The deadline is approaching for certain U.S. multinationals to file returns in India under recent legislative changes. The Indian Finance Act, 2020 made certain changes to the filing requirements for non-resident companies that may require U.S. corporations to file Indian income tax returns if they receive certain specified income (e.g., dividends, interest, royalties and fees for technical services) and claim tax treaty benefits under a pertinent Indian tax treaty (e.g., the reduced withholding rate under the India-U.S. income tax treaty).
The changes originally took effect on April 1, 2020, and there are multiple consequences for non-filing of an income tax return, including interest, fees, and the potential for penalties and prosecution. Returns involving transfer pricing (TP) provisions must also file an accountant’s report and retain various TP documentation, or taxpayers may be subject to additional fines and penalties.
If an original return has not been filed timely, taxpayers may have the option to file a belated income tax return—though these returns must be filed at least three months prior to the end of the succeeding financial year, or before the completion of an audit by the Indian income tax authorities (whichever is earlier).
Notable due dates for Indian FY 2021-22 (April 1, 2021-March 31, 2022) are approaching as follows:
- Original (non-TP) return: Oct. 31, 2022
- Original return (with TP provisions): Nov. 30, 2022
- Belated return: Dec. 31, 2022 (if pertinent tax audit by authorities is not completed before such date)
While the Indian return filing requirements are not new for 2022, many U.S. multinationals may have been unaware of the updated filing requirements in India over the last several years. Multinational enterprises should ensure any required returns are filed as quickly and accurately as possible.
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