Singapore and India to Include Limitation of Benefits in DTAA Amendment: Implications for Foreign Investors

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By Mike Vinkenborg 

On December 30, 2016, Singapore and India agreed on amending their Double Taxation Avoidance Agreement (DTAA) for capital gain income. With the new agreement, which will implemented on April 1, 2017, India aims to tackle investments coming into the country through shell companies and prevent tax avoidance. This follows the agreements reached by India and Mauritius in May 2016 and India and Cyprus in November that year, when they similarly amended their respective DTAAs by implementing a Limitation of Benefits (LOB) clause. The India-Singapore DTAA, last amended in 2005, had the provision that any changes in the Mauritius treaty would automatically apply to the Singapore DTAA. All three DTAA amendments will come into effect on April 1, 2017.

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India Regulatory Brief: Startups May Be Exempt from Local State Laws, Companies Act Norms Relaxed for IFSC Firms

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Government Asks States to Exempt Startups from Local State Laws

In keeping with the government’s goal of a flourishing startup sector in India, the government is in discussion with state governments to allow startup firms to get exempt from local laws, including labor regulations. Many such firms get entangled into regulatory and tax disputes as their evolution propels them into legal grey areas, with the need for the updation of regulatory norms and laws. This is why the central government is considering a more flexible approach, whereby startups can benefit from regulatory easing.

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Motoring Ahead: Investing in India’s Automotive Industry

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By Melissa Cyrill

India is a global leader in the automotive sector, backed by its domestic production capacity, market size, and exports. On average, the country’s automobile sector boasts of an annual production of around 24 million vehicles; the sector also employs over 29 million people (directly and indirectly). Breaking down its global position by industry segment, India is the world’s largest tractor manufacturer, second largest two-wheeler manufacturer, second largest bus manufacturer, fifth largest heavy truck manufacturer, sixth largest car manufacturer, and eighth largest commercial vehicle manufacturer.

This article discusses the growth trends in the automotive sector in India, which offers a highly attractive investment landscape for foreign investors and manufacturing firms. Testament to this is the fact that South Korea’s Kia Motors, Daihatsu from Toyota, PSA Group’s Peugeot Citreon, and three car makers from China, Beiqi Foton, SAIC, and Changan Automotive desire to enter the Indian market, pivoted to become the third largest in the world by the end of the decade.

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Corporate Social Responsibility in India

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Editor’s Note: The article was first published in July 2012 and has been updated on January 11, 2017 as per the latest developments.

By Dezan Shira & Associates

India is the first country in the world to make corporate social responsibility (CSR) mandatory, following an amendment to The Company Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger.

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India Market Watch: Consumer Durables to Cost More in 2017 and 20% Indian Migrants UAE Bound as per OECD Report

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Consumer Durables to Cost More in 2017 Due to Demonetization

The demonetization of high denomination currency slowed down growth in the consumer durables sector, particularly in small towns and rural regions in the past two months. Analysts also expect a decline in the net income of automobile, consumer products, real estate, and telecom sectors. In terms of the regional impact of demonetization on the consumer durables sector, south India appears to be the least affected when compared to the north and eastern parts of the country due to a stronger adoption of digital payments mechanisms.

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Service Tax for Internet Based Services in India from December 2016

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By Koushan Das

Overseas companies providing online information and database access (‘OIDAR’) services will have to pay service tax from December 1, 2016, making electronic services potentially costlier for consumers. The Central Board of Excise and Customs (CBEC) defines OIDAR to include services delivered via information technology (over the internet or an electronic network), which is essentially automated involving minimal human intervention.

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Introduction to the Social Security System in India

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Editor’s Note: The article was first published in March 2013 and has been updated on January 4, 2017 as per the latest regulations.

By Dezan Shira & Associates

India’s social security system is composed of a number of schemes and programs spread throughout a variety of laws and regulations. Keep in mind, however, that the government-controlled social security system in India applies to only a small portion of the population.

Furthermore, the generally accepted concept of the social security system includes not just an insurance payment of premiums into government funds (like in China), but also lump sum employer obligations.

Generally, India’s social security schemes cover the following types of social insurances:

India Regulatory Brief: Central Bank Raises ATM Withdrawal Limits and India, Singapore amend Tax Treaty

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Central Bank Increases ATM Cash Withdrawal Limit

India’s central bank the Reserve Bank of India (RBI) on December 30 raised the daily ATM withdrawal limit to US$65 (Rs 4,500) from January 1, from the earlier limit of US$36 (Rs 2,500) per day. The weekly limit of US$351 (Rs 24,000) remains the same; for traders the limit is US$732 (Rs 50,000) per week. The development comes after the RBI stated that there should be enough currency notes in circulation following the surprise demonetization of the US$7 (Rs 500) and US$14 (Rs 1000) rupee notes on November 8. While the increase in withdrawal limit is welcome, most ATMs still do not have enough cash, particularly in big cities like Delhi, Mumbai, Kolkata, Chennai and Bangalore. A report by a leading newspaper stated that only 40 percent of the 220,000 ATMs in the country. Other reports say that the situation will fully normalize by March. Analysts have questioned the regulation saying that the increase in cash withdrawal might make the situation worse as the new currency is still not enough to meet demand.

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