Tax & Accounting

GAAR to Take Effect in India from April 2017

Posted on by
By Koushan Das 

India will adopt the General Anti-Avoidance Rules (GAAR) with effect from April 1, 2017. GAAR is an anti-avoidance regulation that allows tax authorities to deny tax benefits on transactions conducted with the purpose of avoiding taxes.

While tax avoidance regulation in India is currently governed by the Specific Anti-Avoidance Rules (SAAR), it was not considered comprehensive enough by the government, leading to the formulation of GAAR. However, SAAR regulations will continue to be applicable in addition to GAAR provisions: GAAR will cover those avoidance cases which fall short of SAAR regulations.

Continue reading…

POEM to Determine Tax Residency in India from April 2017

Posted on by

By Dezan Shira & Associates

The Central Board of Direct Taxes (CBDT) recently finalized the guidelines for Place of Effective Management (POEM) regulations in India, which will come into effect from April 1.

POEM is an internationally recognized test for determining the residence of a company incorporated in a foreign jurisdiction. Intended to curb corporate tax evasion, the new norms will apply to the assessment year 2017-2018 and subsequent assessment years. There will be no retrospective assessment.

Continue reading…

Will India Change the Dates of its Financial Year?

Posted on by

By Dezan Shira & Associates 

The government-appointed Shankar Acharya committee has recommended that India shift from the current April to March financial year to a January to December financial year. If the government agrees to go ahead with the recommendation, it can confine this year’s fiscal year to nine months up to December 2017 or make the change in the 2018 fiscal year.

The government will discuss this plan further during the Union Budget on February 1. Many expect the government to make an announcement in the near term.

Continue reading…

Service Tax for Internet Based Services in India from December 2016

Posted on by

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.

Continue reading…

Lower Income Tax on Digital Turnover for Small Businesses in India

Posted on by

By Melissa Cyrill

Responding to the challenges arising from the demonetization of high value currency, the government has been keenly promoting digital financial literacy across the country. In fact, a new mantra has emerged towards the development of a cashless economy. Towards this, several new initiatives have been unveiled including widespread campaigns to spread the adoption of digital payment mechanisms, such as the ‘Digi Dhan Abhiyan’ by the Ministry of Electronics and IT (MeitY). Through the Digi Dhan Abhiyan over 55,000 merchants have begun offering digital payment options to rural customers, and more than 2.5 million people in rural areas (districts and blocks) have started using digital modes of payments. Moreover, upon new RBI regulations, Paytm has begun allowing its “registered” merchant customers to transfer US$ 737 (Rs 50,000) to their bank accounts; the maximum limit was US$ 368 (Rs 25,000) earlier.

Continue reading…

Tax Planning for NRIs Returning to India

Posted on by

By Tracie Sloop Frost

Editor’s Note: This article was first published on July 29, 2015 and has been updated to accommodate regulations.

The decision to return permanently to India is a serious matter for many Indians living abroad. Not only does this decision involve questions of familial and social benefits, health considerations, and nostalgia for home, it also requires careful financial planning and preparation. In this article, we examine some of the most common areas of financial planning for returning Non-Resident Indians (NRIs).

In general, investment and tax provisions relating to NRIs returning to live in India are fairly generous. However, NRIs should carefully plan their return to India to ensure there are no surprises with respect to managing their overseas income and investments.

Continue reading…

The Applicability and Calculation of Gratuity in India

Posted on by

By Dezan Shira & Associates

Editor’s Note: This article was originally published on June 4, 2013, and has been updated as of November 23, 2016, to include the latest gratuity regulations.

Gratuity is a lump sum that a company pays when an employee leaves an organization, and is one of the many retirement benefits offered by a company to an employee.

In India, the basic requirements for gratuity are set out under the Payment of Gratuity Act 1971. An employer may also choose to pay gratuity outside of that which is required by this Act.

In this article, we discuss gratuity in terms of:

  • Applicability;
  • Calculation;
  • Tax exemption;
  • Payment; and
  • Forfeiture.

Continue reading…

Simplifying Personal Tax Filing in India – Digital Solutions and New Initiatives by the Government

Posted on by

By Melissa Cyrill

India’s Central Board of Taxes (CBDT) is gradually unveiling a slew of initiatives that seek to expand the country’s taxpayer base by increasing institutional transparency and easing assessment and payment process for taxpayers. Mostly in the form of digital solutions, the CBDT aims to revamp the country’s laggard tax administration infrastructure by implementing an efficient paperless system and simplifying the existing communication interface.

Continue reading…

Scroll to top