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Section 505 of Income Tax Act 2025 in hindi

Every person, being a non-resident, having a liaison office in India set up as per the guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (42 of 1999), shall, in respect of its activities in a tax year, prepare and deliver to the Assessing Officer having jurisdiction, a statement, in such form and containing such particulars within such period, as may be prescribed.

Summary

Every non-resident person (someone who does not live in India) who has set up a liaison office in India must prepare and submit an annual activities statement.
A liaison office is a representative office established to facilitate communication and coordination, but it is not allowed to conduct direct business or earn its own income.
The liaison office must be established in accordance with the guidelines issued by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act, 1999 (FEMA).
The prepared activities statement must be delivered to the Assessing Officer (the tax officer) who has jurisdiction (legal authority) over the non-resident person.
The statement must be submitted in the specific form, contain the required particulars (details), and be delivered within the period (time limit) officially prescribed by rules.

Practical examples

1A foreign company based in Tokyo, "Sakura Tech Corp," has a liaison office in Mumbai to coordinate with Indian suppliers, established under Reserve Bank of India guidelines. For Tax Year 2026-27, Sakura Tech Corp must prepare a statement of its liaison activities and deliver it to the jurisdictional Assessing Officer in Mumbai in the prescribed form by the due date.

2"Global Trade Inc.," a company based in New York, operates a liaison office in New Delhi registered under the Foreign Exchange Management Act, 1999. In May 2027, the company prepares its annual statement containing all required particulars about its office expenses and activities for the preceding tax year, and submits it to their assigned tax officer in New Delhi.

FAQ

1. Who is required to submit a statement under Section 505?

Every non-resident person who has established a liaison office in India under the guidelines of the Reserve Bank of India.

2. Under what law must the liaison office be set up?

It must be set up according to guidelines issued under the Foreign Exchange Management Act, 1999.

3. To whom should the statement of activities be delivered?

The statement must be prepared and delivered to the Assessing Officer having jurisdiction over the non-resident person.

4. For what period must the statement be prepared?

The statement must be prepared in respect of the activities carried out in a tax year.

5. What must the statement contain and when must it be submitted?

It must be in the prescribed form, contain the prescribed particulars, and be submitted within the prescribed period.

Test yourself

Q1.Who is required to file a statement under Section 505?

Q2.Under which Act must the liaison office be established to trigger this requirement?

Q3.To which official must the statement under Section 505 be delivered?

Q4.What must be included in the statement submitted by the non-resident under Section 505?

Q5.Which agency issues the guidelines for setting up the liaison office mentioned in Section 505?

Q6.In respect of what period must the activities statement be prepared?

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