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India Issues Final Rules on Master File and Country-by-Country Report Requirements

Jessica Silbering-Meyer  

Jessica Silbering-Meyer  

On November 1, 2017, the Indian Ministry of Finance issued a press release on the Central Board of Direct Taxes (CBDT) rules regarding transfer pricing documentation (TPD) in the master file and country-by-country (CbC) report.

India has implemented the OECD BEPS Action 13 recommendations on TPD and CbC reporting by adding section 286 of the Income Tax Act, 1961 (the “Act”), which requires each parent entity or alternate reporting entity, resident in India, to submit a CbC report for every reporting accounting year containing (i)  aggregate information on revenue, profit / loss before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees and tangible assets not including cash or cash equivalents, for each jurisdiction where the group operates; (ii) details of each constituent entity of the group, including the jurisdiction in which it is incorporated / organized / established, and its jurisdiction of residence; and (iii) nature and details of the main business activity or activities of each constituent entity. Section 92D of the Act was also amended to require the maintenance of a master file by each constituent entity of an international group.

On October 6, 2017, the CBDT requested comments on the proposal to insert rules 10DA, 10DB and form nos. 3CEBA to 3CEBE in the Income Tax Rules, 1962 (“Rules”). After examining the recommendations and comments, the CBDT has issued rules with respect to the master file and CbC report. The due date for filing the CbC report for reportable accounting year 2016-17 has been extended to March 31, 2018. The due date for submitting the master file for FY 2016-17 has also been extended to March 31, 2018 as a one-time relief measure. 

The main requirements for the master file and CbC report include the following: 

  • The threshold for the CbC report is total consolidated group revenue of at least Rs. 5,500 crore.
  • The threshold for the master file is consolidated group revenue exceeding Rs. 500 crore and either the aggregate value of international transactions as per the books of accounts exceeding Rs. 50 crore or aggregate value of international transactions in respect of intangible property exceeding Rs. 10 crore.
  • Master file must be submitted in Form 3CEAA and the CbC report in Form 3CEAD.
  • An international group having multiple Indian constituent entities may designate one constituent entity to file the master file.
  • Part A of Form 3CEAA must be filed by each constituent entity of an international group, regardless of whether it qualifies under the threshold for submitting the master file. However, an international group with multiple Indian constituent entities can designate one constituent entity to file Part A on its behalf.
  • Form 3CEAD for submitting the CbC report follows the OECD template.

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