Does our Indian subsidiary of a foreign parent file ITR-6?
Yes. Indian companies file this return whether they are owned at home or abroad, and foreign ownership changes what travels with it rather than whether it is due. For a foreign-owned company the return goes in alongside a transfer-pricing report, because the prices charged between the subsidiary and the rest of its group are part of what the return reports. In practice the report is the long pole: it is built from intercompany agreements and the functions each company actually performs, and it cannot be assembled in the week before a deadline.
Does a foreign company with an Indian branch file ITR-6?
A foreign company with a taxable presence in India files this return, and the threshold question is a different one: what part of its worldwide profit is attributable to India at all. That is an attribution exercise rather than an accounting entry. It looks at what is done in India, by whom, with which assets and at what risk, and it produces a figure the return then reports. Companies that answer it late tend to answer it badly, because by then the facts are being reconstructed rather than described.
Which return does a company claiming charitable exemption file instead?
Not this one. ITR-6 is the corporate return for companies other than those claiming exemption under the charitable provisions, so an entity making that claim belongs on the exemption return. The distinction is worth checking rather than assuming, because a company that has always described itself as not for profit may not be making an exemption claim at all in the technical sense. We settle which claim is actually being made before deciding which return is filed.
Does a dormant Indian company still have to file ITR-6?
Yes. The obligation follows from being a company, so a year with no trading, no revenue and no tax still carries a return. Dormant subsidiaries kept alive for a licence, a lease or a name are the ones we most often find several years behind, usually because nobody was asked to do anything and nothing arrived to prompt them. Filing a dormant year is quick work; establishing what happened in one several years after the event is not.
Do we need a transfer-pricing report with ITR-6?
For a foreign-owned Indian company the return travels with a transfer-pricing report, so the two are planned together rather than in sequence. The report examines the dealings between the company and the rest of its group, covering goods, services, funding and the use of intangibles, and supports the prices at which they were recorded. If the report is not ready the return is either late or filed on figures the report may not support. Both outcomes cost more than starting the analysis early in the year.
How do we work out how much of our profit India taxes?
By attribution rather than by formula. The exercise identifies the activity carried on in India, the people performing it, the assets used and the risks borne there, and attributes to India the profit that activity earns. The rest of the group's worldwide profit stays outside. Two things make it easier: contemporaneous records of what the Indian operation actually did, and consistency with how the group describes the same operation in its own country. We usually start from the group's existing documentation and test it against the facts on the ground.
What is a DTAA?
Double Taxation Avoidance Agreement — India's name for a tax treaty. It does the same work as any treaty: allocates taxing rights between India and the other country, caps Indian withholding on payments abroad, and sets out whether relief comes by exemption or by credit. To use one you generally need a tax residency certificate from the other country, Form 10F, and a PAN in the deductor's records. See DTAA relief between India and Canada.
How does a remittance actually work, and is it taxed?
A remittance is a transfer of money, not a category of income, and moving your own funds between your own accounts is not what creates tax. What can create tax is the income behind the money and the rules of the country it leaves. India, for instance, collects tax at source when a resident individual remits abroad under the Liberalised Remittance Scheme, and requires certification before certain payments leave. The transfer is the trigger for paperwork rather than for tax. See the LRS and tax collected at source.
