Knowledge Center

  • Article: Service PE – A New Era of Litigation – International Taxation – Published by Bloomberg Tax Planning International – Asia Pacific Focus

    September 13 2017

  • New rate of Service Tax w.e.f 1st June, 2015

    May 20 2015

    The Finance Ministry has issued Notification No.14/2015-Service Tax, dated 19th May, 2015. The rate of Service Tax is being increased from 12% to 14% (including cesses). The increase in Service Tax rate will come into effect from 1st June, 2015.

    Link for brief summary for determination of Point of Taxation (POT) vis-a-vis change in effective rate of tax.

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  • Indian poem_A Melodious Reading – Article published by International Tax Review

    April 28 2015

    The India Budget 2015 proposed a number of amendments to the existing law as far as International Taxation is concerned. The union Budget 2015 proposes to amend the Indian Tax Laws (ITL) to provide clarity on taxation of indirect transfer of Indian assets, defer implementation of General Anti Avoidance Rules (GAAR) by two years, reduction of withholding rates for payment of royalties and fees for technical services,  clarity on taxation of interest paid by a branch of a foreign bank in India to its head office, enabling provisions to frame foreign tax credit rules, taxation of offshore funds which have fund managers based in India, reporting requirements for foreign payments etc.. All these proposals are welcomed by the International Community and are in line with the Government’s assurance of a non-adversarial and certain tax regime. However, one proposal which is viewed as against the Government’s assurance is the introduction of Place of Effective Management (POEM) concept as a test for determining corporate residency.

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  • Amount to be disallowed from payments to Non-Residents on which tax is deductible u/s 195

    February 14 2015

    On what amount TDS u/s 195 is required to be deducted while making payments to non-residents? Whether on gross amount or on net amount i.e. only on the income element ? In case where TDS has not been deducted what amount should be taken as base by the Income Tax officers for treating the assessee as being in default??? 

    The CBDT earlier directed AOs u/s 119 that in a case where the assessee fails to deduct TDS u/s 195, the Income Tax officer cannot treat the whole sum remitted to the non-resident as being chargeable to tax but he has to determine the appropriate proportion of the sum chargeable to tax as mentioned in s. 195(1) for treating the assessee as being in default u/s 201. Such appropriate proportion of the sum would depend on the facts & circumstances of each case i.e. nature of remittance, income component therein etc..

    Further to the above, disallowance regarding "other sum chargeble" under section 40(i)(a) is triggered when the deductor i.e. resident payee fails to withhold tax as per provisions of Section 195 of the Act. Akin to the chargebility and withholding of taxes on the whole amount or proportionate amount, concerns have been raised on the amount to be disallowed in such a situation.

    The CBDT has vide circular No. 3/2015 dated 12th February, 2015 has clarified that "the appropriate portion of the sum which is chargeable to tax under the Act shall form the Basis of such disallowance and shall be the same as determined by Assessing Officer jurisdiction for the purpose of Section 195(1).

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  • Form FC – GPR for issue of shares to Non-Residents – to be filed Online

    February 13 2015

    Reserve Bank of India, has, with a view to promote, the ease of reporting of transaction under Foreign Direct Investment, has enabled the Online Filing of Form FC- GPR - which a company submits to RBI for reporting the issue of eligible instruments to the overseas investor against the above mentioned FDI inflow.

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  • Availment of CENVET Credit -within Six Months – A welcome Clarification

    November 20 2014

    During the Budget 2014 Central Excise and Service Tax department had amended the CENVAT credit rules prescribe that manufacturer or output service provider shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of Rule 9.(Ref. Circular No. 21/2014-CE (NT) dated 11.07.2014)

    However the concern have been expressed by the Industry while taking re-credit in the following situation the limitation of six months may be hit and the entire credit cannot be taken.

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