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Alerts:

Transfer Pricing Alert: CBDT introduces amendment to master file and CbCR rules

08 April 2021

Rule 10DA and Rule 10DB of the Income - tax, Rules 1962 (the Rules) provide necessary guidance in relation to Master File (MF) and Country-by-Country Report (CbCR) related compliances which are to be adhered by the constituent entities of an MNE group in case they qualify the prescribed applicability criteria.

Recently, the Central Board of Direct Taxes (CBDT) issued a Notification1 to amend Rule 10DA and 10DB of the Rules. Further, the CBDT has clarified that the said amendments would be applicable from 1 April 2021.

We, at BDO in India, have analysed and summarised the said notification hereunder:

S.no

Particulars

Up till 31 March 2021  

From 1 April 2021

Relevant Rule/Form

1

Concerned income tax authority for submission of:

  • Form 3CEAA2
  • Form 3CEAB3

Joint Commissioner

Joint Director

Rule 10DA(2) and Rule 10DA(4)

2

Entity responsible for submission of Form 3CEAA in India

Where there are more than one constituent entities resident in India of an international group, the Form No. 3CEAA may be furnished by any one constituent entity.

Where there are more than one constituent entities of an international group, the Form No. 3CEAA may be furnished by any one constituent entity.

Rule 10DA(4)

3

Concerned income tax authority for the purposes of section 286

Joint Commissioner as may be designated by the Director General of Income-tax (Risk Assessment)

Joint Director as may be designated by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be.

Rule 10DB(1)

4

Applicability of Form 3CEAD (CbCR Report)

In case total consolidated group revenue of the international group is INR 55 Bn or more

In case total consolidated group revenue of the international group is INR 64 Bn or more

Rule 10DB(6)

5

Form 3CEAB

Heading of Form 3CEAB:

“Intimation by a designated constituent entity, resident in India, of an international group, for the purposes of sub-section (4) of section 92D of the Income-tax Act, 1961”

Heading of Form 3CEAB:

“Intimation by a designated constituent entity, of an international group, for the purposes of sub-section (4) of section 92D of the Income-tax Act, 1961”

Form 3CEAB

 

BDO Comments

From the above, following inferences could be drawn:

  • The concerned income tax authority for submission of MF and CbCR has now been changed to Joint Director, who would be designated by either the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems).
  • Threshold for applicability of CbCR (i.e., Form 3CEAD) has been increased. Now only those entities would be required to file Form 3CEAD which are a part of the MNE Group and whose consolidated group revenue is INR 64bn or more.
  • Earlier where one or more resident constituent entities of the MNE group existed, only one of the constituent entities resident in India were required to file Form 3CEAA (i.e., MF form) subject to it being designated as designated constituent entity vide form 3CEAB. However, pursuant to this amendment, now any constituent entity (not necessarily a resident in India) of the MNE Group may be designated for filing of Form 3CEAA. Thus, the condition of residency has been done away with.

1Notification No 31/2021 [ F.No.370142/19/2019-TPL]

2Master File Form

3Intimate of filing entity in case of multiple entities in India