India intensifies tax scrutiny: New ITR forms for 2026-27 demand greater transparency from businesses

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International Taxation

The Indian government has announced new income tax return (ITR) forms for the 2026-27 fiscal year, which entail a significant increase in scrutiny of business transactions. This measure, aimed at greater transparency, will have a direct impact on subsidiaries of Spanish companies and investors with a presence in the country.

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The Government of India It has increased the tax burden on companies operating within its territory with the introduction of new Income Tax Return (ITR) forms for the 2026-27 tax year. The measure requires a greater level of detail and disclosure of information, which poses a challenge to compliance and confidentiality and an increase in the administrative burden for foreign companies, including Spanish ones.

This reform is part of a broader strategy by the Indian government to combat tax evasion, increase revenue, and improve transparency in one of the world's fastest-growing markets. According to an analysis by the financial publication WhalesbookThis tightening of regulations is a clear sign that Indian tax authorities will focus on complex corporate structures and international transactions.

Increased scrutiny and new reporting obligations

International tax experts consulted by Empresa Exterior They point out that, although the final details of the forms are pending official publication, the increased scrutiny is expected to focus on areas critical to multinationals:

• Transfer pricing: More thorough justification of related-party transactions will be required to ensure that they are conducted at market value.
• Foreign operations: More details on assets, income, and transactions carried out outside of India by the subsidiaries.
• Tax benefits and deductions: Companies will need to provide more robust documentation to justify the deductions and exemptions applied.
• Shareholding structures: Greater clarity could be requested regarding the final ownership structure to identify ultimate beneficiaries and avoid opaque structures.

Implications for Spanish companies in India

For Spanish companies with subsidiaries, production centers or strategic alliances in IndiaThese changes pose an immediate challenge.It's not just about filling in more boxes on a form; it's a paradigm shift that demands a proactive review of fiscal and operational strategies in the country."Warns a tax advisor specializing in the Asian market. Non-compliance or errors in the declaration can lead to..." rigorous inspections and economic sanctions significant.

Companies will need to invest more resources in local consulting and internal reporting systems to collect and verify the information required by Indian authorities. This increase in compliance costs should be factored into financial planning for the next fiscal year.

Scrutiny Area	Required Level of Detail	Potential Impact for Spanish Companies
Linked Transactions	Stop. Detailed transfer pricing reports.	Risk of tax adjustments and increased paperwork burden.
Foreign Income and Assets	Stop. Detailed statement.	Need to consolidate global information accurately.
Tax Deductions	Medium-High. Comprehensive documentary justification.	Potential rejection of deductions and increase in the tax base.

This measure, far from being a hindrance, is interpreted by analysts as a step towards the maturity and harmonization of the Indian tax system with the standards of the OCDEHowever, the adaptation period will be key for Spanish companies to continue operating with legal certainty and efficiency in a strategic market like that of [the rest of the world]. India.

Key points and frequently asked questions about the new tax system in India

How does this measure directly affect my subsidiary in India?

Your subsidiary will need to dedicate more time and resources to data collection for tax returns. It will be essential to review all transactions with the parent company. España and other companies in the group to ensure that the transfer pricing documentation is impeccable and meets the new requirements of the Indian authorities.

What are the main risks for a Spanish exporter?

Although the direct impact is on entities with a physical presence in IndiaAn exporter could be indirectly affected if their local distributor or partner is subjected to an inspection that questions the prices of imports from EspañaMaintaining a transparent and well-documented pricing policy is more important than ever.

What should Spanish companies do immediately?

Experts recommend conducting an internal tax audit of operations in IndiaContact local tax advisors to understand the exact scope of the new forms and strengthen accounting and reporting processes to ensure that all required information is available and accurate for the close of the 2026-27 financial year.