Jun. 25 - The Indian government has proposed significant changes to its tax code, which is to be amended by the revised discussion paper due to be submitted, following extensive consultations, to Parliament soon. In this article we discuss the background to the tax code, the proposed changes and what they mean for the India-based business.
Background
The existing Income Tax Act of India was enacted in 1961. It replaced the first Income Tax Act of 1922. Thus, historically, the first Income Tax Act was operational for almost 40 years and the existing one has been in place for almost 48 years. Little change has been made during this time – up until the current proposals. Read the rest of this entry »
Jun. 25 – India will exempt tax on services that deal with low-cost housing construction, power distribution, services within ports and airports, selected tournaments and championships, foreign travelers in transit and those flying to and from the northeast starting July 1.
“Repair of ships or boats or vessels belonging to the Government of India, including the Navy or the Coast Guard or the Customs, but does not include government owned public sector undertakings,” the Central Board of Excise and Customs (CBEC) said as to the services exempted from tax. Read the rest of this entry »
Jun. 23 - The revised discussion paper on India’s new Direct Tax Code has assured that Double Tax Avoidance Agreements (DTAA) made with other countries will not be annulled when the new tax code is implemented.
Specifically the paper says that, “The current provisions of the Income-tax Act provide that between the domestic law and relevant DTAA, the one which is more beneficial to the taxpayer will apply.” Read the rest of this entry »
Jun. 18 – The newest version of the discussion paper on the Direct Tax Code has clarified the definition of residence for foreign companies in India assuaging fears that companies may be inevitably taxed on their global income.
The paper offers a clearer definition of residency specifying that a foreign company will be considered an Indian resident if the place of effective management or place of central control and management occurs in the country. It defines the place of effective management as the location where key management and commercial decisions that are needed to run the corporation are made. Read the rest of this entry »
Jun. 18 - India may allow companies in all sectors paying the minimum alternate tax (MAT) to credit it against corporate tax that can be carried forward for 10 years according to a revised discussion paper released on Tuesday.
Currently, MAT is levied at 19.93 percent of book profits. The long awaited Direct Tax Code (DTC) is proposing that the MAT be levied at 0.25 percent of the value of gross assets for banking companies and two percent of the value of gross assets for the rest with no option of using the tax credit in the following year. Read the rest of this entry »
Jun. 16 - There is a major change to the taxing of foreign institutional investments (FIIs) in the revised direct taxes code bill being proposed by the Indian government.
Under the new revised bill, capital gains of FIIs will not be treated as business income and hence not subjected to TDS. Instead they will be treated as capital gains. Read the rest of this entry »
Jun. 10 - India wants to open overseas tax units in Britain, Cyprus, France, Germany, Japan, Netherlands, United Arab Emirates, and the United States to fight tax evasion.
The international trade of goods is making tax computation more complicated for both businesses and government. India is implementing measures that will provide transparency when it comes to tax-related information from overseas tax jurisdictions to prevent tax evasion in cross-border transactions. Read the rest of this entry »
Jun. 9 – India’s Central Board of Direct Taxes (CBDT) recently updated regulations relating to the mode of payment, certificate issuance, and provision date for taxes deducted at source (TDS) in Notification No. 41/2010; SO No. 1261(E) dated May 31. The amended rules are backdated so as to begin April 1, 2010.
Under the updated regulations, the tax deduction account number of the deductor, the permanent account number of the deductee, and the receipt number of the TDS return will now be combined to form a unique identification that will allow taxpayers to claim tax credits in their income tax returns. The new TDS forms have also been updated to include the receipt number of the TDS return. Read the rest of this entry »
Jun. 8 – The Securities and Exchange Board of India (SEBI) will slow the issuing of licenses for foreign investment vehicles based out of the South Indian Ocean tax haven of Mauritius. Speculation is high that the Indian government is using subtle pressure tactics to try and rework a bilateral tax treaty signed 28 years ago.
The current treaty allows investors from Mauritius to enjoy tax-free capital gains on investments in India, whether short term, long term, on the stock market, or off the market. Domestic investors meanwhile, must pay 15 percent on short-term capital gains and are also taxed on long-term capital gains if the asset is sold off the stock exchange. Read the rest of this entry »
Jun. 1 – India’s Ministry of Corporate Affairs (MCA) issued General Circular No. 2/2010 on May 26 which featured the establishment of the Easy Exit Scheme (EES), a process that will assist the Registrar of Companies (RoC) to remove inoperative companies from the Register.
With the addition of the EES, the RoC now has to:
