The Income Tax Department has launched an investigation into 394 entities over foreign remittances, with action initiated on August 18, sources told NDTV Profit. The entities under investigation are largely paper companies, sources said. Authorities are tracing the actual source and ultimate destination of the funds, including the beneficiaries behind the overseas transfers.
The probe comes after data showed 6,422 entities remitted Rs 1.29 lakh crore abroad in Q2 FY26. A significant 72.3% of the total outflow went to five jurisdictions—Singapore, UAE, Hong Kong, Mauritius and China. Singapore topped the list with Rs 41,885 crore, followed by the UAE at Rs 18,331 crore and Hong Kong at Rs 18,064 crore. Another Rs 36,175 crore was remitted by 83 entities with foreign addresses.
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The pace of remittances has also accelerated. Rs 43,048 crore was remitted abroad in H1 FY26, already equivalent to 78% of the full-year FY25 figure. The tax authorities are also examining the stated purpose of the transactions. Rs 44,474 crore was reported as long-term capital gains, Rs 27,128 crore as “other income” and Rs 16,423 crore as freight charges.
Sources said these transactions are being examined against the underlying activity to establish whether the stated purpose, source of funds, destination and beneficiaries match. The nationwide verification exercise was launched on Tuesday after the department identified several entities that allegedly remitted large amounts of foreign exchange over the past three years despite reporting little or no turnover.
The entities were identified through ground intelligence and analysis of outward foreign remittance data. The exercise follows a search operation on a group of fictitious charitable trusts allegedly involved in providing accommodation entries against bogus donations and contributions. The operation led investigators to a wider network of entities involved in remitting funds abroad.
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