ITR Filing — Foreign Company

Filing basis under the Income-tax Act, 1961. A foreign company files Form ITR-6 in India, the same return used by domestic companies — foreign companies cannot use ITR-1 through ITR-5.

Where a foreign company earns royalty or Fees for Technical Services (FTS) from India without a Permanent Establishment (PE) here, Section 115A taxes that income at a flat 20% (plus applicable surcharge and health & education cess), up from 10% before the Finance Act, 2023 raised the rate effective AY 2024-25. No deduction for expenditure is allowed against this income under Section 115A(1)(b)(A).

Under Section 90(2), a foreign company resident in a country with which India has a Double Taxation Avoidance Agreement (DTAA) may apply the treaty rate instead of the Section 115A rate where the treaty is more beneficial — most DTAAs cap royalty/FTS withholding at 10–15%, so the treaty rate typically governs once claimed.

A foreign company whose only India-sourced income is royalty/FTS taxed under Section 115A, with tax fully withheld under Section 195 at the applicable rate, is not required to file a return in India — but must file ITR-6 if it wishes to claim a beneficial DTAA rate or has income beyond what Section 115A covers. DSC-based verification is mandatory for ITR-6, as for any company return.

Sources: incometaxindia.gov.in (Section 115A text), hostbooks.com, and taxgarden.in on the current 20% rate and its AY 2024-25 effective date; internationaltaxreview.com and taxsutra.com on the DTAA-override mechanism and the ITR-6 filing exemption for fully-withheld royalty/FTS income (WebSearch, 8 Sep 2026).

Income tax return filing for a foreign company covers the returns of the companies incorporated outside India that earn income taxable in India under the Income-tax Act 1961 — the income from the business connection under Section 9(1)(i), the income from the assets or the sources in India, the capital gains and the other income taxed under the Act, and the treaty protection where the India treaty applies. The foreign company files its return in ITR-6 under Section 139(1), is taxed at the rates the Finance Act prescribes for the foreign companies, and carries the withholding compliance of Section 195 on its receipts where applicable.

The foreign company's Indian tax is the tax on its Indian-source income, computed under the Act and reduced by the treaty. The business connection is where most of the questions are: the permanent establishment under the treaty, the attribution of the profits, the transfer pricing on the transactions with the Indian affiliates. The return is where the foreign company's Indian position is declared, and the treaty relief is claimed.

The cost of an unmanaged foreign company position is the full-rate taxation of the income the treaty would have protected: the permanent establishment that was never addressed, the attribution that was never computed, the treaty benefit that was never claimed. The Indian return is the foreign company's annual declaration of the position, and the assessment tests it.

This service is for foreign companies with Indian-source income. We determine the Indian taxability under Section 9 and the treaty, compute the taxable income and the attribution, apply the treaty relief correctly, prepare and file the return in ITR-6, manage the withholding and the transfer pricing positions, and handle the assessments so the foreign company's Indian tax is exactly what the law requires.