India - Corporate - Tax administration (2024)

Taxable period

In India, the tax year begins on 1 April and ends on 31 March.

Tax returns

Accounts for tax purposes must be made up to 31 March. For persons having business/professional income, the income tax return is required to be filed electronically on or before 31 October of the succeeding tax year. In case the transfer pricing provisions are applicable, the due date for filing of the tax return is on or before 30 November.

In case a taxpayer desires to revise its filed return of income, it would be eligible to do so only up to 31 December of the year following the tax year or before the completion of assessment, whichever is earlier. Updated tax returns can be filed within 24 months from the end of the tax year.

Further, to claim certain tax incentives/deductions, taxpayers have to furnish their tax returns on or before the due date specified for filing the tax returns.

Quarterly WHT returns

Quarterly statements of taxes withheld are required to be filed electronically with the tax authorities on or before 31 July, 31 October, and 31 January for the first three quarters of the tax year and on or before 31 May following the last quarter of the tax year.

Obligation to submit tax return for assets located outside India

A resident taxpayer having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India is mandatorily required to furnish a tax return.

Exempting non-resident from filing tax returns in certain conditions

A relief is granted to non-resident taxpayers/foreign companies by exempting them from filing a return of income in India whose total income consists of royalties or fees for technical services.

Thus, non-resident taxpayer companies will not be required to furnish their tax returns in India if the following conditions are satisfied:

• Their total income consists only of dividends, interest, royalties, or fees for technical services.
• Taxes have been deducted at the rates prescribed under the Income-taxAct from such incomes.

However, relief may not be available to non-residents whose taxes will be deducted at the beneficial rates provided under the respective tax treaties. This is effective from 1 April 2020 and will accordingly apply to tax year 2020/21 onwards.

Payment of tax

Tax is payable in advance (if tax payable for the year exceeds INR 10,000) in specified instalments for every quarter on or before 15 June, 15 September, and 15 December for the first three quarters of the tax year and on or before 15 March for the last quarter of the tax year. Any balance of tax due on the basis of the return must be paid on a self-assessment basis before the return is filed. A tax return will be treated as defective if the tax liability along with interest is not paid on or before the date of submission of the tax return. Interest levied for default in payment of advance tax is computed beginning from the first day of the year following the tax year to the date of the assessment order.

Tax Assessment – Timelines

Assessment timelines

Timelines for issuance of notice and passing order under the Indian Income-tax Act are as follows:

* Where the case is referred to the transfer pricing officer, the timelines are extended by 12 months.

Reassessment timelines

• Three years from the end of the relevant tax year.
• Ten years from the end of the relevant tax year where the Tax Officer has evidence of income escaping assessment, represented in the form of assets, amounting to INR 5 million or more.
• Notice for reopening to be issued only where Tax Officer has ‘information’ suggesting that the income chargeable to tax has escaped assessment and after obtaining prior approval of specified authority.

Topics of focus for tax authorities

Faceless assessment

With a view to roll out e-assessment across the country so as to impart greater transparency and accountability, the Central Government wasempowered to notify a scheme for scrutiny assessments to achieve the desired purpose. The scope of e-assessment has been extended to include best judgement assessment and reassessment as well. Further, similar e-proceedings have been introduced in respect of:

• Proceedings before Commissioner (Appeals).
• Imposition of penalty under the Income-tax Act.

General Anti Avoidance Rule (GAAR)

GAAR provisions were introduced by the Finance Act, 2017 and have been applicable since 1 April 2017. These provisions empower the tax department to declare an ‘arrangement’, or any part or step thereof, entered into by a taxpayer with the main purpose of obtaining tax benefit to be an 'Impermissible Avoidance Agreement' (IAA), the consequence of which would be denial of tax benefit under the Income-tax Act or under the applicable tax treaty.

For GAAR provisions, an IAA means the main purpose of which is to obtain a tax benefit, and it:

• creates rights and obligations not at arm’s length
• results in abuse/misuse of provisions of this Income-tax Act (directly/indirectly)
• lacks/is deemed to lack commercial substance, or
• is carried out in a manner that is not ordinarily employed for bona fide purposes.

The following are consequences if an arrangement is regarded as an IAA:

• Disregard/re-characterise the arrangement.
• Disregard corporate structure.
• Deny tax treaty benefit.
• Reassign place of residence/situs of assets or transactions.
• Reallocate income, expenses, relief etc.
• Re-characterise equity-debt, income-expense, relief, etc.