What is Form 4 under new Income Tax Act? Know Reporting Rule for Income Attributable to Indian Assets
The responsibility for filing Form 4 rests with the Accountant whom the taxpayer has appointed for this purpose. It is mandatory if the income derived from the transfer is chargeable to tax in India.
India’s tax system entered into a new phase with the introduction and implementation of the Income-tax Act, 2025. The new act and rules came into force with effect from April 1, 2026. The government has consolidated scattered amendments to a proper structure. Form 4 Form 4 is a formal report prepared by an Accountant that details the calculation of income attributable...
India’s tax system entered into a new phase with the introduction and implementation of the Income-tax Act, 2025. The new act and rules came into force with effect from April 1, 2026. The government has consolidated scattered amendments to a proper structure.
Form 4 is a formal report prepared by an Accountant that details the calculation of income attributable to the transfer of assets located in India. It is specifically prescribed under Rule 11 of the Income-tax Rules, 2026, following the mandate of Section 9(10) of the new Act.
In simpler terms, if a foreign entity or a non-resident transfers an interest (like shares) that derives its value from assets situated in India, the resulting profit is taxable in India to the extent it relates to those Indian assets. Form 4 provides the mathematical breakdown of how much of that global profit "belongs" to India for tax purposes.
Form 4 is not entirely new in concept but is a better version of its predecessor. Under the Income-tax Act, 1961, this reporting was done through Form 3CT under Rule 11UC.
| Feature | Income-tax Act, 1961 (Old) | Income-tax Act, 2025 (New) |
| Form Name | Form 3CT | Form 4 |
| Section | Section 9(1) | Section 9(10) |
| Rules | Rule 11UC | Rule 11 |
The transition to the 2025 Act also introduces "Tax Years" in place of "Previous Years" and "Assessment Years”.
The responsibility for filing Form 4 rests with the Accountant whom the taxpayer has appointed for this purpose. It is mandatory if the income derived from the transfer is chargeable to tax in India.
Following documents may be required for filing Form 4:
- Communication addresses, emails, contact number o Valuation report of the valuation of the assets
- Financial statements of the taxpayer
- Documents related to the sale of asset/s
- PAN required mandatorily
Structure of Form 4
1) Details such as communication address, email, phone number etc. which is as per the standard template provided for all forms.
2) Details regarding the transaction of transfer of share of interest entity- wise, income derived from such transfer, value of assets located in India, value of global assets, method employed for arriving at the value of the assets.
Form 4 must be filed once every tax year. It must be submitted alongside the taxpayer's Return of Income. The due date for Form 4 is therefore the same as the deadline for filing the relevant income tax return.
The filing process is entirely digital:
- The Accountant generates a UDIN via the ICAI portal.
- The form is submitted electronically through the Income Tax e-Filing portal.
- The statement is finalized with a Digital Signature.
Filing the form 4 allows the Assessing Officer to understand exactly how the taxable income was calculated, which facilitates smoother processing and fewer hurdles during the scrutiny of the Return of Income.
If the concerned person fails to file Form 4 is a serious oversight. It can trigger assessment proceedings under the Income-tax Act, 2025, potentially leading to disputes regarding the income offered in the tax return.
As per the income tax department’s data, the form does not require proof of tax payments. However, where taxable income arises, for processing the return of income filed in this respect, proof of tax and interest payment (challans/BSR codes) is mandatory.
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