Form 145/146 for a dividend or interest paid to your foreign parent

Last updated 26 October 2026

Do you need Form 145 and Form 146 to pay a dividend to a foreign parent?

Usually, yes. A dividend from an Indian company to a non-resident shareholder is taxable in India, so it isn't one of the exempt remittances that skip Form 145. Which part you file depends on the year's running total of taxable remittances:

• ₹5,00,000 or less in the tax year: Form 145 Part A. No CA certificate is needed.
• Above ₹5,00,000: a practising CA issues a Form 146 certificate, then you file Form 145 Part C.
• Above ₹5,00,000 with a lower or nil deduction certificate from the Assessing Officer: Form 145 Part B.

Most dividends to a parent company are well above ₹5 lakh, so Part C is the usual route. Not sure which part fits? See Form 145 Part A, B, C or D: which one to file.

TDS on dividend to a foreign parent: Act rate or treaty rate

Under section 393(2) of the Income-tax Act, 2025, TDS on a dividend paid to a non-resident is 20%, plus surcharge and cess. India's tax treaties often allow a lower rate for dividends, and the rate can depend on how much of the subsidiary the parent owns. Where the treaty rate is lower, you can apply it, but only with these papers in hand before you pay:

• the parent's Tax Residency Certificate (TRC) from its home tax authority, valid for the period
• Form 41 (which replaced Form 10F), filed online by the parent on the Indian income tax portal
• a declaration that the parent is the beneficial owner of the dividend
• a declaration that the parent has no permanent establishment in India
• the parent's PAN, or the details allowed in place of a PAN

A treaty rate is applied as it stands, without adding surcharge and cess. If any paper is missing, deduct at the Act rate. If you apply the treaty rate without the papers, the Indian company carries the short deduction and the interest on it.

TDS on interest paid to a foreign parent

Interest is more varied than dividends. The rate depends on what kind of loan it is:

• Loans in foreign currency: 20% under section 207, plus surcharge and cess, or the lower treaty rate.
• Certain external commercial borrowings and bonds: a lower concessional rate may apply, depending on the instrument and when it was raised.
• Other interest (for example, on some rupee loans): taxed at the normal rate for foreign companies, unless the treaty gives a lower one.

Two more checks apply to a loan from a parent. First, under FEMA a loan from a foreign parent is an external commercial borrowing (ECB), with its own conditions and reporting through your bank. Second, interest paid to a group company has to be at arm's length under the transfer pricing rules, and there is a limit on how much of that interest the subsidiary can deduct. Our guide to Indian subsidiary compliance after incorporation covers these.

Monthly or quarterly interest means a Form 145 every time, and a Form 146 every time once the year's total passes ₹5 lakh.

Step by step: paying a dividend or interest to the parent

1. Approve the payment. For a dividend, the board recommends it and it is declared. A declared dividend has to be paid within 30 days under section 127 of the Companies Act, 2013. For interest, check the loan agreement and its ECB terms.
2. Collect the parent's papers: TRC, Form 41, beneficial-ownership and no-PE declarations.
3. Fix the TDS rate by comparing the Act rate with the treaty rate.
4. Get Form 146 from a practising CA, with UDIN. It records the nature of the payment, the treaty position and the TDS rate.
5. File Form 145 Part C on the income tax portal, quoting the Form 146 acknowledgement.
6. Remit through your bank with the documents below.
7. Deposit the TDS by the 7th of the following month (30 April for payments made in March), and report it in the quarterly TDS return for payments to non-residents.

What your bank will ask for

Each bank's forex desk has its own checklist. Expect most of these:

• Form 145 acknowledgement and Form 146 certificate
• for a dividend: the board resolution (and, for a final dividend, the AGM resolution declaring it), and the latest audited financial statements
• for interest: the loan agreement, the ECB reference from your bank and an interest calculation
• the parent's TRC and Form 41, if a treaty rate was used
• proof of TDS payment, if your bank asks for it

Ask your bank for its list before you file, so you only make one trip. If you're winding up the subsidiary and sending the remaining funds home, see closing a foreign-owned subsidiary in India.

Common mistakes

• Using the treaty rate without Form 41. A TRC alone isn't enough. Collect both before the payment date.
• Reusing last year's TRC. TRCs cover a period. Check that it covers the date of payment.
• Treating repeat interest as one filing. Each remittance needs its own Form 145.
• Forgetting the running total. Small payments early in the year count towards the ₹5 lakh limit for later ones.

For a CA's applicability check, Form 146 and Form 145 on every payment, see our Form 15CA and 15CB filing service.

This article is for general information only. Treaty rates and conditions differ by country. For your specific remittance, consult a practicing CA.