Section 511: reporting requirements for international groups

Notification by an Indian constituent entity

Every constituent entity resident in India that is part of an international group whose parent entity is not resident in India must notify the prescribed income-tax authority, in the prescribed form and manner and by the prescribed date, of:

• whether it is the alternate reporting entity of the international group; or
• the details of the parent entity or the alternate reporting entity (if any) of the group, and the country or territory where those entities are resident.

The main reporting obligation

Every parent entity or alternate reporting entity resident in India must, for every reporting accounting year, furnish a report in respect of the international group of which it is a constituent, to the prescribed income-tax authority, within twelve months from the end of that reporting accounting year, in the prescribed form and manner.

What the report must contain

The report must include:

• aggregate information on revenue, profit or loss before income-tax, income-tax paid, income-tax accrued, stated capital, accumulated earnings, number of employees and tangible assets (excluding cash and cash equivalents), by country or territory of operation;
• details of each constituent entity, including the country/territory of incorporation, organisation or establishment, and the country/territory of residence;
• the nature and details of the main business activity or activities of each constituent entity; and
• any other prescribed information.

Secondary filing by an Indian constituent entity

An Indian-resident constituent entity, other than the main reporting entity, must itself furnish the report for a reporting accounting year, within the prescribed period, if the parent entity is resident in a country or territory:

• where the parent entity is not obligated to file that kind of report; or
• with which India does not have an agreement for exchange of the report; or
• where there has been a systemic failure, intimated by the prescribed income-tax authority to the constituent entity.

Where more than one Indian constituent entity exists

If there is more than one such constituent entity resident in India, the secondary report may be furnished by any one of them, provided the international group has designated that entity to file on behalf of all Indian-resident constituent entities, and this has been conveyed in writing to the prescribed income-tax authority on behalf of the group.

When the secondary filing obligation does not apply

The secondary filing obligation does not apply where an alternate reporting entity of the group has already filed the report with the tax authority of its country of residence, by the date specified there, and specified conditions are met - including that a report-exchange agreement exists with India, no systemic failure has been conveyed, the foreign country has been informed in writing that the filer is the alternate reporting entity, and the prescribed income-tax authority has been duly informed.

Verification and audit powers

The prescribed income-tax authority may, to verify the accuracy of a filed report, issue a written notice requiring the reporting entity to produce specified information or documents within thirty days of receiving the notice, extendable by up to a further thirty days on application.

Exemption for smaller groups

Section 511 does not apply to an international group for an accounting year if the total consolidated group revenue, per the consolidated financial statement for the preceding accounting year, does not exceed the prescribed amount.

Key definitions

The section defines several technical terms used throughout, including:

• "accounting year" - a tax year (where the parent entity is India-resident) or the annual accounting period used by the parent entity under applicable law/accounting standards (in other cases);
• "agreement" - an agreement under section 159(1) or (2), combined with a Central Government-notified agreement for exchange of the report;
• "alternate reporting entity" - a constituent entity designated by the group, in place of the parent entity, to file the report in its own country/territory of residence;
• "constituent entity" - broadly, any separate entity included (or notionally includible) in the group's consolidated financial statement, plus certain permanent establishments preparing separate financial statements;
• "group" - a parent entity and all entities whose financial results are (or would be) consolidated with it for financial reporting purposes;
• "consolidated financial statement" - the statement presenting the assets, liabilities, income, expenses and cash flows of the parent and constituent entities as a single economic entity;
• "international group" - a group with two or more enterprises resident in different countries/territories, or an enterprise resident in one country/territory carrying on business through a permanent establishment in another;
• "parent entity" - the top constituent entity required (or notionally required) to prepare the group's consolidated financial statement, with no higher entity above it in that chain;
• "permanent establishment" - has the meaning given in section 173(c);
• "reporting accounting year" - the accounting year to which the report's financial and operational results relate;
• "reporting entity" - the constituent entity (including the parent entity or alternate reporting entity) required to furnish the report;
• "systemic failure" - broadly, where a country/territory with a report-exchange agreement with India has suspended automatic exchange in breach of that agreement, or has persistently failed to provide India the report for a group with an Indian constituent entity.

Frequently asked questions