Transactions with persons located in notified jurisdictional areas are subject to enhanced scrutiny and additional documentation requirements. Rule 125 of the Income Tax Rules, 2026 specifies the information and documents that must be maintained for such transactions.
The Statutory Framework
Section 176
The Central Government may, by notification, specify any country or territory outside India as a notified jurisdictional area in relation to transactions entered into by any assessee, having regard to the lack of effective exchange of information with such jurisdiction.
Rule 125
Rule 125 requires the assessee to maintain additional information and documents for transactions with persons located in notified jurisdictional areas.
Authorisation Requirement
Form 61
For the purposes of Section 176(3)(a), the authorisation to be submitted by the assessee shall be in Form No. 61.
Submission Requirements
- First copy to be deposited with the financial institution
- Second copy along with evidence of deposit to be submitted to the Assessing Officer
- The assessee must take all necessary steps to ensure the authorisation is legally enforceable
Additional Documentation
Ownership Structure
- Description of the ownership structure of the specified person
- Name and address of individuals or entities having directly or indirectly more than 10% shareholding or ownership interests
Group Profile
- Profile of the multinational group of which the specified person is a part
- Name, address, legal status, and country of tax residence of each enterprise
- Ownership linkages
Business Description
- Broad description of the business of the specified person
- Description of the industry it operates in
Other Information
- Any other information, data, or document relevant to the transaction
Retention Period
The information and documents must be kept and maintained for a period of eight years from the end of the financial year succeeding the relevant tax year.
Consequences of Non-Compliance
Disallowance
No deduction shall be allowed for any payment made to a financial institution located in a notified jurisdictional area unless the assessee furnishes the required authorisation.
Additional Tax
Any sum received or credited from a person located in a notified jurisdictional area shall be deemed to be the income of the assessee if no satisfactory explanation is provided.
Higher TDS
Tax shall be deducted at the highest of: rate in force, rate specified in the Act, or 30%.
Expert Legal Guidance
Understanding documentation requirements for notified jurisdictional area transactions is essential. Anuj Desai & Associates provides expert advisory services on international tax compliance, helping taxpayers maintain required documentation.