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CA Final · Direct Tax Laws & International Taxation · Provisions to Counteract Unethical Tax Practices

An Indian concern, Bharat Components Ltd, is covered by section 506 of the Income-tax Act, 2025. A foreign parent's shares were transferred during the tax year ending 31 March 2027. The transfer did not have the effect of directly or indirectly transferring management or control rights of the Indian concern. As per Rule 235 of the Income-tax Rules, 2026, by when must Form No. 163 be furnished, and for how long must the supporting documents be kept?

Form No. 163 is due within 90 days from the end of the financial year of the transfer, here 29 June 2027, since management or control did not pass. The supporting information and documents must be kept for eight years from the end of the relevant tax year under Rule 235.

  1. AWithin 90 days from the end of the financial year, i.e., by 29 June 2027; documents kept for eight years from the end of the relevant tax yearCorrect
  2. BWithin 90 days of the transaction; documents kept for six years
  3. CWithin 30 days from the end of the financial year; documents kept for eight years
  4. DWithin 90 days from the end of the financial year; documents kept for ten years

Explanation

Rule 235(2) requires Form 163 within ninety days from the end of the financial year in which the transfer occurred. The shorter 90 days from the transaction applies only where the transfer effectively transfers management or control of the Indian concern, which is not so here. Rule 235(7) requires records to be kept for eight years from the end of the relevant tax year. 31 March plus 90 days is 29 June.

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