Rule 125: Notified-jurisdiction authorisation and records
Rule 125 provides the authorisation and additional-documentation requirements for the section 176 cases. It requires both delivery of Form 61 and evidence of that delivery, and adds records about the specified counterparty and its ownership.
Official notified Income-tax Rules, 2026Need advice on Rule 125?
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Rule 125 - Furnishing of authorisation and maintenance of documents, etc. for the purposes of section 176
(1) For the purposes of section 176(3)(a), the authorisation to be submitted by the assessee, shall be in Form No. 61.
(2) The assessee shall cause the first copy of the filled up Form No. 61 to be deposited with or transmitted to the financial institution referred in section 176(3)(a).
(3) The second copy of the filled up Form No. 61 along with the evidence of the first copy of said form having been deposited or transmitted to the financial institution shall be submitted by the assessee to the Assessing Officer having jurisdiction over him.
(4) For the purposes of ensuring that the authorisation in Form No. 61 is legally enforceable, the assessee shall take all necessary steps as are required under any law in force in India or outside India.
(5) For the purposes of section 176(3)(b), the assessee who has entered into a transaction with a person located in a notified jurisdictional area (herein referred to as the specified person) shall, in addition to information and documents referred to in rule 84(1), keep and maintain the following information and documents, namely: — (a) a description of the ownership structure of the specified person, including name and address of individuals or other entities, whether located in the notified jurisdictional area or outside, having directly or indirectly more than 10% shareholding or ownership interests; (b) a profile of the multinational group of which the specified person is a part along with the name, address, legal status and country of tax residence of each of the enterprises comprised in the group with whom the assessee has entered into a transaction, and ownership linkage among them; (c) a broad description of the business of the specified person and the industry it operates in; (d) any other information, data or document, which may be relevant for the transaction with the specified person.
(6) The information and documents specified in sub-rule (5) shall be for the period upto the due date of filing of return of income under section 263(1)
(7) The information and documents specified in sub-rule (5) shall be kept and maintained for a period of eight years from the end of the financial year succeeding the relevant tax year.
Rule breakdown
Use Form 61 and deliver both copies correctly
The first completed copy is deposited with or transmitted to the financial institution referred to in section 176(3)(a). The second goes to the jurisdictional AO with evidence that the first copy was delivered.
Keep transmission or deposit proof; merely completing the form does not establish both delivery steps.
Ensure the authorisation is enforceable
The assessee must take all necessary steps under law in India or abroad to make the authorisation legally enforceable.
Review any relevant execution or foreign-law requirements with suitable advice. Do not assume a signature automatically resolves every enforceability issue.
Additional counterparty information is required
Alongside Rule 84(1) records, retain the specified person’s ownership structure, including direct or indirect holders of more than 10%, whether inside or outside the notified area.
Also keep the relevant multinational-group profile and ownership links, business and industry description, and other transaction-relevant information.
Use the stated information period
Sub-rule (6) requires the information and documents for the period up to the section 263(1) return due date. Plan collection before that date and reconcile the records with the transaction.
Check the applicable current due date and any valid change rather than copying a calendar from another case.
Retention runs from the succeeding financial-year end
Keep sub-rule (5) records for eight years from the end of the financial year succeeding the relevant tax year. The starting point is part of the rule and should not be shortened to the relevant tax-year end.
For a relevant tax year ending 31 March 2027 and succeeding financial year ending 31 March 2028, the stated eight-year period runs to 31 March 2036. This is a calendar illustration of the rule.
Key takeaways
Delivery proof is required
The AO receives the second copy with evidence of first-copy delivery.
Enforceability matters
Take the necessary steps under applicable Indian or foreign law.
Extra ownership records
The more-than 10% test includes indirect interests.
Do not shorten retention
Count eight years from the succeeding financial-year end.
Practical checklist
- Keep both Form 61 copies and delivery evidence.
- Review legal enforceability.
- Collect additional ownership and group information.
- Use the correct retention start date.
Avoid
- Do not treat completion of the form as proof of delivery.
- Do not omit indirect ownership or shorten the retention period.
FAQs
Is submitting only the AO copy enough?
The rule also requires depositing or transmitting the first copy to the financial institution and providing evidence of that step.
Does the ownership information stop at direct shareholders?
No. It expressly includes direct and indirect holdings or interests above the stated threshold.
Does retention start at the end of the relevant tax year?
The rule states the end of the financial year succeeding the relevant tax year.
Glossary
- Specified person
- The person located in the notified jurisdictional area described in sub-rule (5).