Furnishing of information or documents by an Indian concern in certain cases
[Section-506 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Where,––
- (a) any share of, or interest in, a company or an entity registered or incorporated outside India, derives, directly or indirectly, its value substantially from the assets located in India, as referred to in section 9(9)(a); and
- (b) such company or, entity, holds, directly or indirectly, such assets in India through, or in, an Indian concern,
then, such Indian concern shall, for the determination of any income accruing or arising in India under the said clause, furnish within such period, the information or documents in such manner, as prescribed, to the prescribed income-tax authority.
FAQs on Section 506 of Income Tax Act 2025
What does Section 506 of the Income Tax Act, 2025 deal with?
Section 506 mandates Indian concerns to furnish information or documents if a foreign company or entity derives substantial value from assets located in India through or in the Indian concern.
When is an Indian concern required to furnish information under Section 506?
An Indian concern must furnish information when a foreign entity derives substantial value from Indian assets and those assets are held directly or indirectly through or in the Indian concern.
What kind of entities are covered under Section 506?
The section applies to companies or entities registered or incorporated outside India.
What is the condition regarding value derivation for Section 506 to apply?
The foreign company or entity must derive, directly or indirectly, substantial value from assets located in India as referred to in section 9(9)(a).
Is indirect holding of Indian assets by a foreign entity covered under this section?
Yes, both direct and indirect holdings of Indian assets through or in an Indian concern are covered.
Who has the obligation to furnish information or documents?
The Indian concern through which the foreign entity holds assets in India is obligated to furnish the information or documents.
For what purpose is the information required under Section 506?
The information is required for the determination of any income accruing or arising in India under section 9(9)(a).
To whom should the information or documents be submitted?
The information or documents must be submitted to the prescribed income-tax authority.
Is there a prescribed time limit for furnishing the information?
Yes, the information must be furnished within the period prescribed under the rules.
What is meant by “prescribed manner” in this context?
“Prescribed manner” refers to the way and format specified by rules made under the Income Tax Act, 2025.
Does this section apply to all foreign companies with interests in India?
It applies only if the foreign company’s share or interest substantially derives value from Indian assets and those assets are held through or in an Indian concern.
From when is Section 506 effective?
Section 506 is effective from 1st April, 2026.
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