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

Ananya Industries Ltd, an Indian concern, furnished information in Form No. 163 for an offshore share transfer that took place during the tax year ending 31 March 2027. It must retain the supporting documents listed in Rule 235(3) of the Income-tax Rules, 2026. For how long must these be kept, and which document is among those required?

The documents must be kept for eight years from the end of the relevant tax year. Among the items listed is the financial and accounting statements of the foreign company or entity for two years before the transfer date. Rule 235(7) and (3)(e) provide these requirements.

  1. AEight years from the end of the relevant tax year; the financial statements of the foreign entity for two years prior to the transfer dateCorrect
  2. BSix years from the end of the relevant tax year; the financial statements of the foreign entity for five years
  3. CEight years from the date of transfer; only the transfer contract
  4. DTen years from the end of the relevant tax year; only the valuation report of the Indian asset

Explanation

Rule 235(7) requires the documents to be kept for eight years from the end of the relevant tax year. Rule 235(3)(e) lists financial and accounting statements of the foreign company or entity for two years prior to the date of transfer. The other options give wrong periods or an incomplete list; the rule lists many documents.

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