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- DIRECT TAX CODE: - WHAT TO EXPECT On November 22, 2017, the Ministry of Finance (Finance Ministry), set up a task force to draft a new direct tax law (Direct Tax Law/DTL) to replace the five-decade old Income tax Act, 1961 (Income tax Act/Act), to align with the direct tax system prevalent in various countries, international best practices, the economic needs of the country and other related matter...
- ASSESSING THE EFFICACY OF GRANDFATHERING RELIEF UNDER INDIA-MAURITIUS TAX TREATY Introduction Recently Slovenia became the fifth country to ratify the Organisation for Economic Cooperation Development’ (“OECD”) Multilateral Instrument (“MLI”) which is to come in force from 1 July 2018...
- INDIA'S FOCUS ON ANTI-ABUSE PROVISIONS IN TAX TREATIES WITH SPECIFIC REFERENCE TO THE INDIA-HONG KONG TREATY Introduction On March 19, 2018, India and Hong Kong signed Double Taxation Avoidance Agreement (DTAA). The DTAA will stimulate the inflow of investment, technology and personnel. The DTAA improves tax transparency, curbs tax evasion and tax avoidance...
- CAPITAL OR REVENUE - PANDORA'S BOX RELEASES TAX UNCERTAINTY Classification of an income or expenditure as “capital” or “revenue” nature can have a profound effect from an income tax perspective. India’s principal legislation on income tax i.e. the Income Tax Act, 1961 (the Act), in general seeks to levy tax on receipts, income, gains etc...
- BUDGET 2018 - IMPACT ON M&A TRANSACTIONS With India inching towards election in 2019, a lot was expected from the Finance Minister in the 2018 budget. Many policy announcements focusing on development of agriculture, rural economy, healthcare etc. have been made in the Finance Bill, 2018 (‘Budget 2018’)...
- NEW SCHEME FOR 'SCRUTINY' ASSESSMENT UNDER FINANCE BILL 2018 - LITIGATION GAMECHANGER? The filing of an Income Tax Return (ITR) by a taxpayer (Assessee) for any Assessment Year (AY) in accordance with the provisions of section 139 of the Income Tax Act 1961 (the Act) ordinarily results either – (a) The ITR be...
- BUDGET 2018: REINTRODUCTION OF CAPITAL GAINS TAX ON LISTED SECURITIES The Hon’ble Finance Minister (FM) pronounced the Budget on 01 February 2018 and has introduced new tax regime for taxation of long-term capital gains (LTCG) on sale of listed equity shares and units of equity oriented funds and business trusts...
- BUDGET WISHLIST - CLARIFY STAND ON SECONDMENT ARRANGEMENTS With the thrust of the current government on ’Make in India’ and India’s ascent in the ’Ease of Doing Business’ rating, it is expected that more and more foreign companies will start manufacturing within India...
- TAX CHALLENGES ON ADOPTION OF IND AS Background In 2011, the Ministry of Company Affairs had issued the Indian Accounting Standards (Ind AS) i.e., the standards that are converged with the International Financial Reporting Standards. However, it was deferred and on 16 February 2015, the MCA notified the Companies (Indian Accounting Standards) Rules, 2015 in exercise of power conferred by section 133, read with section 469, of the Companies Act, 2013...
- UNION BUDGET 2018-19 TO AID RESTRUCTURING OF CORPORATES? With less than a week to go before the India’s Union Budget for the financial year 2018-19, there is lot of debate between pundits from various schools of thought. Given the past three budgets in the reign of Prime Minister Narendra Modi, the tax laws and the corresponding regulations have been rationalised, resolving many ignored/ untouched issues...
- BEPS PROJECT AND ITS INDIAN PREMIERE Introduction The OECD/G20 Base Erosion and Profit Shifting (BEPS) project has been lapping at India’s shores since a few years; it is now at the harbor and will soon transform long-standing Indian jurisprudence on international taxation...
- RESTRUCTURING, EVOLVING LANDSCAPE IN THE CURRENT SCENARIO Today, Indian Inc. is gripped by an ever-changing regulatory environment and major industry transformation. To reduce “structural cholesterol,” that is, the stagnant and sticky routines that gradually undermine growth India Inc...
- PLACE OF EFFECTIVE MANAGEMENT RULES - CONFUSION CONTINUES Several changes have occurred and clarifications given since the onset of the Place of Effective Management (POEM). However, has it really served the purpose that the Indian government has been aiming for? The POEM is an internationally recognised test for the determination of the place of residence of a company incorporated in a foreign jurisdiction...
- TAX ON FABULOUS VALUATION Among all the hurdles that Indian start-ups have to cross today, the tax authorities have also emerged as one of them. Start-ups promoted by ex-officials of top shot industry players, B-school alumni and entrepreneurs from diverse stratum, possess doer capabilities and unique futuristic ideas but limited capital and legacy...
- OVERSEAS MERGERS - REALLY TAX NEUTRAL? Recently, there have been a slew of changes in the Indian tax sphere, which impact non–residents. Starting with the advent of indirect transfer taxation emanating from the Vodafone controversy, clarity on non–applicability of Minimum Alternate Tax provisions to foreign companies, developments on the Base Erosion and Profit Shifting front to the recently signed Multilateral Instrument, clearly the intent seems to bring tax laws in line with changing times...
- CRYSTAL GAZING IN TRANSFER PRICING - GLOBAL PROSPECTIVE In 2015, the OECD[1] released final reports on the 15 Action Plans (AP) of the BEPS[2] project which probably, is the most comprehensive work done in the field of international taxation in recent past. BEPS objective is to prevent aggressive profit shifting by ensuring that the remuneration earmarked by entities of a Multinational Enterprise (MNE) shall commensurate not only with the functions performed but with also the control functions undertaken by respective entities related to risk assumed and capital employed coupled with relative value creation...
- SUCCESSION PLANNING THROUGH TRUST Succession planning is a method to essentially transition the management and ownership of the business/ assets earned during one’s lifetime to the next generation of family members in a seamless manner. Business succession and planning are necessary to ensure business continuity, keep the family legacy alive, protect family interests, ring-fence family wealth, manage conflict among family members and is beneficial for various stakeholders...
- SECTION 50CA: IMPACT ON M&A TRANSACTIONS In the recent past, the current government has sought to bring about various economic and policy reforms in order to bring about transparency and ease in doing business, along with curbing tax evasion to the extent possible. In the context of transfer of shares, the government has introduced new sections such as section 50CA and section 56(2)(x) and made amendments to section 10(38) of the Income-tax Act, 1961 (Act)...
- TREATMENT OF LOSS OF ORDINARY BUSINESS V/S SPECIFIED BUSINESS Section 72A Section 72A of the Income-tax Act, 1961 (“IT Act”) deals with the availability of accumulated losses (being loss from business or profession) and unabsorbed depreciation pursuant to an amalgamation, demerger or succession of a firm/ proprietary concern by a company or conversion of a company into a limited liability partnership...
- CROSS BORDER RESTRUCTURING - INDIAN COMPANIES ACT, 2013 In the past, section 394 of the Companies Act, 1956, (Cos Act, 1956) gave flexibility to foreign companies (from any jurisdiction) to merge with Indian companies. However, Indian companies could not merge with foreign companies. Section 230 to 233 of the Companies Act, 2013 (Cos Act, 2013) in relation to Compromise, Arrangements and Amalgamation amongst Indian companies were made effective from 15 December, 2016...