Income Tax Law | Updated 28 October 2026

Section 285A of the Income-tax Act, 1961: Information and Documents by an Indian Concern

Indian entities may have to report an offshore transfer of shares or interests where the value of the foreign entity is substantially derived from assets located in India. This guide explains the original provision and the current reporting framework under Section 506 of the Income-tax Act, 2025.

What does Section 285A require?

Under Section 285A of the Income-tax Act, 1961, when shares or interests in an entity incorporated outside India derive substantial value, directly or indirectly, from Indian assets, and those assets are held through or in an Indian concern, the Indian concern must furnish prescribed information and documents to the designated income-tax authority. The purpose is to enable determination of income deemed to accrue or arise in India under Section 9(1)(i), including Explanation 5.

The provision was inserted by the Finance Act, 2015 with effect from 1 April 2016. It addresses reporting by the Indian concern, even though the share or interest transferred may be in a foreign entity.

Section 506 of the Income-tax Act, 2025

Section 506 provides for information reporting where (a) a share or interest in a foreign company or entity derives its value substantially from assets in India as referred to in Section 9(10)(a), and (b) the foreign company or entity holds those assets directly or indirectly through or in an Indian concern. The Indian concern must provide the prescribed information or documents to the prescribed income-tax authority within the specified time and manner.

The expression Indian concern refers here to the Indian entity or business concern through or in which the relevant Indian assets are held. The applicability of the provision depends on the statutory conditions, not merely on the existence of foreign shareholders.

Filing procedure: Rule 235 and Form No. 163

The reporting includes identifying particulars, ownership and group structure, transaction information and other prescribed supporting details. Indian concerns should maintain the underlying ownership, financial and valuation documentation as required by the applicable rule.

Earlier compliance under Rule 114DB

For periods governed by the 1961 Act, Rule 114DB of the Income-tax Rules, 1962 prescribed Form No. 49D, electronic submission under digital signature, and the relevant 90-day reporting timelines. The historical reporting obligations should be examined according to the law applicable to the relevant transaction and period.

Consequences of failure to report

Under Section 271GA of the 1961 Act, failure by an Indian concern to furnish the required information could attract a penalty equal to 2% of the transaction value where management or control rights were transferred, or Rs. 5,00,000 in other cases. The corresponding penalty provision in the 2025 Act is Section 458. The applicability of any penalty, procedural protections and possible relief must be assessed under the governing law and facts.

Practical compliance considerations

• Identify foreign share transfers involving a direct or indirect interest in Indian assets.
• Determine whether the substantial-value and other statutory conditions are met.
• Check whether the transaction transfers management or control of the Indian concern.
• Compile group ownership, valuation, transaction and supporting records.
• File the prescribed form within the applicable deadline and retain acknowledgement and records.

Official legal references

• Income Tax Department: Section 285A of the 1961 Act
• Income Tax Department: Income-tax Act, 2025 (Section 506)
• Income Tax Department: Form 163 explanatory note, Rule 235 and Section 506
• Income Tax Department: Section 271GA penalty provision
• Income Tax Department: Earlier Form No. 49D

Disclaimer: This article is general legal information. For a specific offshore transfer, review the applicable law, valuation, reporting rules and facts with a qualified tax professional.