 145 instead of Form 15CA, and every Chartered Accountant certifying such payments must issue Form 146 instead of Form 15CB. The numbers changed. The obligations didn't. But UDIN is now mandatory, the exempt categories list grew, and the filing sequence is stricter. Here is everything you need to know.

What replaced what — the full picture

Until 31 Mar 2026

Remitter declarationForm 15CA

CA certificateForm 15CB

Section195(6), Act 1961

RuleRule 37BB

Exempt categories28

UDIN on CA certNot mandatory

CA cert threshold₹5 lakh

From 1 Apr 2026 Form 145

ReplacesForm 15CA

Filed byIndian payer / remitter

SectionSec 397(3)(d), Act 2025

RuleRule 220

Filing basisPer transaction, before each remittance

Exempt categories33 (5 new added)

PartsA, B, C, D

From 1 Apr 2026 Form 146

ReplacesForm 15CB

Filed byChartered Accountant only

SectionSec 397(3)(d), Act 2025

RuleRule 220

When requiredTaxable remittance >₹5L, no AO cert

UDINNow mandatory on every Form 146

Can be withdrawn?Yes — within 7 days

How Form 145 and Form 146 work together — the mandatory sequence

For a taxable remittance above ₹5 lakh — this sequence is non-negotiable

Step 1

Non-resident

File Form 41 + TRC

Establishes DTAA eligibility. Generates ARN. Payer cannot apply treaty rate without this ARN.

Step 2

Indian payer

Assign Form 146 to CA

Log in → My Account → Add CA → enter CA's membership number → assign Form 146.

Step 3

Chartered Accountant

File Form 146 with UDIN + DSC

CA certifies income nature, TDS rate, DTAA article. Generates acknowledgement number. UDIN is mandatory.

Step 4

Indian payer

File Form 145 Part C

Links Form 146 ARN. Declares remittance details and DTAA rate to tax department. e-Verify via DSC or EVC.

Step 5

Bank (AD)

Process remittance

Bank requires Form 145 acknowledgement + Form 146 + A2 form + supporting docs. 1–3 working days.

Form 145 — the four parts explained

A

Part A

Taxable remittances where aggregate does not exceed ₹5 lakh in the tax year.

No CA certificate needed. Simpler declaration by remitter.

No Form 146 needed

B

Part B

Taxable remittances exceeding ₹5 lakh where an Assessing Officer certificate (Form 128) has been obtained specifying the TDS rate.

Needs Form 128 — not Form 146

C

Part C

Taxable remittances exceeding ₹5 lakh with no AO certificate. Most common scenario for business payments.

Form 146 must be filed by CA first. Remitter links Form 146 ARN here.

Requires Form 146 ARN first

D

Part D

Remittances that are not taxable in India — no TDS, no CA certificate.

Simple declaration that the payment falls outside Indian tax scope.

No Form 146 needed

Form 146 — what the CA certifies and what's new

The biggest change from Form 15CB: UDIN is now mandatory on every Form 146. UDIN is an 18-digit alphanumeric number generated on the ICAI portal that makes every CA certificate tamper-proof and verifiable in real time. A Form 146 without a valid UDIN is considered invalid — the remitter cannot use it to file Form 145 Part C, and the bank will not process the remittance. CAs must generate the UDIN on the ICAI portal before or at the time of filing.

Form 146 also now requires the CA's PAN and firm registration number. Once a Form 146 is used by the remitter in Part C of Form 145, it is marked "consumed" and cannot be reused. It can be withdrawn within 7 days if filed in error — but withdrawal automatically updates the linked Form 145 Part C status to "Withdrawn."

Step-by-step filing procedure

Filing Form 145 — Parts A, B, D (no CA certificate)

Step 1

Log in

PAN + password at incometax.gov.in

Step 2

Navigate to form

e-File → Income Tax Forms → File Income Tax Forms → Act 2025 tab → Form 145

Step 3

Select Part

Choose A, B, or D based on taxability and amount. Fill remitter, remittee, amount, purpose, TDS details.

Step 4

Preview, e-Verify, submit

DSC or EVC. Download acknowledgement. Submit to bank with A2 form.

Filing Form 145 Part C — with CA certificate (Form 146)

Step 1 — Indian payer

Assign Form 146 to CA

My Account → Add CA → enter membership number → assign Form 146 to the transaction

Step 2 — CA

File Form 146 with UDIN

CA logs in → generates UDIN on ICAI portal → files Form 146 with DSC → provides acknowledgement number to remitter

Step 3 — Indian payer

File Form 145 Part C

Enter Form 146 acknowledgement number → fill remittance details → preview → e-Verify (DSC or EVC) → submit → give acknowledgement to bank

Exempt remittances — when Form 145 is not needed

Rule 220(3) lists 33 categories of exempt remittances — up from 28 under the old Rule 37BB. Five new import-related RBI purpose codes have been added that were previously grey areas. Common examples of typically exempt remittances include: payment for imports of goods, travel expenses, education remittances, medical treatment abroad, maintenance of close relatives, and subscription fees for international publications. Always verify the current Rule 220(3) list before assuming an exemption applies — assumptions can be costly.

Transition rule — old forms already filed

Form 15CA/15CB filed before 31 March 2026 remain valid provided the actual remittance occurred on or before the date specified in those forms. If the remittance was not completed within that window, fresh Form 145 and Form 146 must be filed.

Accrual in old year, remittance in new year: If income accrued in February 2026 but remittance happens in April 2026 — the reporting format follows the law in force on the date of remittance (Form 145/146 under Act 2025). But the taxability and rate are governed by the Act applicable to the year of accrual (Act 1961). Two different Acts applying to one transaction — confirm with your CA before processing.

Decision table — which form do you need?

Situation	Form required	Filed by	Timing
Taxable remittance ≤₹5L in the year	Form 145 Part A	Indian payer	Before each remittance
Taxable remittance >₹5L — AO rate certificate obtained	Form 145 Part B	Indian payer	Before each remittance · attach Form 128
Taxable remittance >₹5L — no AO certificate	Form 146 first then Form 145 Part C	CA files 146 · payer files 145	CA files 146 → payer uses ARN in Part C → before remittance
Remittance not taxable in India	Form 145 Part D	Indian payer	Before each remittance
Remittance falls under Rule 220(3) exempt list	No form needed	—	Verify exemption applies first
Non-resident wants DTAA lower rate	Form 41 + TRC — non-resident files annually	Non-resident	Once per tax year · before ARN is shared with payer

Penalties for non-compliance

Default	Liable party	Consequence	Severity
Form 145 not filed before remittance	Indian payer	Penalty up to ₹1 lakh under Section 462. Bank will refuse to process remittance — transaction blocked.	Critical
Inaccurate information in Form 145	Indian payer	Penalty up to ₹1 lakh under Section 462	Critical
Form 146 filed without UDIN	CA	Certificate considered invalid. Form 145 Part C cannot proceed. Remittance blocked.	Critical
Incorrect information in Form 146	CA	Penalty up to ₹10,000 per certificate	High
TDS not deducted or short deducted	Indian payer	Assessee-in-default. 1% per month interest + penalty equal to TDS amount + 100% expense disallowance	Critical
Form 145 and Form 146 data mismatch	Indian payer	Selected for AO verification. Risk of demand, interest, and scrutiny.	High

Common errors — click to expand fix

CriticalWarningCompliance

1

Form 146 filed without UDIN — certificate invalid

CA submits Form 146 but UDIN was not generated on the ICAI portal first. Entire certificate is void. Form 145 Part C cannot be linked to it. Remittance blocked.

CA filing

2

Form 145 Part C filed before Form 146 — wrong sequence

Indian payer tries to file Part C before the CA has filed Form 146. Portal will not accept Part C without a valid Form 146 acknowledgement number.

Payer filing

3

CA not registered on e-filing portal / no DSC registered

CA cannot file Form 146 without being registered on incometax.gov.in and having a valid DSC registered. Form 146 can only be submitted via CA's DSC — no EVC alternative.

CA filing

4

Wrong Part selected in Form 145

Remitter selects Part A for a remittance that exceeds ₹5 lakh — or selects Part C unnecessarily for a non-taxable payment. Wrong part cannot be changed after submission.

Payer filing

5

Form 145 and Form 146 data mismatch — triggers AO scrutiny

Inconsistencies between remittance amount, date, or DTAA details in Form 145 and Form 146 flag the transaction in the ITBA system. Common cause: exchange-rate differences between filing date and remittance date.

Compliance

6

Bank refuses to process remittance — Form 145 acknowledgement missing

Authorised Dealer (bank) requires Form 145 acknowledgement + Form 146 + A2 form before processing. Incomplete documentation package causes remittance to be held.

Bank processing

7

Assuming Form 145 is not needed — exempt category misidentified

Remitter assumes payment is exempt under Rule 220(3) without verifying the current 33-category list. Form 145 not filed. Bank may still process but tax department flags the transaction.

Compliance

8

Old Form 15CA / 15CB used for April 2026 onwards remittances

Finance teams continue using old form numbers after the transition. Forms 15CA and 15CB are not valid for any remittance made from 1 April 2026 onwards.

Compliance

Pre-filing checklist for Indian payers

Non-resident has filed Form 41 and shared ARN — confirm before any payment

Determined correct Part (A / B / C / D) based on taxability and amount

Verified payment is not in the Rule 220(3) exempt list before assuming no form needed

For Part C: CA assigned on portal and Form 146 filed with valid UDIN before starting Form 145

Form 146 acknowledgement number in hand before opening Part C

Remittance amount, date, and DTAA article consistent between Form 145 and Form 146

Form 145 e-verified via DSC or EVC — acknowledgement downloaded

Full documentation package ready for bank: Form 145 + Form 146 + A2 + invoice + TDS challan

TDS deducted at correct rate — DTAA rate only if Form 41 ARN received from non-resident

All records retained for 7 years for potential AO scrutiny

Also read: Form 41: Complete Guide for Non-Residents — Filing Procedure, Portal Errors, Fixes & TDS Consequences (2026) — covers the non-resident's obligation to file Form 41 and TRC before DTAA benefits can be claimed on any payment from India.

TDS on Foreign Software Distribution Payments — Royalty or Not

 By CA Surekha Ahuja

Downloading Software from Foreign Vendor for Resale — Whether Payment Constitutes Royalty and Whether TDS Under Section 195 Applies

The taxation of cross-border software payments has been one of the most aggressively litigated international tax issues in India. The controversy primarily revolved around whether payments made by Indian distributors/resellers to foreign software suppliers for downloadable or off-the-shelf software constitute “royalty” under Section 9(1)(vi) of the Income-tax Act, 1961 and the applicable DTAAs.

The issue attained final judicial clarity through the landmark Supreme Court ruling in Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT, which fundamentally settled the distinction between:

• transfer of copyright rights; and
• sale/use of a copyrighted article.

That distinction now forms the backbone of software taxation jurisprudence in India.

Core Legal Issue

Whether payment made by an Indian entity to a foreign vendor for downloading software and thereafter reselling the same to Indian customers constitutes:

payment for copyright, or

payment for a copyrighted product?

The answer determines:

• taxability in India;
• characterisation as royalty;
• applicability of Section 195 TDS;
• consequential exposure under Section 40(a)(i).

The Foundational Legal Principle — Copyright vs Copyrighted Article

The Supreme Court recognised the most crucial distinction in software taxation:

Every software contains copyright,

but every software payment is not royalty.

Royalty arises only when rights in the copyright itself are transferred.

Mere use, resale, or distribution of a copyrighted product does not amount to use of copyright.

This distinction is both commercially and legally decisive.

What Constitutes Copyright Rights?

Copyright rights generally include:

• right to reproduce software;
• right to modify source code;
• right to commercially exploit IP;
• right to create derivative works;
• right to independently distribute or sub-license;
• right to adapt or alter software.

Transfer of such rights may result in royalty.

What Is a Copyrighted Article?

A copyrighted article merely refers to:

• a software copy;
• downloadable software package;
• standard licensed software;
• shrink-wrapped or electronically supplied software.

The purchaser merely obtains limited rights to use or resell the software subject to restrictions.

The underlying intellectual property continues to belong to the foreign supplier.

Thus:

the customer uses the product, but does not acquire the copyright embedded in it.

Supreme Court Decision — Engineering Analysis

In Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT, the Supreme Court examined:

• distributor arrangements;
• reseller structures;
• downloadable software;
• OEM transactions;
• EULAs and licence agreements.

The Court categorically held:

consideration for mere resale/use of software without transfer of copyright rights is not royalty.

The Court further clarified that:

• limited licence rights;
• installation permissions;
• restricted resale rights;
• end-user access permissions,

do not amount to transfer of copyright.

What is transferred is merely a copyrighted article.

Important Analytical Principle Emerging from the Judgment

The judgment shifted the analysis from terminology to substance.

Mere nomenclature such as:

• “licence fee”,
• “software licence”,
• “user licence”,

does not automatically create royalty.

Courts examine:

the real legal rights transferred,

and not merely the labels used in agreements.

Why Ordinary Software Resale Transactions Are Not Royalty

In a standard software distribution arrangement:

• foreign vendor retains copyright ownership;
• reseller gets only restricted distribution rights;
• source code is not transferred;
• software cannot be modified;
• reseller cannot commercially exploit IP independently;
• no derivative rights are granted.

Therefore:

distributor never steps into the shoes of a copyright owner.

The distributor merely facilitates movement of licensed software copies.

Hence:
payment remains consideration for copyrighted products and not for use of copyright itself.

Download Mechanism Is Legally Irrelevant

The Supreme Court effectively rejected the argument that electronically downloaded software automatically becomes royalty.

Whether software is supplied through:

• physical media;
• electronic download;
• cloud delivery;
• activation keys,

the decisive factor remains:

whether copyright rights are transferred.

The mode of delivery does not alter tax characterisation.

Interplay with Section 195

Section 195 applies only where payment is “chargeable to tax” in India.

The Supreme Court in GE India Technology Centre Pvt. Ltd. v. CIT held:

withholding obligation cannot exceed actual taxability.

Thus, where:

• payment is not royalty; and
• foreign supplier has no Permanent Establishment in India,

the income itself may not be taxable in India.

Consequently:

no TDS obligation under Section 195 survives.

DTAA Protection — A Critical Dimension

Most Indian DTAAs define royalty far more narrowly than domestic law.

The Supreme Court made an extremely important observation:

unilateral domestic amendments cannot automatically expand treaty taxation rights retrospectively.

This became highly significant because retrospective amendments introduced through Finance Act 2012 attempted to widen royalty scope for software payments.

However, treaty protection continued to prevail.

The judgment thereby reinforced an important international tax principle:
DTAAs cannot be indirectly rewritten through retrospective domestic amendments.

Alignment with International Tax Principles

The Supreme Court substantially aligned Indian jurisprudence with internationally accepted OECD principles distinguishing:

• copyright rights;
  from
• copyrighted articles.

This brought significant certainty to global software commerce and cross-border technology transactions.

Situations Where Royalty Exposure May Still Arise

Engineering Analysis does not provide blanket exemption to every software transaction.

Royalty exposure may still arise where agreements grant:

• source code ownership/access;
• unrestricted reproduction rights;
• modification rights;
• rights to create derivative works;
• independent commercial exploitation rights;
• unrestricted sub-licensing powers.

In such cases:

payment may represent consideration for transfer or use of copyright itself.

Accordingly:

• royalty provisions may apply;
• TDS under Section 195 may become mandatory.

Practical Drafting Significance

Post Engineering Analysis, contractual architecture has become extremely important.

Agreements should clearly establish:

• copyright retained by foreign supplier;
• limited user/distribution rights only;
• no transfer of IP ownership;
• no unrestricted reproduction rights;
• no modification or derivative rights.

Many software agreements unintentionally weaken the non-royalty position by granting excessive hosting, API integration, modification, or sub-licensing rights.

Therefore:

tax characterization ultimately depends upon the precise legal rights and commercial powers actually transferred.

Emerging Area — SaaS and Cloud Models

While Engineering Analysis substantially settled traditional software distribution taxation, evolving:

• SaaS models;
• cloud infrastructure arrangements;
• AI licensing frameworks;
• platform access structures,

may still generate future litigation depending upon the degree of control, access, and IP rights granted.

Thus, characterisation analysis continues to remain transaction-specific.

Practical Conclusion

The law now stands substantially settled that:

downloading software from a foreign vendor and reselling the same ordinarily does not constitute royalty where copyright itself is not transferred.

Where:

• foreign supplier retains IP ownership;
• Indian reseller merely receives limited distribution/use rights;
• no proprietary copyright rights are parted with,

the payment ordinarily:

• is not royalty;
• is not chargeable to tax in India as royalty;
• does not attract Section 195 withholding;
• should not trigger disallowance under Section 40(a)(i).

The decisive test is not the existence of embedded intellectual property within software, but:

whether the payer acquires copyright rights,

or merely deals in a copyrighted product.

That distinction now forms the settled foundation of Indian software taxation jurisprudence.

Key Judicial Authorities

• Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT
• GE India Technology Centre Pvt. Ltd. v. CIT