All international groups operating in the country will have to provide a country-by-country (CbC) report as per the revised Income tax Act, the government clarified in a finance ministry release issued today.
The CbC report is to be furnished by the ultimate parent entity of an international group in the country or territory of its residence.
This is in keeping with India’s commitment to implement the recommendations of the 2015 Final Report on Action 13, titled “Transfer Pricing Documentation and Country-by-Country Reporting”, identified under the OECD Base Erosion and Profit Shifting (BEPS) Project.
The report has to be furnished on or before the due date specified for filing of return of income for the relevant accounting year. The date for furnishing of CbC report for FY 2016-17 was extended to 31 March 2018 vide a CBDT circular dated 25 October 2017.
Sub-section (4) of Section 286 of the Income Tax Act specifies situations in which the said report shall be furnished in India by the constituent entity of an international group, resident in India, namely, those in which there is failure to obtain CbC report on account of the parent entity being resident of a country or territory with which India does not have an agreement providing for exchange of CbC reports or where there has been a systemic failure of the country or territory and the same has been intimated to such constituent entity.
It has been brought to the notice of the government that constituent entities of international groups, resident in India, have apprehensions that the due date of furnishing of CbC report is also 31 of March 2018.
The government has clarified that the due date of 31 March 2018 applies to furnishing of CbC report under sub-section (2) of Section 286 only and not under sub-section (4) of the said section.
It has further clarified that the Finance Bill, 2018 (as passed by the Lok Sabha) has proposed that the due date for furnishing of CbC report under sub-section (4) of Section 286 shall be as prescribed. Accordingly, the time for furnishing of CbC report under sub-section (4) of section 286 of the Act is proposed to be prescribed after the enactment of Finance Bill, 2018.