New Delhi, Apr 22 - To keep a check on illicit outflow of funds through multi-billion cross-border deals, the Income Tax department has notified a fresh reporting format for foreign business entities which indulge in corporate liaison in India.
The comprehensive two-page reporting format, called Annual Activity Certificate (AAC) 49C, asks for two dozen different questions on the activities of the Liaison Offices (LOs) set up in the country including the names and locations of such employees who earn more than Rs 50,000 per month.
"The non-resident entities having a liaison office in India have been filing the activity certificate with their respective assessing officers till now under section 285 of the Income Tax Act. But they were being done in a random fashion.
"The new format is to bring uniformity in the system and it comes into force from this financial year," a senior department official said.
The form 49C informs the I-T about the financial activity of an overseas business entity in the country.
The Union Finance Ministry, according to sources, had last year asked I-T field formations to prepare a comprehensive reporting format in this regard as the department had to face difficulties while pursuing some cases with regard to cases of transfer pricing and capital gains.
"India is witnessing a steady increase in the number of such offices and according to estimates there could be more than 300 LOs in the country at present indulging in overseas mergers, acquisitions and trade," the official said.
According to the latest Finance Ministry data, "mis-pricing (in cross-border deals), which is one of the main and new methods of transfer of illicit funds outside the country has resulted in detection of mis-pricing of Rs 33,784 crore in the last two financial years as against detection of trade mis-pricing of Rs 14,655 crore in the last five fiscals". PTI