What does a late ITR-6 cost an Indian subsidiary?
The exposure is charged by reference to the return and the delay rather than to the tax, so a subsidiary that made a loss or had a nil year still faces a real amount for having filed nothing. For a foreign-owned company there is usually a second cost behind the first: the transfer-pricing report that should have travelled with the return does not exist yet either, and building it after the event means describing a year from memory. We quantify both before filing, so the group is not surprised twice.
Must the transfer-pricing report be ready before we file ITR-6 late?
Practically, yes, if the return is to be filed on figures that hold. The return for a foreign-owned company travels with a transfer-pricing report, and filing on intercompany prices the report will not ultimately support means revisiting the return as well. Where several years are open we build the analysis once across the whole period, then file the years in order on a consistent basis. Filing a single year in isolation is quicker and tends to create the inconsistency the next year then has to explain.
Our Indian company was dormant — is a late ITR-6 still charged?
Yes. Dormancy removes the tax, not the filing obligation, and the exposure for lateness attaches to the return that was due. This is the commonest version of the problem we see: a company retained for a licence or a lease, nobody instructed to file, and several years discovered at once. It is also the simplest to clear, because a year with no trading has little behind it to reconstruct and nothing accruing on an unpaid balance. Delay is what turns a straightforward year into an expensive one.
What does the CRA charge a Canadian parent for filing late?
For the 2025 tax year the Canada Revenue Agency charges 5% of the balance owing on a late return, plus 1% of that balance for each full month it stays outstanding, to a maximum of 12 months. The penalty does not compound, but interest compounds daily on the unpaid balance. Those figures are Canadian and say nothing about the Indian charge on a late corporate return, which follows its own rules. When both are open we deal first with the side where interest is running on real money.
Does our late ITR-6 hold up the parent's own return?
Often, in two ways. The parent may need the subsidiary's tax position for its own reporting, and where relief for Indian tax is claimed abroad the claim rests on tax actually established, which an unfiled return has not established. The practical effect is that the parent either files without the claim or files on an estimate to be amended. Where a group has both open we set the order deliberately, usually completing the Indian year the foreign claim depends on before the foreign return is delivered.
We file ITR-6 late most years — does the charge get worse?
Not automatically, and the idea that a second late year simply doubles everything is wrong. On the Canadian side the higher rate for the 2025 tax year, 10% of the balance owing plus 2% for each full month to a maximum of 20 months, applies where the Canada Revenue Agency issued a demand to file and charged a late-filing penalty in any of the three preceding tax years. Repetition on its own does not trigger it; a demand plus a charged penalty does. India works out its own charge under its own rules.
What is Schedule FA and who has to complete it?
It is the foreign asset disclosure in an Indian return, and the trigger is residential status rather than income: a resident discloses foreign bank accounts, custodial and equity holdings, foreign life insurance with a cash value, immovable property and other assets held at any time in the year, plus any beneficial interest. A non-resident does not. The obligation is disclosure-based, so it applies to an account that earned nothing, and the penalties under the black-money legislation are what make it worth getting right. See Schedule FA reporting.
What is RNOR status and why does it matter to a returning NRI?
Resident but Not Ordinarily Resident is a transitional Indian status that can apply for a limited period after you return, based on how long you were non-resident before. While it lasts, certain foreign income stays outside the Indian net that would be taxed once you become an ordinary resident — which makes the timing of a return date, and of realising foreign gains, a genuine planning decision rather than an administrative one. See the RNOR window.
