The income-tax (I-T) department is investigating 394 entities and 36 professionals for suspicious foreign remittances, with their reported financial profiles inconsistent with the large amounts sent abroad, government sources told Moneycontrol.
Some of these companies are linked to major Indian businesses houses, they added. The percentage of entities linked to business houses are minor — about 5 percent. "But they have been identified in the process and the probe is on," one of the sources told Moneycontrol.
"These 394 companies are largely shell companies, based out of Mauritius, UAE and Singapore. And the remittances sent abroad to these companies are over Rs 30,000 crore in the first half of FY26."
The I-T department is tracing the destination of these remittances and analysing the ownership structure, sources said.
“The verification process should be seen as an effort to identify the cases that require closer examination. Where there are discrepancies or concerns in the documentation or the underlying transaction, the department may need to examine those cases in greater detail,” a second source said.
“The key issue is not merely the amount being remitted. A remittance, by itself, should not be viewed in isolation from the nature and purpose of the transaction that gives rise to it.”
What has the probe unearthed so far?
According to I-T department data, more than Rs 1 lakh crore was remitted in FY26 to more than 5,000 entities abroad.
In a statement on August 18, the department said several entities were identified that had remitted large amounts of foreign exchange over the past three years, based on ground intelligence and analysis of data on outward remittances.
A nationwide network of entities engaged in remittances was unearthed during a search operation this month. It involved a group of fictitious charitable trusts allegedly providing entries against bogus donations or contributions, the department said.
Preliminary verification showed that the entities making the remittances were either non-filers or had filed returns reporting very small turnovers.
The stated purposes of the remittances, including payment for freight, import of software and import of consulting services, also did not appear to match the entities’ activities, it said.
Ground-level intelligence indicated that the entities were not even operating from their declared addresses.
'Not all cases may be suspicious'
“Not all cases may be suspicious. Anyway, the banks do the first level of filter. So, unless major fake documentation is done, the cases may not be all fake remittance,” Rajeev Dimri, senior tax partner, KPMG, said.
“The overall point is valid. For private companies, there may be situations where business remittances are guises to hide personal expenses or investment in properties, shown as business assets."
At this stage, the department is likely to examine the overall financial affairs of the identified entities and individuals, including the source and purpose of the foreign remittances, experts said.
"If the investigation establishes that the foreign remittances were used to acquire undisclosed assets or financial interests outside India, the entities or individuals concerned could also face proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015," said Manish Garg, partner-tax, AKM Global.
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