TaxTMI 
TaxTMI 
Legal Framework for International Group Reporting : Clause 511 of the Income Tax Bill, 2025 Vs. Section 286 of the Income-tax Act, 1961
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.... having constituent entities in India. The legislative framework is designed to enhance transparency in the reporting of global income, profits, taxes paid, and economic activity, thereby enabling the Indian tax authorities to effectively assess transfer pricing risks and prevent tax avoidance through profit shifting. This commentary provides a comprehensive analysis of Clause 511 of the Income Tax Bill, 2025, examining its objectives, detailed provisions, practical implications, and interpretative issues. It further undertakes a clause-by-clause comparative analysis with the existing Section 286 of the Income-tax Act, 1961, highlighting similarities, differences, and the evolution of the legal framework in this area. Objective and Purpos....
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....is part of an international group whose parent entity is not resident in India, must notify the prescribed income-tax authority regarding: * Whether it is the alternate reporting entity (ARE) of the international group; or * The details of the parent entity or the ARE, including their countries of residence. The notification must be made in the prescribed form, manner, and within the prescribed time frame. 2. CbC Report Filing by Parent/Alternate Reporting Entity Resident in India (Sub-section 2) Every parent entity or ARE resident in India is required to furnish a CbC report for every reporting accounting year, in respect of the international group, within twelve months from the end of the reporting accounting year, in the prescribe....
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....ply if: * An ARE has filed the CbC report with its tax authority by the specified date; * All of the following conditions are met: * The report is required by law in that country/territory; * The country/territory has an agreement with India for exchange of reports; * No systemic failure has been conveyed by the Indian authority; * The ARE's status is communicated to its tax authority and to the Indian authority. 7. Verification of Report Accuracy (Sub-section 7) The prescribed authority may issue a written notice to the reporting entity to produce information/documents to verify the report's accuracy, to be furnished within thirty days (extendable by a further thirty days upon application). 8. Threshold for Applicabi....
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....months of the reporting accounting year. 3. Content of the CbC Report Both provisions mandate the inclusion of the same financial and economic information in the CbC report, with minor differences in the language but no substantive divergence in scope. 4. Secondary Filing Obligation Both provisions require secondary reporting by Indian constituent entities where the parent is resident in a jurisdiction that does not require CbC reporting, does not have an exchange agreement with India, or where there is a systemic failure. The procedural safeguards (designation of a single reporting entity, written communication to authorities) are maintained in both. 5. Exemptions and Safe Harbours The exemption from secondary filing where an ARE has....
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....onsiderations. Ambiguities and Issues in Interpretation A few interpretative issues and potential ambiguities arise in the application of these provisions: * Definition of "Systemic Failure": The determination of systemic failure is at the discretion of the prescribed authority. The criteria for such a finding and the process for communicating it are not elaborated, potentially leading to uncertainty for taxpayers. * Scope of "Any Other Information": Both provisions allow for the prescription of additional information to be included in the CbC report. The open-ended nature of this power could increase compliance burdens if not exercised judiciously. * Overlap with Other Reporting Requirements: Indian MNEs may be subject to overlappi....