Legal & Regulatory

India Regulatory Brief: GST Schedule for Goods and Services, RBI Removes Restrictions for Bank Branches

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Final GST schedule released for goods and services

The GST Council, which is the federal agency regulating the new indirect tax structure in India – the Goods and Services Tax (GST) – published a detailed list of tax rates late last week.

The final GST schedule aligns 1,211 goods in six separate categories; barring the exemption list, there are five slabs of taxation. These fall under 5 percent, 12 percent, 18 percent, 28 percent, and 28 percent plus cess. For services, the tax structure is similar. Further, all e-commerce vendors will be liable to pay one percent tax collected at source under the GST regime.

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A Guide to Franchising in India

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By Bradley Dunseith

India offers enormous potential for foreign franchisors who tailor their brand to fit into the country’s dynamic consumer market. India’s huge market has created a space for competitive franchises to thrive while rising incomes have enlarged the demand for foreign brands.  

To succeed in the Indian market, franchisors will need a robust understanding of the country’s regulatory structure due to the absence of comprehensive franchise-centric legislation.

In this article, we explain the entry strategies for foreign franchises interested in establishing an Indian presence. We then highlight the legal precautions necessary for such companies to secure their position in the Indian market.

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India Regulatory Brief: Online Portal for Filing Tax Returns, RERA in Effect since May 1

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Tax department launches online filing of tax returns

Filing tax returns online will be the norm in India for the Assessment Year (AY) 2017-18 onwards as the Income Tax department launched its e-filing portal in May. This online portal facility can be accessed for filing all categories of Income Tax Returns (ITRs). This year, the Central Board of Direct Taxes (CBDT) launched all the seven ITR forms for AY 2017-18 on March 31. Income tax returns need to be filed by July 31 every year.

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The New Benami Act – Considerations for NRIs and Foreign Investors

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By Bradley Dunseith

In Prime Minister Modi’s war against ‘black money’ the Indian government is attempting to tighten up a real estate strategy for tax evasion: Benami properties. 

Benami means ‘anonymous’ or ‘without name’ in Hindi. A Benami property refers to property bought in the name of a secondary person so as to conceal the identity of the real buyer. Individuals generally purchase Benami properties in the name of relatives to conceal the extent of their wealth from the government. Real estate developers, on the other hand, buy Benami properties to sidestep stringent land ceilings – using proxy companies to make the actual purchase.

The new Benami Transaction (Prohibition) Amendment Act, 2016 ups the maximum punishment for owning Benami properties from the former three years of jail time to the current five years of jail time and a fine. The new Act further allows authorities to permanently confiscate Benami properties without compensation to the former owner.

The federal government of India has reported that 140 cases have already been filed where Benami assets are worth more than US$31 million (Rs 200 crore).

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The Aadhaar Card: Now a Mandatory Proof of Identification

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By Vasundhara Rastogi

The Aadhaar card contains a twelve-digit unique identification number issued by the Unique Identification Authority of India (UIDAI) to all individuals residing in India, regardless of their citizenship. This means it is applicable for non-resident Indians (NRIs) and foreign residents, as well.

According to the Aadhaar Act, 2016, a ‘resident’ is an individual who has resided in India for 182 days or more in total in the previous one year prior to the date of application for Aadhaar. It is therefore applicable to expatriates who reside in India on long-term visas. However, Aadhaar is only meant to serve as a proof of identity and address, and does not equate to Indian citizenship.

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Establishing a Business in India – Offices, Partnerships, and Companies

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By Bradley Dunseith

A physical presence in India is essential to break into the country’s emerging market. But establishing the right kind of presence can mean the difference between success and wasted efforts.

Foreign companies should consider state regulations, physical connectivity, and local costs when choosing a location for their Indian office. Of equal importance is the type of Indian presence foreign companies choose.

India’s Reserve Bank of India (RBI), in conjunction with the Registrar of Companies, allows for several types of offices – Liaison, Branch, and Project – in addition to firms and partnerships for foreign companies hoping to establish themselves.

Here, we run you through a short description of each type as well as their respective benefits and drawbacks.

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India Regulatory Brief: Cross-Border Mergers Approved for Indian Businesses, Aadhaar Now Mandatory for Expats

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Indian businesses now cleared for cross-border mergers

In a major push to attract greater foreign direct investment (FDI), the federal government has greenlit cross-border mergers in India if they are approved by the Reserve Bank of India. This means that Indian business entities can now negotiate mergers with foreign companies, after meeting select criteria. The policy shift opens up the merger and acquisitions (M&A) landscape in the country and incentivizes foreign companies to enter the Indian market more aggressively.

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India Regulatory Brief: India-Cyprus DTAA in Effect, GST Taxpayers to be Rated on Compliance

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India-Cyprus Double Tax Treaty Agreement in force from April 2017

Tax authorities in Cyprus recently confirmed that the ratification procedures supporting the country’s Double Tax Treaty Agreement (DTAA) with India were finalized. 

This operationalizes the Treaty for the Avoidance of Double Taxation, which was signed on November 18 last year, following which the DTAA between Cyprus and India came into force on December 14.

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