Statutory Anomalies in India’s Country-by-Country Reporting Regime under OECD BEPS Action Plan 13

In 2015, the OECD’s BEPS Action Plan 13 introduced Country-by-Country Reporting (CbCR) to enhance the assessment transparency of transfer pricing and BEPS-related risks faced by tax administrations. India incorporated this framework through s.286 of the Income-Tax Act, 1961 (“ITA, 1961”), with the objective of ensuring that compliance is more facilitative than punitive rather than simply serving as a mechanism for imposing sanctions on multinationals. However, legal and interpretational qualms have been raised about the Indian CbCR framework not aligning with either the minimum standards of the OECD or India’s own Constitutional principles. This article argues that these unresolved legal uncertainties undermine the objective of CbCR and expose taxpayers to avoidable compliance, penal and litigation issues. The article identifies four statutory fault lines. First, the ITA, 1961 provides limited guidance on what constitutes an ‘international group’ or its scope, creating uncertainty about how permanent establishments are to be treated as compared to subsidiaries, while the absence of defined surrogate filing triggers creates a risk of dual filing obligations. Lack of guidance on revenue threshold calculation, particularly on accounting standard harmonization and currency conversion, is further compounded by overlapping BEPS Pillar 2 obligations. Second, s.286 mandates a rigid, non-extendable twelve-month deadline that does not account for delays attributable to parent entities, differing global accounting periods, or jurisdictional information exchange gaps, leaving otherwise compliant taxpayers exposed to penalties. Third, s.271GB creates a strict liability for penalty imposition regardless of whether defaults were caused by factors beyond the taxpayer’s control. This disproportionate treatment, where minor or unavoidable lapses attract the same penalty as deliberate non-compliance, is arbitrary in application and raises concerns under Article 14 as interpreted in E.P. Royappa v. State of Tamil Nadu. Fourth, s.138 does not explicitly prevent CbCR data from being used for direct transfer pricing adjustments, raising potential concerns under Article 21 following Puttaswamy v. Union of India in cases of unauthorised use or misuse of commercially sensitive data. Comparative analysis with Australia, the United Kingdom, and the United States illustrates that effective implementation need not come at the cost of massive structural changes. Targeted statutory reforms introducing definitional clarity, a graduated penalty structure, and explicit confidentiality safeguards would make India’s framework more facilitative than punitive and uphold the Constitutional guarantees under Articles 14 and 21 it sought to achieve.