Economy & Trade

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 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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Choked: Cleaning up the Air in Indian Cities

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By Pritesh Samuel

As India continues to expand its economy through rapid industrialization, the government faces an uphill task of cleaning its air, particularly in the main cities of Delhi, Mumbai and Kolkata. While Delhi has been in the limelight for being the most polluted, especially during the winter months, smaller tier II cities in the country fare worse. In data compiled by the Central Pollution Control Board (CPCB) smaller cities such as Raipur, Ghaziabad and Allahabad had Particulate Matter 10 (PM10) levels of 225 or worse. The World Health Organization (WHO) prescribed safe limit for PM10 is 20. A report by WHO in May 2016 also showed that Gwalior, Patna and Raipur had overtaken Delhi in deteriorating air quality. Further data also showed that cities in southern India fared much better than cities in the north. Between 2011 and 2015, data showed that Delhi’s air quality was worse than Beijing and Shanghai in China.

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India PAN Numbers and Application Procedures for Foreign Investors

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By Dezan Shira & Associates

Editor’s Note: The article was first published in August 2013 has been updated as of December 29, 2016 to incorporate the latest changes.

In India, the permanent account number (PAN) is a ten character alphanumeric code combination allotted by the Indian Income Tax Authorities to individuals and registered entities. The PAN’s key function is as an all-in-one form of identification, but it also acts as a factor for all financial transactions; thereby maintaining a track-record of an individual’s financial transactions. Through this, PANs help in avoiding tax evasion and also support compliance of applicable laws.

All foreign directors or responsible persons engaged by the Indian subsidiary of a foreign-invested business must register for a PAN if they wish to operate their company accounts, regardless of whether they are based in India or not.

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India Market Watch: Imported PoS Machines Exempt from Labelling, Government Reduces Electronic Transfer Charges

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Imported PoS Machines Exempt from Mandatory Labelling

The Indian government has decided to exempt mandatory Bureau of Indian Standards (BIS) labelling of imported PoS (Point-of-Sale) machines until March 31, 2017. This exemption has been implemented to expedite shipments and facilitate cashless digital payment particularly after the government’s recent demonetization rule. BIS is the National Standards Body of India that covers product quality certification. As per the earlier rules, imported PoS machines required mandatory BIS certification and standard logo for custom clearance and sales in India.

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Taking Advantage of India’s Improving Business Environment – New Issue of India Briefing Magazine Out Now

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ib-2016-04-improving-business-environmentThe new issue of India Briefing magazine, titled “Taking Advantage of India’s Improving Business Environment“, is out now and available as a complimentary download in the Asia Briefing Publications Store through the month of December.
                        

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India Market Watch: GST Deadline Looks Increasingly Improbable, India and UK Sign Ease of Doing Business MoU

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Goods and Services Tax (GST) Regime Looks Set to Miss April 1 Deadline

A direct fallout from Prime Minister Narendra Modi’s shock demonetization announcement on November 8, rising acrimony from the political opposition threatens to block any progress towards implementing the GST regime. A major obstacle is reaching an agreement between central and state financial officials over the administration of the GST. Some states are also holding their ground over the issue of compensation for revenues they fear will be lost once the GST gets launched. On the other hand, the government is of the firm view that a central agency must audit and scrutinize taxpayers; dual agencies for the same would result in discrepancies, and be at cross-purposes with the reformed tax regime.

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Industry Spotlight: India’s Growing Aviation Sector

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By Pritesh Samuel

India’s Aviation Market is on a high growth path and aims to be the third-largest market by 2020 and the largest by 2030. At present, India is the ninth largest civil aviation market with a size of around US$ 16 billion. The growth of the airline industry is also expected to boost other sectors from manufacturers, ground handling services, tourism boards, shippers, and so on. The city of Bangalore in the southern state of Karnataka is India’s aviation manufacturing hub and accounts for around 65 percent of the country’s aviation manufacturing output.

India’s domestic passenger air traffic has grown steadily; it rose by 23.14 percent between January and August 2016, to reach 64.47 million from 52.36 million during the same period in 2015. Aircraft movement as of July 2016 at Indian airports was 168,400, which was a 14.3 percent increase over that observed during the same period last year. International aircraft movement also increased by 8.2 percent, compared to last year. The Centre for Asia Pacific Aviation (CAPA) states that domestic air traffic is expected to cross 100 million passengers by financial year 2017, compared to 81 million passengers in 2015. While the Indian aviation market is extremely competitive, airlines operating in the country are expected to record operating profits of US$ 1.29 billion in 2016. The air transport sector supports 8 million jobs and contributes around US$ 72 billion to the GDP. Foreign investment in the sector from April 2000 to March 2016 was valued at US$ 931.05 billion.

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