The Central Board of Direct Taxes (CBDT) has issued Notification No. 14/2025, amending the Income-tax Rules, 1962, to enhance compliance and reporting requirements for non-resident entities operating liaison offices in India.
The key amendment is related to Form No. 49C, which must now be filed within eight months from the end of the relevant financial year. Previously, the deadline for submission was not explicitly defined in this manner.
Key Highlights of the Amendment
Revised Reporting Timelines:
- Non-resident entities with liaison offices must file Form No. 49C within eight months from the financial year-end.
- The Annual Activity Certificate (AAC) must also be submitted to the Reserve Bank of India (RBI) within the same timeframe.
Expanded Disclosure Requirements:
- Details of the Head Office and Principal Office in India, including PAN, contact details, and incorporation details.
- Chartered Accountant certification for the AAC submission.
- Salary and compensation details for employees working in India, including payments made outside India.
- Information on Indian agents, representatives, and distributors linked to the liaison office.
Regulatory Compliance for Liaison Offices:
- Each liaison office must disclose its registration details with the RBI, nature of activities, and the total number of employees.
- Any other group entities operating from the same premises must be reported.
- If the liaison office is engaging in liaisoning for other entities, additional disclosures are required.
Financial Reporting for Non-Resident Entities:
- Details of all transactions involving purchases, sales, and services with Indian parties, including transactions outside the liaison office's scope.
- Comprehensive financial data, including receipts and expenses from India.
Stricter Compliance for Group Entities:
- Non-resident companies must now report whether they have any subsidiaries, branch offices, or LLPs in India.
- Additional reporting requirements for group entities having multiple liaison offices.
Implications for Non-Resident Entities
- Increased Compliance Burden: Non-resident businesses with liaison offices in India must streamline their record-keeping and ensure timely submission of Form No. 49C.
- Enhanced Transparency: The amendment aims to curb tax evasion by improving transparency in cross-border transactions.
- Penalties for Non-Compliance: Any failure to file the revised Form 49C on time may attract penalties under the Income-tax Act, 1961.
This move aligns with the Indian government's efforts to tighten tax compliance and enhance oversight on foreign businesses operating in the country.
Official copy of the notification has been attached
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