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Consolidation of Financial Statement of Susdiary with Parent Company and Branch with Head office

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Anurag Mishra

21 Points Posted on 24 May 2021

I read Ind As 21 , but it could not make me clear so can anyone provide the better and valuable suggestions on my below query of ITR filing on the Consolidated financial statement of Subsidiary Company with its Parent/holding company And Branch office with its Head office -:

- Can we calculate income tax and file ITR on the basis of consolidated P&L statements when Head Office is registered in India but Branch office is registered in foreign territory (Branch office is being regulated by foreign tax laws) ?

- Can we calculate income tax and file ITR on the basis of consolidated P&L statements when Parent/Holding company is registered in India but Subsidiary is registered in foreign territory ( Subsidiary is being regulated by foreign tax laws) ?

- Can we calculate income tax and file ITR on the basis of consolidated P&L statements when Parent/Holding company is registered in India and Subsidiary is also registered in India ( Subsidiary has its separate existence having pan, tan) ?

Replies (2)

Quick Summary

This discussion clarifies the complexities of filing Income Tax Returns (ITR) in India when dealing with consolidated financial statements. It addresses scenarios involving foreign subsidiaries, foreign branches, and Indian subsidiaries. The consensus is that Indian Income Tax law assesses income on a PAN basis, not consolidated financial statements. Therefore, separate ITRs must be filed for the parent/head office and its subsidiary/branch, even if consolidated statements are prepared for accounting purposes.

Jay Chichani

77 Points Posted on 24 May 2021

In Income Tax Act 1961, Assessee Income assessment is based on PAN basis not on basis of CFS . So, Subsidiary is treated as separate Assessee due to have Different PAN as compare to Parent PAN
There is no concept of Consolidated FS Tax basis in Income Tax hence you need to file 2 ITR I.e Parent and Subsidiary Seprate.