Income Tax Act, 2025
Section 115JG: Conversion of an Indian branch of foreign company into subsidiary Indian
115JG. Conversion of an Indian branch of foreign company into subsidiary Indian
company.—(1) Where a foreign company is engaged in the business of banking in India through its
branch situate in India and such branch is converted into a subsidiary company thereof, being an Indian
company (hereafter referred to as an Indian subsidiary company) in accordance with the scheme framed
by the Reserve Bank of India, then, notwithstanding anything contained in the Act and subject to the
conditions as may be notified by the Central Government in this behalf,—
(i) the capital gains arising from such conversion shall not be chargeable to tax in the assessment
year relevant to the previous year in which such conversion takes place;
(ii) the provisions of this Act relating to treatment of unabsorbed depreciation, set off or carry
forward and set off of losses, tax credit in respect of tax paid on deemed income relating to certain
companies and the computation of income in the case of the foreign company and Indian subsidiary
company shall apply with such exceptions, modifications and adaptations as may be specified in that
notification.
(2) In case of failure to comply with any of the conditions specified in the scheme or in the
notification issued under sub-section (1), all the provisions of this Act shall apply to the foreign company
and the said Indian subsidiary company without any benefit, exemption or relief under sub-section (1).
(3) Where, in a previous year, any benefit, exemption or relief has been claimed and granted to the
foreign company or the Indian subsidiary company in accordance with the provisions of sub-section (1)
and, subsequently, there is failure to comply with any of the conditions specified in the scheme or in the
notification issued under sub-section (1), then,—
(i) such benefit, exemption or relief shall be deemed to have been wrongly allowed;
(ii) the Assessing Officer may, notwithstanding anything contained in this Act, re-compute the
total income of the assessee for the said previous year and make the necessary amendment; and
(iii) the provisions of section 154 shall, so far as may be, apply thereto and the period of four
years specified in sub-section (7) of that section being reckoned from the end of the previous year in
which the failure to comply with the condition referred to in sub-section (1) takes place.
(4) Every notification issued under this section shall be laid before each House of Parliament.]
4[CHAPTER XIIBC
SPECIAL PROVISIONS RELATING TO FOREIGN COMPANY SAID TO BE RESIDENT IN INDIA
115JH. Foreign company said to be resident in India.—(1) Where a foreign company is said to be
resident in India in any previ- ous year and such foreign company has not been resident in India in any of
the previous years preceding the said previous year, then, notwithstanding anything contained in this Act
and subject to the conditions as may be notified by the Central Government in this behalf, the provisions
of this Act relating to the computation of total income, treatment of unabsorbed depreciation, set off or
carry forward and set off of losses, collection and recovery and special provisions relating to avoidance of
tax shall apply with such exceptions, modifications and adaptations as may be specified in that
notification for the said previous year:
1. Subs. by Act 23 of 2012, s. 54, for “a limited liability partnership on its total income” (w.e.f. 12013).
Where a foreign company is engaged in the business of banking in India through its
branch situate in India and such branch is converted into a subsidiary company thereof, being an Indian
company (hereafter referred to as an Indian subsidiary company) in accordance with the scheme framed
by the Reserve Bank of India, then, notwithstanding anything contained in the Act and subject to the
conditions as may be notified by the Central Government in this behalf,—
the capital gains arising from such conversion shall not be chargeable to tax in the assessment
year relevant to the previous year in which such conversion takes place;
the provisions of this Act relating to treatment of unabsorbed depreciation, set off or carry
forward and set off of losses, tax credit in respect of tax paid on deemed income relating to certain
companies and the computation of income in the case of the foreign company and Indian subsidiary
company shall apply with such exceptions, modifications and adaptations as may be specified in that
notification.
In case of failure to comply with any of the conditions specified in the scheme or in the
notification issued under sub-section
Where, in a previous year, any benefit, exemption or relief has been claimed and granted to the
foreign company or the Indian subsidiary company in accordance with the provisions of sub-section
and, subsequently, there is failure to comply with any of the conditions specified in the scheme or in the
notification issued under sub-section
such benefit, exemption or relief shall be deemed to have been wrongly allowed;
the Assessing Officer may, notwithstanding anything contained in this Act, re-compute the
total income of the assessee for the said previous year and make the necessary amendment; and
the provisions of section 154 shall, so far as may be, apply thereto and the period of four
years specified in sub-section
of that section being reckoned from the end of the previous year in
which the failure to comply with the condition referred to in sub-section
takes place.
Every notification issued under this section shall be laid before each House of Parliament.]
4[CHAPTER XIIBC
SPECIAL PROVISIONS RELATING TO FOREIGN COMPANY SAID TO BE RESIDENT IN INDIA
115JH. Foreign company said to be resident in India.—
Where a foreign company is said to be
resident in India in any previ- ous year and such foreign company has not been resident in India in any of
the previous years preceding the said previous year, then, notwithstanding anything contained in this Act
and subject to the conditions as may be notified by the Central Government in this behalf, the provisions
of this Act relating to the computation of total income, treatment of unabsorbed depreciation, set off or
carry forward and set off of losses, collection and recovery and special provisions relating to avoidance of
tax shall apply with such exceptions, modifications and adaptations as may be specified in that
notification for the said previous year:
1. Subs. by Act 23 of 2012, s. 54, for “a limited liability partnership on its total income” (w.e.f. 12013).