Form 49D Filing Due Date: What Indian Companies Must Know About Indirect Transfer Reporting for FY 2025-26

If your Indian company's shares are substantially held through a foreign entity, and those foreign shares changed hands during FY 2025-26, you have a critical compliance deadline approaching the electronic filing of Form 49D under Section 285A of the Income Tax Act, 1961.

What Is This Compliance Requirement?

Under Explanation 5 to Section 9(1)(i) of the Income Tax Act, 1961 (inserted by the Finance Act, 2012), shares or interests in a foreign company are deemed to be capital assets situated in India if they derive their value "substantially" from assets located in India. This means that when a non-resident transfers shares of a foreign company say, a Mauritius or Singapore holding company  that indirectly holds an Indian subsidiary, the capital gains from that offshore transaction become taxable in India.

To ensure the Income Tax Department is kept informed of such transactions, the law casts a reporting obligation on the Indian entity through which the foreign company holds its Indian assets. This obligation is governed by Section 285A of the Income Tax Act, 1961 read with Rule 114DB of the Income Tax Rules, 1962.

Who Needs to File Form 49D?

Every "Indian concern" that is, an Indian company or entity through which a foreign company or entity holds assets in India is required to furnish information electronically in Form 49D when an indirect transfer takes place.

In simple terms, if your company is the Indian subsidiary of a foreign holding structure, and the shares of that foreign holding company were transferred during FY 2025-26, your company bears the reporting responsibility  even if the transaction took place entirely offshore and your company played no role in it.

When Is the Due Date?

As per Rule 114DB:

• General case: Form 49D must be filed electronically, under digital signature, to the Assessing Officer having jurisdiction over the Indian concern, within 90 days from the end of the financial year in which the indirect transfer took place. For FY 2025-26 (ending 31st March 2026), this due date falls on 29th June 2026.
• Special case transfer of management or control: Where the indirect transfer has the effect of directly or indirectly transferring the right of management or control over the Indian concern, Form 49D must be filed within 90 days from the date of the transfer itself (not from year-end).

What Does "Substantially" Mean? The Two-Threshold Test

The indirect transfer provisions apply only when both of the following conditions under Explanation 6 are satisfied on the specified date:

1. The Fair Market Value (FMV) of the Indian assets held by the foreign company exceeds Rs. 10 crore, and
2. The Indian assets constitute at least 50% of the total FMV of all assets owned by the foreign company or entity.

Both conditions must be met simultaneously for the provision to apply.

What Information Must Be Reported in Form 49D?

The Indian concern is required to furnish, among other details:

• Complete holding structure of the Indian concern, including all group entities in India and the ultimate holding company
• Details of the foreign company or entity whose shares were transferred
• Shareholding structure before and after the transfer
• Any transfer contract or agreement entered into
• Basis of consideration for the shares or interest
• Asset valuation reports and supporting evidence
• Details of tax paid outside India in connection with the transaction
• Percentage of stake transferred and the percentage held by the transferor in the 12 months preceding the transfer

Penalty for Non-Compliance

Non-filing or delayed filing of Form 49D attracts serious penalties under Section 271GA:

• 2% of the value of the transaction  if the transfer had the effect of transferring management or control over the Indian concern
• Rs. 5 lakh  in all other cases of non-compliance

Given that transaction values in indirect transfer situations tend to be significant, a 2% penalty can run into crores of rupees.

Is There Any Exemption?

Yes. The small shareholder exemption under Explanation 7 to Section 9(1)(i) protects investors who hold less than 5% in the foreign entity and do not have any rights of management or control. Such investors are excluded from the indirect transfer provisions entirely. Additionally, Category I and Category II Foreign Portfolio Investors (FPIs) registered with SEBI are fully exempt from these provisions.

It is also important to note that the Taxation Laws (Amendment) Act, 2021 withdrew retrospective application of these provisions for transactions that took place before 28th May 2012. For all transactions from 28th May 2012 onwards, the indirect transfer provisions apply in full.

Key Takeaway for Indian Subsidiaries

If your Indian company is part of a multi-tier international holding structure and any transfer of shares or interest in the foreign holding entity has occurred during FY 2025-26, the obligation to file Form 49D rests with you — not with the foreign company, not with the buyer, and not with the seller. This is a compliance obligation that many Indian subsidiaries overlook, only to receive assessment notices and penalty demands later.

Act before 29th June 2026 to avoid penalties.

For expert guidance on this topic, contact your tax professional today.