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Rule 123Published

Rule 123: International-group master file and Forms 56–57

Rule 123 prescribes international-group information and filing by constituent entities. The full information requirement combines a group-revenue test with transaction thresholds, while Part A of Form 56 is required even where those tests are not met.

Official notified Income-tax Rules, 2026

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Rule 123 - Maintenance and furnishing of information and document by constituent entity of an international group under section 171

(1) Every person, being a constituent entity of an international group shall, — (a) if the consolidated group revenue of the international group, of which such person is a constituent entity, as reflected in the consolidated financial statement of the international group for the accounting year, exceeds five hundred crore rupees; and (b) the aggregate value of international transactions, — (i) during the accounting year, as per the books of account, exceeds fifty crore rupees; or (ii) in respect of purchase, sale, transfer, lease or use of intangible property during the accounting year, as per the books of account, exceeds ten crore rupees, keep and maintain the following information and documents of the international group: — (A) a list of all entities of the international group along with their addresses; (B) a chart depicting the legal status of the constituent entity and ownership structure of the entire international group; (C) a description of the business of international group during the accounting year including — (I) the nature of the business or businesses; (II) the important drivers of profits of such business or businesses; (III) a description of the supply chain for the five largest products or services of the international group in terms of revenue and any other products including services amounting to more than 5% of consolidated group revenue; (IV) a list and brief description of important service arrangements made among members of the international group, other than those for research and development services; (V) a description of the capabilities of the main service providers within the international group; (VI) details about the transfer pricing policies for allocating service costs and determining prices to be paid for intra-group services; (VII) a list and description of the major geographical markets for the products and services offered by the international group; (VIII) a description of the functions performed, assets employed and risks assumed by the constituent entities of the international group that contribute at least 10% of the revenues or assets or profits of such group; and (IX) a description of the important business restructuring transactions, acquisitions and divestments; (D) a description of the overall strategy of the international group for the development, ownership and exploitation of intangible property including location of principal research and development facilities and their management; (E) a list of all entities of the international group engaged in development and management of intangible property along with their addresses; (F) a list of all the important intangible property or groups of intangible property owned by the international group along with the names and addresses of the group entities that legally own such intangible property; (G) a list and brief description of important agreements among members of the international group related to intangible property, including cost contribution arrangements, principal research service agreements and license agreements; (H) a detailed description of the transfer pricing policies of the international group related to research and development and intangible property; (I) a description of important transfers of interest in intangible property, if any, among entities of the international group, including the name and address of the selling and buying entities and the compensation paid for such transfers; (J) a detailed description of the financing arrangements of the international group, including the names and addresses of the top ten unrelated lenders; (K) a list of group entities that provide central financing functions, including their place of operation and of effective management; (L) a detailed description of the transfer pricing policies of the international group related to financing arrangements among group entities; (M) a copy of the annual consolidated financial statement of the international group; and (N) a list and brief description of the existing unilateral advance pricing agreements and other tax rulings in respect of the international group for allocation of income among countries.

(2) The information and document specified in sub-rule (1) shall be furnished to the Joint Director referred to in rule 124(1), in Form No. 56, on or before the due date for furnishing the return of income as specified under section 263(1)(c).

(3) The constituent entity shall furnish Part A of Form No. 56 even if the conditions specified in sub-rule (1) are not satisfied.

(4) Where there are more than one constituent entities of an international group required to file the information and document in sub-rule (2), then Form No. 56 may be furnished by any one constituent entity, if, — (a) the international group has designated such entity for this purpose; and (b) the information has been conveyed in Form No. 57 to the Joint Director referred to in rule 124(1) in this behalf, thirty days before the due date of furnishing the Form No. 56.

(5) The information and documents specified in sub-rule (1) shall be kept and maintained for a period of nine years from the end of the relevant tax year.

(6) The rate of exchange for the calculation of the value in rupees of the consolidated group revenue in foreign currency shall be the telegraphic transfer buying rate of such currency on the last day of the accounting year.

(7) In this rule, — (a) the expressions ―accounting year‖, ―consolidated financial statement‖ and ―international group‖ shall have the meanings respectively assigned to them in section 511(10); and (b) ―telegraphic transfer buying rate‖ shall have the meaning assigned in rule 207.

Rule breakdown

Apply both levels of the full-information threshold

The consolidated group revenue must exceed ₹500 crore and either aggregate international transactions exceed ₹50 crore or the specified intangible-property transactions exceed ₹10 crore, using the stated accounting-year and book-recorded measures.

The transaction alternatives are joined by OR, but the group-revenue condition must also be met. Exactly at a stated threshold is not the same as exceeding it.

Build the group business and value-creation record

The information includes all entities and ownership structure, business and profit drivers, supply chains for the five largest products/services and others over 5% of group revenue, important service arrangements and geographic markets.

It also covers the specified functions/assets/risks of entities contributing at least 10% of revenues, assets or profits and important restructurings, acquisitions and divestments.

Document intangibles, financing and tax arrangements

Maintain the group’s intangible strategy, relevant entities and property, agreements, transfer-pricing policies and significant transfers. The financing information includes arrangements, the top ten unrelated lenders and central financing entities.

Include the consolidated financial statements and specified unilateral APAs or other income-allocation rulings. Organise the evidence so each required item can be traced to a source.

Form 56 and the continuing Part A obligation

The information is furnished in Form 56 to the designated Joint Director by the stated return due date. The notified text cites section 263(1)(c); check the current applicable due-date provision and any valid extension.

Part A must be furnished even if the full-information threshold conditions are not satisfied. Do not treat failure of a threshold as a complete filing exemption.

One designated entity requires advance notification

Where multiple constituent entities are required to file, one may furnish Form 56 if the group designates it and Form 57 conveys the information thirty days before the Form 56 due date.

Keep the designation, timely notification and responsibility for collecting all relevant information documented.

Retention and conversion

Keep the specified information for nine years from the end of the relevant tax year. Foreign-currency group revenue uses the telegraphic-transfer buying rate on the last day of the accounting year, with Rule 207 supplying the definition.

Do not substitute the preceding-year conversion date used in a different reporting rule.

Key takeaways

Combined threshold test

Group revenue plus either transaction threshold governs full information.

Part A remains

Below-threshold does not mean no Form 56 Part A.

Thirty-day designation notice

Form 57 precedes the Form 56 due date.

Nine-year retention

Preserve the required group evidence.

Practical checklist

  • Test thresholds using the correct accounting-year measures.
  • Complete Part A even where the full-information conditions fail.
  • Calendar the designation notice and retain source evidence.

Avoid

  • Do not replace exceeds with equals or more.
  • Do not confuse this exchange-date rule with country-by-country reporting.

FAQs

Must both transaction thresholds be exceeded?

No. Either the aggregate-transactions or specified-intangibles threshold suffices, together with the group-revenue condition.

Is Part A needed if the thresholds are not met?

Yes. Sub-rule (3) expressly requires it.

Can one group entity file for all without notification?

The rule requires group designation and Form 57 information thirty days before the Form 56 due date.

Glossary

Form 56
The prescribed group-information form, including its continuing Part A requirement.
Form 57
The notification of the designated constituent entity under sub-rule (4).

Official sources