The FAQs on Income Tax Form 71 provide guidance on audit and compliance requirements for specified funds claiming tax exemption or concessional tax rates on income attributable to the investment division of an offshore banking unit under the Income-tax Act, 2025 . Form 71 is an accountant-certified audit report confirming that the fund maintains separate books, fulfills prescribed conditions, and accurately reports eligible income. Filing this form electronically at least one month prior to the due date of the income tax return is mandatory, and failure to comply may result in denial of tax benefits. The accountant must verify the report with details such as UDIN and membership credentials, ensuring authenticity and accountability. While document attachment is not mandatory, detailed records must be maintained. The form enhances transparency, ensures correct income attribution, and strengthens regulatory oversight of offshore investment structures seeking tax concessions.
Income Tax Department
Ministry of Finance, Government of India
FAQs on Income Tax Form 71: Verification by an accountant for computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit, for purposes of Schedule VI to the Act
Form 71 – Frequently Asked Questions
Form for Verification by an Accountant for computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit, for the purposes of Schedule VI of the Act
| Name of form as per I.T. Rules, 1962 | Form 10-IL | Name of form as per I.T. Rules, 2026 | 71 |
| Corresponding section of I.T. Act, 1961 | Section 10(4D) and 115AD(1B) | Corresponding section of I.T. Act, 2025 | Section 11 read with Schedule VI Table: Sl. Nos. 1 to 4] and section 210(3) |
| Corresponding Rule of I.T. Rules, 1962 | Rule 21AJA | Corresponding Rule of I.T. Rules, 2026 | 142 |
Q1: What is Form 71 ?
Ans: Form 71 is the prescribed form for filing the audit report prescribed under Rule 142 of the Income Tax Rules, 1962. A specified fund, in order to claim exemption, or benefit of taxation at concessional rates, in respect of eligible income attributable to the investment division of an offshore banking unit, is also required to fulfil certain other eligibility conditions, as prescribed in the rule. These eligibility conditions inter-alia include maintenance of separate books of accounts for the registered investment division, getting the accounts audited by an accountant, maintaining other relevant documentation, and filing of such audit report in the prescribed form on or before the specified date (i.e. one month prior to the due date for filing return of income).
Q2: Who should file Form 71?
Ans: The accountant, who has audited the book of accounts of the eligible investment division of the offshore banking unit, is required to file this audit report, certifying the correctness of the separate accounts maintained by the investment division and affirming the fulfillment of other eligibility conditions, as stipulated in Rule 142.
Q3: Who is required to verify the Form 71?
Ans: The accountant, who has audited the book of accounts of the eligible investment division of the offshore banking unit, is required to verify that he has examined the books of accounts of the eligible investment division, and also affirm that such investment division fulfils other eligibility conditions to claim the benefit of exemption, or taxation at concessional rates. The accountant is also required to mention his membership number, the UDIN of the audit report, and details of his audit firm.
Q4: Where and how the Form 71 is required to be filed?
Ans: The Form 71 shall be filed electronically on the e-filing portal of Income-tax Department. The form shall be duly verified, either under digital signature or through electronic verification code, by the accountant.
Q5: What is the time limit for filing Form 71?
Ans: The audit report in Form 71 is required to be filed electronically, at least one month prior to such “due date” for filing return of income prescribed under section 263(1)(c) of the ITA’ 2025, as may apply for the specified fund claiming the benefit of exemption, or taxation at concessional rates. This time limit is specified in the relevant rules.
Q6: What documents are required to file Form 71?
Ans: The following documents may be required while filing Form 71, –
> A copy of Trust deed, or Memorandum of Association, or any other legal instrument evidencing the formation of the fund
> Copy of SEBI Category-I FPI registration certificate
> Annual financial statements of the specified fund for the relevant tax year
> Audited financial statements of the eligible investment division of the offshore banking unit for the relevant tax year
> Bank statements, Foreign Inward Remittance Certificate, and settlement advisories
> Statement of securities (held during the year and transactions executed) including income earned on securities held and gain arising on transfer of securities
> Details of Unit Holders with number of units held by them and their classification by residency status i.e. resident or non-resident
Q7: Is Form 71 mandatory?
Ans: Filing of a valid Form 71 within the specified time limit, is one of the mandatory conditions for making an admissible claim of exemption, or taxation at concessional rates, by a specified fund, in respect of income which is attributable to investment division of an offshore banking unit, under the aforementioned provisions.
Q8: Can I edit Form 71 after submission?
Ans: No. Once Form 71 is validly submitted, after verification by the accountant, and acknowledgment is generated, it cannot be edited. Please ensure that all details are correct before final submission.
Q9: Do I need to attach any document with the Form 71?
Ans: No. It is not mandatory to attach any document with the Form 71.
Q10: While filling Part A and Part B, can I leave any field blank?
Ans:
> PAN of the Specified Fund is Name and complete address thereof shall be pre- filled, which can be updated by the user. Status is pre-filled.
>Details of the offshore banking unit are mandatory
>In Part B, only the applicable remarks (Yes/No) are to be selected from the drop-down
Q11: What if the specified fund does not have a PAN?
Ans: Form 71 cannot be submitted without a valid PAN of the specified fund.
Q12: Can Form 71 be filed offline?
Ans: No. Form 71 can only be submitted online through the Income Tax e-Filing portal.
Q13: Why is Form 71 important?
Ans: Filing of a audit report in Form 71 within the specified time limit is one of the mandatory compliance for claiming the benefit of tax-exemption, or taxation at concessional rates, by the specified fund, in respect of the eligible income of the investment division of an offshore banking unit, under section 11 read with Schedule VI [Table: Sl. Nos. 1 to 4] and section 210(3) of the ITA 2025. However, the claim of benefit of exemption (as also taxation at concessional rates) is further subject to fulfillment of various other eligibility conditions, as prescribed in the statute and relevant rules.
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GUIDANCE NOTE for Form 71
Audit Report of a registered investment division of an offshore banking unit for claiming exemption under section 11 read with Schedule VI [Table: Sl. Nos. 1 to 4], or benefit of taxation at concessional rates under section 210(3) of the ITA 2025
Purpose
Form 71 is the form of audit report prescribed under Rule 142 of the Income Tax Rules. A specified fund, in order to claim exemption, or benefit of taxation at concessional rates, in respect of income attributable to the registered investment division of an offshore banking unit, is also required to fulfil certain other eligibility conditions, as prescribed in Rule 142.
The eligibility conditions inter-alia include maintenance of separate books of accounts for the registered investment division, getting the accounts audited by an accountant, maintaining other relevant documentation, and filing of such audit report on or before the specified date (i.e. one month prior to the due date for filing return of income).
Filing of this Form is a mandatory compliance for a specified fund, so as to claim the benefit of tax exemption, benefit of taxation at concessional rates, in respect of the income attributable to the registered investment division of an offshore banking unit.
This form provides for columns for affirmation (or denial) by the auditor that the eligibility conditions for the registered investment division of an offshore banking unit, as prescribed under Rule 142, are fulfilled.
Who Should File
A specified fund seeking the benefit of tax-exemption, or taxation at concessional rates, in respect of the income of the registered investment division of an offshore banking unit, as available under Section 11 read with Schedule VI [Table: Sl No. 1 to 4] of ITA 2025 and Section 210(3) of ITA 2025, respectively, is mandatorily required to furnish the audit report of an accountant in Form 71, certifying the correctness of the separate accounts maintained by its registered investment division and maintenance of other relevant documentation etc.
When and How to File
>The form is to be filed on the e-filing portal.
> The form shall be furnished electronically either under digital signature or through electronic verification code verified by the accountant, who has audited the books of accounts maintained by the registered investment division.
> The e-form is required to be furnished by the specified Fund on or before the specified date, i.e. one month prior to the “due date” for filing the Return of Income under Section 263 of the ITA 2025.
Structure of Form 71
> Name of the offshore banking unit
> Verification by the auditor as to examination of the books of accounts of the investment division of the offshore banking unit
> Affirmation by the auditor as to fulfilment of each of the prescribed eligibility conditions by the registered investment division of the offshore banking unit
What are the documents required to file the Form 71
Following documents may be required for filing Form 71 –
> Annual financial statements of the specified fund for the relevant tax year
> Audited accounts of the eligible investment division of the offshore banking unit for the relevant tax year
> Bank statements, Foreign Inward Remittance Certificate, and settlement advisories evidencing income receipt and attribution
> Statements of securities (held during the year and transactions executed) issued by the Broker/Custodian
> Records of all securities transactions, including purchase date, sale date, holding period, and resulting capital gains/loss
> Unit Holders Register (showing classification of unit holders by residency status i.e. resident or non-resident)
What is the process flow of filing Form 71?
The process flow includes following steps:
> Prepare the application: Fill Form 71, ensuring all columns are complete with accurate details.
> Attach mandatory documents.
> Sign/verify: The application and the attached statements must be digitally signed by the accountant who has audited the separate books of accounts maintained by the registered investment division.
> Submit online on the e-filing portal.
Outcome of Processed Form:
> Once the Audit Report in Form 71 is validly filed on or before the specified date, and is successfully processed, the specified fund shall be able to claim the benefit of exemption, or taxation at concessional rates, in respect of income attributable to the eligible investment division of an offshore banking unit
> The specified fund, in order to claim the benefit of exemption, or taxation at concessional rates, must also file the annual statement of exempt income and income taxable at concessional rates, in Form 70, on or before the due date of filing return of income.
Key updates include the following:
> The affirmation as to conducting audit of the books of accounts of the registered investment division has been moved from Column (2) to the column relating to declaration by the auditor.
> In the declaration part, the membership number of the auditor and the UDIN of the audit report is also sought to be captured.
Improved Applicant Experience, Expedited Process:
> The language of the Form has been simplified.
> The existing Form 71 was notified recently with effect from 1st April 2022. No significant gaps were identified in the existing Form.
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