Rule 125 of the Draft Income-tax Rules, 2026 prescribes the procedure for furnishing authorization and maintaining documents for the purposes of section 176, particularly in cases involving financial institutions and transactions with persons located in notified jurisdictional areas. The assessee is required to submit authorization in Form No. 61, with the first copy deposited or transmitted to the concerned financial institution and the second copy, along with proof of such submission, furnished to the jurisdictional Assessing Officer. The assessee must also ensure that the authorization is legally enforceable by complying with applicable laws in India or abroad. In addition, where the assessee enters into a transaction with a person situated in a notified jurisdictional area, detailed documentation must be maintained beyond the requirements of rule 84(1). This includes disclosure of ownership structures identifying persons holding more than ten per cent direct or indirect interest, a profile of the multinational group and ownership linkages, a description of the specified person’s business and industry, and any other relevant transactional information. Such documentation must be maintained up to the due date for filing the return under section 263(1) and preserved for eight years from the end of the financial year succeeding the relevant tax year, reinforcing transparency and regulatory oversight in cross-border dealings.
Extract of Rule No. 125 of Draft Income-tax Rules, 2026
Rule 125
Furnishing of authorization and maintenance of documents, etc. for the purposes of section 176.
(1) For the purposes of section 176(3)(a), the authorisation to be submitted by the assessee, shall be in Form No. 61.
(2) The assessee shall cause the first copy of the duly filled Form No. 61 to be deposited with or transmitted to the financial institution referred in section 176(3)(a)
(3) The second copy of the Form No. 61 along with the evidence of the first copy of said form having been deposited or transmitted to the financial institution shall be submitted by the assessee to the Assessing Officer having jurisdiction over him.
(4) For the purposes of ensuring that the authorisation in Form No. 61 is legally enforceable, the assessee shall take all necessary steps as are required under any law for the time being in force in India or outside India.
(5) For the purposes of section 176(3)(b), the assessee who has entered into a transaction with a person located in a notified jurisdictional area (hereinafter referred to as the specified person) shall, in addition to information and documents referred to in rule 84(1), keep and maintain the following information and documents, namely: —
(a) a description of the ownership structure of the specified person, including name and address of individuals or other entities, whether located in the notified jurisdictional area or outside, having directly or indirectly more than ten per cent shareholding or ownership interests;
(b) a profile of the multinational group of which the specified person is a part along with the name, address, legal status and country of tax residence of each of the enterprises comprised in the group with whom the assessee has entered into a transaction, and ownership linkage among them;
(c) a broad description of the business of the specified person and the industry it operates in;
(d) any other information, data or document, which may be relevant for the transaction with the specified person.
(6) The information and documents specified in sub-rule (5) shall be for the period upto the due date of filing of return of income under section 263(1)
(7) The information and documents specified in sub-rule (5) shall be kept and maintained for a period of eight years from the end of the financial year succeeding the relevant tax year.
