The Income Tax department has notified the new Income Tax return forms (new forms) for the tax year 2018-19 on April 01, 2019. Upon analysis of the new forms, one can observe that the Income Tax authorities are seeking detailed disclosures by delving into the finer details of the nature of income. The additional disclosures … More Are you ready for the new era of enhanced reporting in your Income Tax return?
The attribution of profits to permanent establishment (PE) is one of the most litigated aspects of international tax in India. The Central Board of Direct Taxes (CBDT) had formed a committee to examine the existing scheme of profit attribution to PE and recommended changes. The committee’s draft report has been released by the CBDT and … More Indian Government drafts proposals for attribution of profits to permanent establishments (PEs) in India – Focus on India’s demand/market and deviation from TP principles
Gift Tax – Background The provisions of section 56(2)(vii) were introduced as a counter-evasion mechanism to prevent the laundering of unaccounted income under the pretext of a gift, particularly after abolition of the Gift Tax Act. Under the existing provisions of section 56(2)(vii), if an individual or an HUF received any sum of money or … More Gift taxation: Uncertainty prevails after the withdrawal of CBDT circular
The Organisation for Economic Co-operation and Development (OECD), in the process of providing an answer on taxation of digital economy, issued a public consultation document titled “Addressing the Tax Challenges of the Digitalisation of the Economy” on 13 February 2019. The consultation document provides an opportunity to the interested parties for putting down their views … More Digital Tax: Taking a step ahead and expanding the footprint!
The Indian Government has been, for a long time, seeking to curb the menace of black money especially that is hoarded overseas. Mandating the reporting of foreign assets by a resident and ordinarily resident tax payer in the India Tax Return (ITR) from tax year 2011-12 onwards was an effort in this direction which strengthened … More Have undisclosed foreign assets and income? You could be prosecuted
“The hardest thing to understand in the world is the income tax”- Albert Einstein. The emergence of diverse business models in a digital economy and the responses (and proposed responses) of various governments to tax companies in this space are certainly vindicating Einstein! Some of such models include (spotted as of today and still evolving) … More Digital Tax: The journey so far and what lies ahead
India has experienced the completion of its first financial year of the much-awaited Goods and Services Tax (GST) from 1 July 2017 to 31 March 2018. This contemporary regime held high aspirations digitally by mandating taxpayers to undertake transaction-level reporting of its business on to its information technology/Goods and Services Tax network (IT/GSTN) platform. It … More GST audit – it is the time to reconcile
India and China are two of the world’s oldest civilizations. Cultural and economic relations between China and India date back to ancient times. Despite political issues over the years, the relations between India and China have steadily improved and strengthened in various fields of mutual interest. Indian Prime Minister Narendra Modi and Chinese President Xi … More Protocol amending India-China DTAA: Embracing the change!
In India, it is a settled principle of law that the tax treaties cannot create more onerous obligations or liabilities independent of enabling provisions under the domestic law. As such, where any income is exempt under the provisions of domestic tax law, the tax treaty cannot create a fresh tax liability. Internationally, most of the … More Can tax treaties be used to create a tax liability?
General Anti-Avoidance Rules (GAAR) represents a set of rules that provide a tax authority the power to deny tax benefits when an arrangement is undertaken without any commercial purpose or substance (i.e., when the arrangement is planned to generate a tax benefit). GAAR, especially the Indian GAAR, is not limited in its application to specified … More Softening the GAAR blow, Canada style: A case study on adopting a nuanced approach to GAAR principles
Employees’ Stock Option Plans (ESOPs) form an integral part in the overall reward framework of an organization. In a typical ESOP, the company grants options to the employees. These options vest over a period of time, subject to certain conditions. On fulfilment of the vesting conditions, the employees get the right to exercise the options … More Unfolding the ESOPs’ taxation conundrum
TP litigation in India High-pitched transfer pricing (TP) assessments have been in headlines in India for about a decade now. The first round of TP assessments commenced during financial year (FY) 2004-05 and since then, the number of cases scrutinized and the quantum of TP adjustments have been rising with TP adjustments of approximately US$10.8 … More SQL redefined: Silver lining or double-edged sword
With the FIFA World Cup 2018 unfolding so many surprises, football fever has certainly reached a crescendo in India, having caught the attention of many in a nation where football may have otherwise been considered dormant some time ago. Moving to the tax and finance arena, another term which may have caught one’s attention in … More “Value” lies in the eyes of the beholder?
Family owned businesses have been among the oldest and few of the most thriving businesses. Some of the largest and oldest corporations in the world – [Takenaka Corporation, Merck, Wendel, Franz Haniel, Molson Coors Brewing, Jeronimo Martins and Thomson Reuters] to cite a few, have emanated out of family owned, controlled and managed businesses. Over … More Family governance: – A mirror, sword and shield
Of the various “no tax evasion” objectives of the pre-GST regime, the requirement of state permits for the movement of goods into various states has been adopted by the GST law as well. The GST law has contemplated the requirement of a document, the E-Way Bill, for any movement of goods exceeding a consignment value … More E-Way Bill: A vital piece of the GST jigsaw
Changes are made to the Income tax return (ITR) forms almost every year with the intent of collecting more information and also simplifying the compliance for taxpayers. The Finance Minister has time and again mentioned the need for expanding the taxpayer base and fighting tax evasion. With technology playing the role of an enabler, the … More New ITR forms: Get ready to share more details in your tax return
More controversy expected As Indian companies breathed a sigh of relief after meeting the first compliance deadline of filing of Country-by-Country report (CbCR) and Master File (MF), what could lie ahead is more controversy and questioning from tax authorities as they gain access to new sources of information and increased transparency across the globe. This … More Is a surge in TP controversy post the MF and CbCR filing likely?
Global mobility is a dynamic arena that often throws up new challenges for even the most seasoned professionals. However, one question that has been around for a long time is: Can employers consider tax treaty relief while determining withholding taxes for their employees? While there are strong technical arguments in favor of considering the tax … More The winds of change have begun to blow. Are you set to claim tax relief at tax withholding stage?
Union Budget 2018 is going to be the last full-year budget before the upcoming Lok Sabha Elections in 2019 and therefore there is a lot of speculation that it will be a populist budget. However, in an interview on 24 January, Prime Minister Narendra Modi gave indications that his Government will stay the course of … More Budget 2018: Transfer pricing expectations
The present corporate tax rate in India and dividend distribution tax (DDT) together account for around 46%—50% of the effective tax rate for domestic companies. With the recent amendment to US tax laws, resulting in the reduction of corporate tax from 35% to 21%, India may be under greater pressure to reduce the tax burden … More Budget 2018: DDT – Will it be abolished?
Like every other year, there are a number of “asks” the country (both individuals and corporates) may have from the Finance Minister this Budget — reducing corporate tax rates, doing away with dividend distribution tax and increasing the tax exemption limit to name a few. And as budgets go, something or someone may have to … More Will the Government’s “digital” agenda fund the much-anticipated tax cuts in this Budget?
The Finance Minister is in an unenviable position of having to meet multiple expectations ranging from that of corporates or businesses seeking “relief” after GST implementation The country is abuzz with discussions around the upcoming National Budget to be presented by the finance minister (FM) on February 1, 2018. Since we Indians are an opinionated … More Expecting a populist Budget 2018? FM’s hands could be tied by fiscal constraints
Till a few years ago, the Union Finance Budget used to be the country’s signature tax event of the year. However, the recent past has seen tax-related changes roll in through the year, so much so that every month has taxpayers understanding and debating new developments, thereby consigning the Budget to a lower pedestal. The … More Transfer pricing in 2017 and what it means for the future
The latest National Income estimates from the CSO released on 5 January 2018 indicate a recovery in economic growth beginning 2QFY18 after a fall in the growth rate for five consecutive quarters. This recovery augers well for the fiscal prospects for the latter half of FY18 and for FY19. The World Bank has also estimated … More Budget FY19: A macro-fiscal perspective
Determination of tax residence based on the Place of Effective Management (PoEM) has been in force in India since April 2016, with guidance and clarification from tax authorities issued in January 2017. The guidance has shed more light on cases that the Government intends to cover within the ambit of the PoEM regulations. However, as … More Place of Effective Management – Decoding UK’s Development Securities decision in the Indian context
Recently, OECD released an update to the OECD model convention and commentary (“2017 update”). The 2017 update largely consists of amendments agreed upon as part of the BEPS project and follow up work thereon. In addition, it incorporates certain other changes that were released for public comments previously and finalized now. It also contains the … More India’s position on the “2017 OECD update”: Deviating from an international consensus?
The transfer of share or interest in a foreign company or entity deriving substantial value from assets located in India is taxable in India. However, where such transfer outside India is a consequence of a direct redemption or sale of an investment in India which is chargeable to tax in India, application of indirect transfer … More Relaxation from application of indirect transfer provisions to alternative investment funds
Change is certain, and the digital world is changing exponentially. It started with smartphones, which impacted the masses and led to the emergence of smart lives. As digitization and automation continue, it is now the time for smart businesses. Among many fast-emerging disruptive technologies, blockchain technology seems to have the potential to revolutionize businesses and … More Blockchain technology: Possible future of digital transfer pricing
Digitalization of the global economy has happened at a tremendous pace and a large scale, permeating almost all areas of society. However, emergence of new business models have made it harder to tax businesses possessing a digitalized value chain. Conventional source allocation rules related to brick and mortar structures are not apt for the digital … More Taxation in digital economy, making way legally
The Organisation for Economic Co-operation and Development (OECD) commenced work on the Base Erosion and Profit Shifting (BEPS) project to address concerns that existing principles of domestic and international taxation were failing to keep pace with the global nature of modern business models. As a member of the G20 and an active participant in the … More Master file notification: Expectations, impact and risk areas for MNCs
OECD proposes changes to be incorporated in the 2017 update to the OECD Model Tax Treaty The Organisation for Economic Co-operation and Development (OECD) on 11 July 2017 released the draft contents of the update to the OECD Model Tax Convention (the 2017 update). Among a number of other proposals, the 2017 update contains changes … More Developments in International Tax: An update and its impact
Tax treaties are based on a set of common principles designed to eliminate double taxation that may occur in the case of cross-border trade and investments. The current network of bilateral tax treaties dates back to the 1920s and the first Model Tax Convention developed by the League of Nations. The Organisation for Economic Co-operation … More The Multilateral Instrument and the future of bilateral tax treaties
Formulating anti-BEPS (Base Erosion and Profit Shifting) measures for cases where companies were deemed to not have a Permanent Establishment (PE) despite substantial business activity, was a key priority for the Organisation for Economic Cooperation and Development (OECD) in its BEPS project. Recommendations and outcomes from the OECD Action Plan 7 of the BEPS project, … More The evolution and rethink of the Permanent Establishment concept as a consequence of BEPS
With an ever-evolving global taxation landscape, it has become essential to be in sync with the changing rules and regulations. The OECD BEPS global tax agenda has led to various countries proposing/implementing changes in their local laws to align with the themes laid out in the BEPS Action Plans. Recently the OECD released the text … More The road to counter BEPS
Globalization has brought about a boom in the movement of employees to different countries to acquire specialized technical skill and expertise. Over the years, we have seen organizations coming out with various assignment models to send their employees abroad. This trend offers many benefits to employees apart from bolstering their career and creating an international … More Global mobility and evolving changes
Buyback tax (BBT) provisions were introduced in the Income Tax Laws (ITL) in 2013 to check tax avoidance by unlisted companies, which resorted to buyback of shares instead of dividend distribution, particularly where the buyback distribution proceeds were tax-exempt for overseas shareholders under the treaty network. BBT is payable by domestic unlisted companies in the … More Taxation of buybacks by unlisted companies: a step toward greater clarity?
India’s GST journey is in its critical phase with GST Council debating important issues like rate structure, administrative ease and GST law. Multiple rate structure is the pragmatic way forward, and aligned to what CEA report indicated. While debate around what will fall in which rate basket continues, it’s important we have consistent classification across … More ‘Avoid cess, increase GST peak rate’
India is on the verge of going live with the long over-due indirect tax reform, the introduction of Goods and Service Tax (GST). Despite certain delays, the Constitutional Amendment Act which empowers the Center and State to simultaneously tax the same transaction was enacted in September 2016. In the run-up to the target date of … More Can GST effectively guide the e-commerce package?
Through this article, V.S Krishnan, Advisor, Tax Policy Group, EY India (Former member of CBEC) shares his view on how expenditure switching from tax incentives to infrastructure spending could benefit small and medium units as a whole.
Further, he opines that irrespective of big or small units, the self-policing mechanism provided by the GST design and tracking of every transaction by the GSTN system will ensure a more level playing field for all.
GST is expected to transform the Indian economy in the medium to long term. The new GST framework would result in the development of a common Indian marketplace, reduce the cascading effect of multiple layers of taxes and increase revenue buoyancy for the Central Government (Government) and most of the state governments. By leveraging an … More India’s looming Goods and Services Tax (GST): considerations for the pharmaceutical industry
Over the past few months, there has been significant progress on Goods and Services Tax (‘GST’). GST is the most significant indirect tax reform proposed to be implemented in the history of Independent India. A GST regime aligned with overall objectives of removing the cascading, unifying the Indian market, simplifying administration and compliances and ease … More Has GST dialled the right number?
The media and entertainment (M&E) sector has seen overall growth in all the segments, driven by rapidly rising incomes and evolving lifestyles. However, the M&E sector is plagued by multiple taxes at each level of the supply chain, leading to a complex tax structure with tax compliances at the Union, state and municipal levels.