This reporting requirement has been brought in this budget in line with the recommendations of BEPS Action 13 and effective from April 1, 2016 (AY 2017-18). As per Sec.286(2) , an Indian company who is a Parent entity (Parent ) or an Alternate Reporting entity (Alternate) which is resident in India should file the Country-by-Country report for every accounting year while filing its tax return u/s 139(1).
Under Sec.286(4), a constituent entity resident in India who is part of the international group , not being a parent or alternate reporting entity as mentioned above, shall be asked to file Country-by-Country report only if there is no agreement with the Parent or Alternate of the group or a systemic failure is reported and the constituent entity is notified of such failure by Indian Tax Authorities.
This reporting requirement shall not apply to those international group for an accounting year, if the total consolidated group revenue does not exceed the amount , as may be prescribed. Please note that BEPS in Action 13 has mentioned Euro 750 Mio as the limit which might be followed by the Indian Revenue Authorities also.
BEPS Action 13 prescribes a Master File containing high level information about the Multi-national group or international group’s global operations and transfer pricing policies and a Local File providing for all material information regarding the related party transactions, amounts involved and TP study for Arm’s length nature of such transactions.
A CBCR template shall include the following apart from any other information as may be prescribed :
- Tax Jurisdictions where each of the constituent entities is incorporated or organised or established and where it is resident and its main business activities
- Amount of revenue – related parties and unrelated parties, profit or loss before income tax, amount of income tax paid , amount of income tax accrued , capital and reserves, number of employees and tangible assets not being cash or cash equivalents with regard to each country or territory in which the group operates.
For non-compliance, there shall be penalty as detailed below :
- Any Assessee who does not maintain and file the required information within the due date – Rs. 5,00,000
- Non-filing of CbCR by the Parent or Alternate who is an Indian resident in respect of the reporting accounting year , a sum of Rs. 5000 per day up to one month, Rs. 15,000 per day beyond one month and Rs. 50,000 per day for continuing default after serving of notice
- Non furnishing the information called for by the tax officer within the given time period, a sum of Rs. 5000 per day up to serving of penalty order and Rs. 50,000 per day for default beyond the date of serving penalty order
- Furnishing inaccurate details knowingly or failure to file corrected report within 15 days from the date of discovery of inaccuracy or files inaccurate information or document in response to the notice issued under Sec.286(6) calling for information to be produced within 30 days from the date of receipt of such notice issued by the prescribed authority, a sum of Rs.5,00,000 shall be levied as penalty.