Section 506
Section 506: Indian concern must furnish information on indirect asset transfers
Section 506 targets the classic "indirect transfer" situation, where a foreign company or entity's value comes substantially from assets located in India, held through an Indian concern. That Indian concern is required to furnish information or documents to help the tax authority determine the income accruing or arising in India under section 9(10)(a).
When the obligation applies
The section applies where:
- a share of, or interest in, a company or entity registered or incorporated outside India derives, directly or indirectly, its value substantially from assets located in India, as referred to in section 9(10)(a); and
- such company or entity holds, directly or indirectly, such assets in India through, or in, an Indian concern.
What the Indian concern must do
In that situation, the Indian concern must, for the purposes of determining any income accruing or arising in India under section 9(10)(a), furnish within the prescribed period, to the prescribed income-tax authority, the information or documents in such manner as may be prescribed.
Frequently asked questions
Who has the reporting obligation under Section 506?
The Indian concern through which a foreign company or entity, deriving substantial value from India-located assets, holds those assets - not the foreign entity itself.
What is this information used for?
Determining income accruing or arising in India under section 9(10)(a), which deals with indirect transfers of Indian assets.
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Talk to our tax team about this sectionLast updated 9 September 2026