Sections 505 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 505 to 507 of the Income-tax Act, 2025 create three reporting duties. A non-resident with a liaison office in India must deliver a statement of its activities, an Indian concern that holds assets for a foreign company or entity must furnish information, and producers of cinematograph films and persons in specified activities must report payments above a stated amount.
This explanation is as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026. Under section 1(3) the Act came into force on the 1st April, 2026, save as otherwise provided. Later amendments, rules and notifications should be checked.
Section 505 requires a non-resident with a liaison office in India to deliver a statement of its activities in a tax year to the Assessing Officer. Section 506 requires an Indian concern through which a foreign company or entity holds Indian assets to furnish information or documents. Section 507 requires a film producer or person in a specified activity to furnish a statement of payments of over Rs. 50,000 in the aggregate to each person engaged. The form, particulars, periods and authorities are all prescribed.
Section 505: non-resident with a liaison office
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, containing such particulars, and within such period, as may be prescribed.
The Reserve Bank guidelines and the Foreign Exchange Management Act, 1999 are other instruments; the reader should check them for what a liaison office is and what it may do. The Income-tax Act itself prescribes only that the statement is for the activities of the tax year and goes to the Assessing Officer having jurisdiction. The form, particulars and period are left to the Income-tax Rules, 2026, and are not in the text consulted. Anyone running such an office from India may want to speak to us on non-resident tax filing support.
Section 506: Indian concern holding assets for a foreign entity
The two conditions
Section 506 applies where both of the following are true:
- (a) a share of, or interest in, a company or an entity registered or incorporated outside India derives, directly or indirectly, its value substantially from assets located in India, as referred to in section 9(10)(a); and
- (b) that company or entity holds, directly or indirectly, those assets in India through, or in, an Indian concern.
The duty
The Indian concern shall, for the purposes of determining any income accruing or arising in India under section 9(10)(a), furnish within the prescribed period to the prescribed income-tax authority the information or documents, in the manner prescribed. The section does not say what the information or documents are; that too is left to the rules. This note deals only with the reporting duty in section 506, not with section 9 itself.
Section 507: film producers and persons in specified activities
Sub-section (1): who reports
Any person carrying on the production of a cinematograph film or engaged in any specified activity, or both, during the whole or any part of a tax year, shall furnish a statement within such period, in such form and manner, to the prescribed income-tax authority, as may be prescribed.
Sub-section (2): what the statement contains
The statement shall contain particulars of all payments of over Rs. 50,000 in the aggregate made by him or due from him to each person engaged by him in the production or specified activity. (The Act prints the figure as "` 50000".) Note the words "made by him or due from him": payments due but not yet made are also reported. The test is applied person by person ("to each such person") on the aggregate of payments to that person.
Sub-section (3): "specified activity"
The expression means any:
- event management;
- documentary production;
- production of programmes for telecasting on television or over the top platforms or any other similar platform;
- sports event management;
- other performing arts; or
- any other activity as the Central Government may, by notification, specify.
What the Central Government may have notified is not in the text consulted.
| Section | Who reports | To whom | What is stated | Detail left to rules |
|---|---|---|---|---|
| 505 | Non-resident with a liaison office in India | Assessing Officer having jurisdiction | Statement of activities in a tax year | Form, particulars, period |
| 506 | Indian concern holding assets for a foreign company or entity | Prescribed income-tax authority | Information or documents | Period and manner |
| 507 | Film producer or person in a specified activity | Prescribed income-tax authority | Payments of over Rs. 50,000 in aggregate to each person engaged | Period, form, manner |
A worked example (names and figures assumed)
Studio Meridian, a production house, makes a documentary during a tax year. It engages three persons, and the payments made or due to them are as follows (all names and amounts assumed):
| Person engaged | Aggregate payments made or due | Over Rs. 50,000? |
|---|---|---|
| Editor | Rs. 80,000 | Yes |
| Sound recordist | Rs. 50,000 | No: exactly Rs. 50,000 is not "over" |
| Narrator | Rs. 1,20,000 | Yes |
- Documentary production is a "specified activity" under section 507(3), so Studio Meridian must furnish a statement to the prescribed income-tax authority.
- Under section 507(2) the statement contains particulars of payments to the editor and the narrator. The sound recordist's payments are not above the threshold on these figures.
- If part of the editor's Rs. 80,000 has not yet been paid, it is still included, because the sub-section covers payments "made or due".
Need help with reporting duties?
If your business has a foreign parent, a liaison office or a production activity that may attract these statements, it is worth confirming early which duty applies and what the rules prescribe. Our non-resident tax filing team can walk through the position with you.
Key takeaways
- A non-resident with a liaison office in India delivers a statement of the tax year's activities to the Assessing Officer (section 505).
- An Indian concern through which a foreign company or entity holds Indian assets furnishes information or documents for section 9(10)(a) (section 506).
- Film producers and persons in specified activities report payments of over Rs. 50,000 in the aggregate to each person engaged, including payments due (section 507).
- "Specified activity" includes event management, documentary production, television or over-the-top programmes, sports event management and performing arts.
- Forms, particulars and periods are prescribed; they are not in the Act.
Read next
- Sections 501 to 504: service and authentication of notices
- Section 508: statement of financial transaction or reportable account
- Section 159: relief where tax is paid under an agreement with another country
- Chapter XXIII guide: miscellaneous provisions
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.