Form 38 Income Tax Rules 2026 pdf download and Key points
FORM NO. 38
[See rule 72]
Certificate of foreign inward remittance
Under the Income-tax Rules, 2026, Form No. 38 replaces the erstwhile Form 10H. It is governed by Section 152(6) of the Income-tax Act, 2025, and Rule 72 of the Income-tax Rules, 2026.
Here are all the key points regarding Form No. 38:
1. Purpose of the Form Form 38 is the prescribed Certificate of foreign inward remittance. It is used to claim a tax deduction under Section 151 or 152 of the Income-tax Act, 2025, for foreign income in the nature of royalty. It serves as proof that the foreign royalty income was successfully brought into India within six months from the end of the relevant tax year. The maximum deduction that can be availed using this form is ₹3 lakhs. The form must be formally certified by the Bank Manager of the bank that received the foreign income.
2. Applicability (Who Should File) The form must be filed by an individual who is a resident of India, being either an author of certain eligible books or a patentee with a patent registered under the Patent Act, 1970, and who derives royalty income from outside India.
3. Frequency and Due Date Form 38 is required to be filed along with the Return of Income. Therefore, the due date to file this form aligns perfectly with the due date for the individual to file their annual income tax return.
4. Structure and Contents of the Form The form captures detailed transaction information to track the foreign remittance, structured as follows:
- Basic details of beneficiary: Name and PAN.
- Beneficiary Bank Details: Beneficiary Account Number and Bank Name.
- Details of the Remitter: Name, Address, and Name of the Remitting Bank.
- Details of the payment: Mode of Remittance, Foreign Currency Amount, Rupee Equivalent, and Purpose of Remittance.
5. Mandatory Documents and Pre-requisites To file Form 38 successfully, the following documents and related compliance are required:
- A Certificate of foreign inward remittance duly certified by the RBI or any other competent authority in Form 38 itself.
- Depending on the nature of the royalty, the taxpayer must also file Form 36 (duly verified by the person responsible for making payment for books) or Form 37 (duly verified by the Patent Controller for patents) along with their return of income.
6. Filing Process and Verification The filing process follows a specific digital flow:
- Enter the details of the payer and payee, along with the payment details online.
- Enter verification details.
- Upload a PDF of the verification that has been physically or digitally signed by the Bank Manager.
- Finally, the form must be e-verified by the taxpayer using either a Digital Signature Certificate (DSC) or Aadhaar.
7. Key Updates in the 2026 Rules To streamline the compliance process, several user-friendly updates have been made:
- Pre-filled Data: Basic details such as the Assessee’s Name, PAN, and Tax Year are now pre-filled, though the assessee retains the option to edit them.
- Terminology and Standardisation: Obsolete terms such as “Assessment year”, “Financial year”, or “Previous year” have been replaced with “Tax year” throughout the form, and the currency symbol “Rs.” has been replaced with “₹”. Sections and clauses have also been entirely updated to map to the Income-tax Act, 2025.