India: Proposed CbC reporting, Master file rules | KPMG | GLOBAL

India: Proposed country-by-country reporting, Master file rules

India: Proposed CbC reporting, Master file rules

The Central Board of Direct Taxes released draft rules and forms for use by taxpayers in complying with the country-by-country (CbC) reporting and Master file reporting rules. Comments concerning these draft proposals and forms are due by 16 October 2017.

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Proposed CbC reporting rules

Draft rule 10DB concerns the filing of the CbC report in India. The CbC reporting requirements were included in a provision of the Finance Act 2016, and thus were made part of the Income-tax Act, 1961. As proposed, the draft CbC rules generally follow the recommendations under the OECD’s base erosion and profit shifting (BEPS) Action 13. Among the requirements for filing CbC reports under the draft rules in India are the following measures.

  • Threshold. The consolidated revenue threshold for filing a CbC report is generally in line with the threshold prescribed by OECD—that is, INR 5,500 crore or U.S. $840 million for the preceding year.
  • Notification of CbC reporting entity. Form 3CEBB would be used to notify the Director General of Income-tax (Risk Assessment) as to whether there is an “alternate” reporting entity of the group—one that would be charged with responsibility for filing the CbC report, and details of the parent corporate entity or the alternate reporting entity and the country/territory where such entities are residents. This notification would have to be provided 60 days prior to the date of filing the CbC report.
  • Filing of annual CbC report. Form 3CEBC would be used to make and file the annual CbC report. Every parent corporate entity or alternate reporting entity that is a resident in India would be required file a CbC report on Form 3CEBC annually, by the prescribed due date. Under section 286(2), the CbC report would be filed on or before the due date of the income tax return. The information to be provided on Form 3CEBC would be similar to the information required under the OECD recommendations.
  • Entity to file CbC reports, if no automatic exchange of CbC reports. If there is only one constituent entity in India, then that entity would be required to file the CbC report with the tax authority in India, by the required due date. If there is more than one constituent entity in India, then the entity designated by the international group as the entity charged with filing the CbC report would be required to file the CbC report with the tax authority in India by the required due date. The notification requirements would also apply (that is, the notification to the tax authority of this designated entity to file the CbC report).

Master file rules (as proposed)

The proposal also includes guidelines for maintenance of a Master file, if certain requirements are satisfied. These are outlined in the following table.

 

Requirements Threshold  Timeline for filing

1. Consolidated
revenue of the “international group” in the immediately preceding accounting
year exceeds

INR500 crore
(U.S. $76 million)

FY 2016-17

To be filed on or
before 31 March 2018.

 

Subsequent years

To be filed on or before the due-date for filing of return of income.

and

2. Aggregate
value of international transaction

a. During the
reporting year, as per books of accounts exceeds

or

b. In respect of purchase, sale, transfer, lease or use of intangible
property during the reporting year, as per the books of accounts, exceeds

INR50 crore
(U.S. $7.6 million)
 
 

 

 

or

 
INR10 crore
(U.S. $1.5 million)

The draft rules require that both conditions be satisfied for the detailed Master file information requirements to be triggered. 

The draft rules require filing the Master file on Form 3CEBA. This form consists of two parts.

  • Part A would be required to be filled by constituent entities resident in India of any “international group” regardless of the threshold requirement being satisfied. This part would require the reporting of certain basic details such as the name of the group, number of constituent entities in India, their names and addresses, among other general information.
  • Part B of the form would be required to be prepared by entities for which the Master file requirements under the thresholds listed in the table, above, are triggered.

Form 3CEBE would be filed when the international group has more than one constituent entity in India. In such instances, the international group would designate a constituent entity that would be responsible for filing Form 3CEBA (that would be completed by either by the international group or the designated constituent entity).

Accordingly, if there is only one constituent entity in India, Form 3CEBE would not be required to be filed. In such instances, only Form 3CEBA would be filed. Also, if there is more than one constituent entity in India, only the designated constituent entity would file Form 3CEBA, provided that Form 3CEBE is filed either by the international group or the designated constituent entity by the prescribed due date.

Notification and or filing of Form 3CEBE would have to be filed at least 30 days prior to the date of filing the Master file. Hence, for FY 2016-17, the due date would be 1 March 2018.

 

Read an October 2017 report [PDF 466 KB] prepared by the KPMG member firm in India

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