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Introduction The transition to the Income Tax Act, 2025 continues to bring significant structural reforms, especially in cross-border taxation and compliance. One such important development is the introduction of Form 163, which replaces the earlier Form 49D and plays a crucial role in reporting indirect transfers involving Indian assets. As per the latest FAQs released by the Income Tax Department, Form 163 aims to improve transparency and tracking of offshore transactions that impact Indian
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FAQ :
Form 163 is a mandatory reporting form introduced under Section 506 of the Income Tax Act, 2025, used to report indirect transfers of assets located in India, particularly when shares of a foreign entity are transferred but its value is derived from Indian assets.
An Indian concern or its authorised representative must file Form 163 when a non-resident transfers shares or interests that indirectly result in the transfer of Indian assets.
Yes, filing Form 163 is compulsory under the new Income Tax Act, 2025. Failure to comply can lead to penalties.
Form 163 must be filed within 90 days from the end of the tax year in which the transfer occurs, or within 90 days of the transaction if it leads to the transfer of management or control of an Indian entity.
Form 163 requires details about the Indian entity and its group structure, holding entities, foreign entities deriving value from Indian assets, and specifics of the transaction involving the transfer of shares or interests.
The purpose of Form 163 is to act as a reporting mechanism to improve transparency in cross-border transactions, help authorities determine capital gains tax liability for non-residents, and strengthen the monitoring of indirect asset transfers involving India.
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