In keeping with India’s
commitment to implement the recommendations of 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,
section 286 of the Income-tax Act, 1961 (‘the Act’) was inserted vide Finance
Act, 2016, providing for furnishing of a Country-by-Country report in respect
of an international group by its constituent or parent entity. Section 92D of
the Act was also amended vide Finance Act, 2016 to provide for keeping and
maintaining of Master File by every constituent entity of an international
group, which was to be furnished as per rules prescribed in this regard.
Subsequent to the
aforesaid amendments to the Act, comments and suggestions were invited on the
proposal to insert rules 10DA, 10DB and form nos. 3CEBA to 3CEBE in the
Income-tax Rules, 1962 (‘the Rules’), laying down the guidelines.
After examining the
recommendations of the Committee set up in this regard, and comments and
suggestions received from stakeholders and general public, the Central Board of
Direct Taxes has notified the rules for maintaining and furnishing of transfer
pricing documentation in the Master File and Country-by-Country report.
Since it is the first reporting
year for furnishing of the Country-by-Country report, the due date for filing
the Country-by-Country report for reportable accounting year 2016-17 has
already been extended to 31st of March, 2018 vide Circular No. 26/2017 dated
25.10.2017. Similarly, the date of compliance for furnishing the Master File
for FY 2016-17 has been extended to 31st of March, 2018 as a one-time relief
measure.
The salient features of
the Country-By-Country Report and Master File rules are as under:
·
The
threshold for the Country-By-Country Report is total consolidated group revenue
of Rs. 5,500 crore or more.
·
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.
·
Report
of Master File has to be submitted in Form 3CEAA and the Country-by-Country
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 is to be filled by every constituent entity of an international
group regardless of whether it qualifies under the threshold for furnishing
Master File. However, to reduce the compliance burden, such international group
having multiple Indian constituent entities can designate one constituent
entity to file Part A on its behalf.
·
Form
3CEAD for furnishing Country-by-Country Report follows OECD template.
The notification is available on www.incometaxindia.gov.in.
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DSM/SBS/KA