Income Tax Return Filing for Foreign Companies in India: Forms & Deadlines

Introduction: When Must a Foreign Company File an ITR in India?

Not every foreign company doing business with India needs to file an Indian income tax return — but far more companies are required to file than most assume. The obligation arises whenever a foreign company earns income that is taxable under Indian law, regardless of whether tax has already been withheld at source.

This article is part of our Complete Guide to Annual Compliance for Foreign-Owned Companies in India. Here we dive deep into the ITR filing process, form requirements, deadlines, and the specific compliance traps that foreign companies encounter.

A foreign company must file an income tax return in India if it:

• Has a permanent establishment (PE) in India — including a branch office, project office, or dependent agent
• Earns income from India that exceeds the basic exemption limit (which is effectively nil for companies)
• Has TDS deducted on Indian-source income and wants to claim a refund of excess TDS
• Wants to claim benefits under a Double Taxation Avoidance Agreement
• Has capital gains from the sale of Indian assets (shares, property, or business assets)
• Receives income from royalties, fees for technical services, interest, or dividends from India

Even if the entire Indian income has been subject to withholding tax at source, filing a return allows the company to claim treaty benefits, carry forward losses, and establish a clean compliance record — which becomes critically important during any future assessment or if the company seeks to expand operations in India.

ITR-6: The Form for Foreign Companies

Foreign companies operating in India file ITR-6, the same form used by domestic companies (except those claiming Section 11 exemptions). ITR-6 must be filed electronically on the Income Tax e-filing portal (incometax.gov.in), and it must be verified using a Digital Signature Certificate (DSC) — there is no alternative verification method for companies.

Key Schedules in ITR-6 for Foreign Companies

While ITR-6 contains numerous schedules, foreign companies must pay particular attention to these sections:

Changes in ITR-6 for AY 2025-26

The CBDT introduced several changes to ITR-6 for Assessment Year 2025-26 that foreign companies should note:

• Enhanced reporting of international transactions and related-party dealings
• New disclosure requirements for virtual digital assets (cryptocurrency)
• Updated schedules for the new tax regime election under Section 115BAA/115BAB
• Additional fields for reporting GAAR-related disclosures
• Specific fields for MLI modifications to DTAA claims

Due Dates: A Three-Tier System

India follows a three-tier deadline system based on audit and transfer pricing requirements. For foreign companies, the applicable deadline almost always falls in October or November, because most foreign companies either require a tax audit or have international transactions triggering transfer pricing requirements.

FY 2025-26 (AY 2026-27) Deadlines

When Does a Tax Audit Apply?

A tax audit under Section 44AB is required if the foreign company's total sales, turnover, or gross receipts from Indian operations exceed INR 10 crore in the relevant financial year (the threshold was increased from INR 5 crore for businesses that conduct 95% or more transactions digitally). The tax audit report must be filed in Form 3CA/3CD by 30 September of the assessment year.

When Is Transfer Pricing Applicable?

Transfer pricing documentation is required when the aggregate value of international transactions with associated enterprises exceeds INR 1 crore in a financial year. For foreign companies with Indian subsidiaries, PEs, or any intercompany dealings (management fees, royalties, cost-sharing arrangements, loans), this threshold is almost always exceeded.

The transfer pricing compliance timeline for FY 2026-27 is:

The master file requirement applies to international groups with consolidated revenue exceeding INR 500 crore. The Country-by-Country Report (CbCR) applies to groups with consolidated revenue exceeding EUR 750 million (approximately INR 6,800 crore).

Tax Rates for Foreign Companies in India

Foreign companies face higher base tax rates than domestic companies that have opted for the concessional regime. The applicable rates for AY 2026-27 are:

Note: Foreign companies cannot opt for the concessional corporate tax regime under Section 115BAA (22% effective rate) or Section 115BAB (15% effective rate). These concessional rates are available only to domestic companies. This disparity makes DTAA planning essential for foreign companies, as treaty rates on specific income types (dividends, interest, royalties) can significantly reduce the overall tax burden.

Minimum Alternate Tax (MAT)

Foreign companies are also subject to MAT at 15% of book profits if the tax computed under normal provisions is lower than 15% of book profits. However, MAT does not apply to foreign companies that do not have a PE in India and earn only income from capital gains, interest, royalties, or fees for technical services (subject to specific conditions). For companies with a PE, MAT applies on the book profits attributable to Indian operations.

Advance Tax Obligations

Foreign companies with an anticipated Indian tax liability exceeding INR 10,000 in a financial year must pay advance tax in quarterly instalments. Failure to pay advance tax results in interest under Section 234B (for shortfall) and Section 234C (for deferment).

Advance Tax Schedule

Foreign companies earning only interest, dividends, or royalty income (with TDS deducted at source) may not need to pay advance tax separately, as the TDS typically covers or exceeds the final tax liability — especially when DTAA rates apply. However, companies with PE income (business profits) must compute and pay advance tax independently.

Step-by-Step Filing Process

Filing ITR-6 as a foreign company requires careful preparation across multiple compliance streams. Here is the process broken down into actionable steps:

Step 1: Obtain and Prepare Documents (April-June)

• Obtain a Tax Residency Certificate (TRC) from your home country for DTAA claims
• File Form 10F on the Income Tax portal (if claiming DTAA benefits) — see our guide on how to claim DTAA benefits
• Prepare Indian financial statements (if the company has a PE or Indian entity)
• Compile details of all Indian-source income, TDS deducted, and advance tax paid

Step 2: Complete Statutory Audits (July-September)

• Tax audit under Section 44AB (Form 3CA/3CD) — due 30 September
• Transfer pricing documentation and contemporaneous records
• Ensure Form 26AS (Annual Tax Statement) reconciles with company records

Step 3: File Transfer Pricing Report (October)

• Transfer pricing audit report in Form 3CEB — due 31 October
• The Chartered Accountant must certify that international transactions are at arm's length price
• Documentation must include functional analysis, comparability analysis, and benchmarking study

Step 4: Prepare and File ITR-6 (October-November)

• Complete all schedules of ITR-6 with Indian income details
• Claim DTAA benefits in Schedule TR with supporting TRC and Form 10F references
• Report all international transactions in Schedule TP
• Claim TDS credit in Schedule TDS (verify against Form 26AS/AIS)
• Sign with DSC and submit on the Income Tax portal
• File by 30 November if transfer pricing applies

Step 5: Post-Filing Compliance (December onwards)

• File master file (Form 3CEAA) by 30 November if applicable
• Respond to any defect notices or intimation under Section 143(1) within 15 days
• Track refund status on the portal if excess TDS refund is claimed
• Maintain all records for a minimum of 8 years from the end of the assessment year

Penalties for Non-Compliance

The penalty framework for ITR filing failures is multi-layered, combining late filing fees, interest charges, and potential prosecution:

The most severe consequences for foreign companies are typically the transfer pricing penalties, which are calculated as a percentage of the transaction value — not the tax — meaning a single non-compliant intercompany arrangement can generate penalties of several crore rupees.

Loss of Benefits

Beyond monetary penalties, late filing or non-filing has practical consequences:

• Business losses cannot be carried forward — If the ITR is filed after the due date, the company loses the ability to carry forward business losses and capital losses (except depreciation and house property losses)
• Deductions may be denied — Certain deductions under Chapter VI-A are only available if the return is filed on time
• Refund delays — Late-filed returns are processed later, delaying any TDS refund by months or years
• Increased scrutiny — Late filing or non-filing flags the company for scrutiny assessment, which can result in detailed examination of all Indian transactions

Special Considerations for Foreign Companies

Branch Offices and Project Offices

Foreign companies operating through a branch office or project office in India must file ITR-6 reporting the income attributable to Indian operations. The challenge lies in profit attribution — determining what portion of the foreign company's global income is attributable to the Indian PE. India follows the OECD's Authorised OECD Approach (AOA) for profit attribution, treating the PE as a functionally separate entity.

Liaison Offices

A liaison office is not permitted to earn income in India — it can only perform liaison activities (market research, promotion, information exchange). If the liaison office is operating correctly, no ITR filing should be necessary. However, if the Income Tax Department determines that the liaison office is conducting revenue-generating activities, it may be reclassified as a PE, triggering retrospective tax liability and filing obligations.

Companies with Only TDS Income

Foreign companies that earn only passive income from India (interest, dividends, royalties) with TDS already deducted are not strictly required to file an ITR if the TDS covers their full tax liability. However, filing is strongly recommended to:

• Claim DTAA benefits and recover excess TDS
• Establish a compliance record for future expansion
• Prevent the department from issuing non-filing notices
• Carry forward any losses from Indian operations

FEMA Reporting Intersection

Foreign companies with Indian operations must also comply with FEMA reporting requirements, which intersect with tax compliance. The FLA return (filed with the RBI by 15 July annually), FC-GPR filings for equity investments, and ECB reporting for cross-border loans must be consistent with the figures reported in the ITR. Discrepancies between FEMA filings and tax filings are a common trigger for scrutiny assessments.

Key Takeaways

• File ITR-6 even if TDS covers your liability — Filing establishes compliance, enables refund claims, and allows loss carry-forward. Non-filing risks prosecution under Section 276CC.
• Know your deadline — Most foreign companies fall under the 30 November deadline because transfer pricing applies to virtually all intercompany transactions exceeding INR 1 crore.
• Pay advance tax quarterly — Companies with PE income must pay advance tax in four instalments. Interest under Section 234B and 234C accrues at 1% per month on shortfalls.
• Transfer pricing is the highest-risk area — Penalties of 2% of transaction value for documentation failures and 50-200% of tax on adjustments make TP the most expensive compliance gap for foreign companies.
• Reconcile everything — Form 26AS, AIS, FEMA filings, and ITR figures must be consistent. Discrepancies trigger scrutiny assessments that can take years to resolve.