Knowledge Center

  • Changes in FDI norms for Multi Brand Retail Trading

    August 24 2013

    In the case of multibrand retail, government notified its decision to include agri ooperatives in the 30% sourcing from medium and small industry. The new definition of small industry, investment in plant and machinery of up to $2 million against $1 million earlier, has been included in the policy.

    The revised policy also gives states the right to allow FDI-funded multi-brand etail stores in any cities of their choice as opposed to only in those with population of more than 1 million in the current policy.

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  • Review of Foreign Direct Investment (FDI) – caps and routes in various sectors

    August 24 2013

    Falling rupee & poor governance has been in headlines since quite a few days.Further to our updates on 14th August, 2013 "tightening of knot by RBI on foreign outflows" Government of India has taken a series of measures to lure foreign investors by relaxing/liberalizing  Foreign Direct Investment (FDI) norms in various sectors.  The required changes are made part of the Consolidated FDI Policy by way of issue of Press Notes

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  • Draft Safe Harbour Rules for Transfer Pricing

    August 19 2013

    Central Board of Direct Taxes (CBDT), on 14 August 2013 released draft safe harbour rules for public comments. A “safe harbour” is defined in the Income Tax Law as circumstances in which the Tax Authority shall accept the transfer price declared by the taxpayer.  The draft rules propose to provide minimum operating profit margins in relation to operating expenses which a taxpayer is expected to earn for certain categories of international transactions, such as provision of software development services, contract Research & Development (R&D) services, manufacture and export of automotive components etc which will be acceptable to the Tax Authority. The draft rules also provide acceptable norms for certain categories of financial transactions such as intra-group loans made or guarantees provided to non-resident affiliates of an Indian taxpayer.

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  • An article on Taxability of EPC Contracts as an AOP_Published by Taxman

    August 9 2013

    Engineering Procurement & Construction contract (EPC) require a high level of technical skill set & provide for a voluminous scope of work & accordingly is practically difficult for an individual entity to carry out the whole scope of work. In turn, two or more entities having different skill set form a consortium amongst them so as to undertake all activities relating to the supply, engineering and construction as per the contract. Generally EPC contract is awarded to such consortium, by way of bidding process. Often these contracts are awarded on lump sum turn-key (LSTK) basis despite providing for a separate scope work, separate & well defined consideration and joint & several liabilities for each of the member. Such consortiums consist of a foreign entity acting as a technical partner and Indian entity acting as a construction partner. The arrangements may vary depending upon the facts & the requirements of each case. Once the foreign entity is involved application of Double Taxation Avoidance Agreement (DTAA) also gets triggered.

    Taxabilty of Such EPC Contract as an AOP has been a vexed issue recently on account of recent controversial ruling...

    To understand the various implications......



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  • Calculation of total foreign investment in Indian companies, transfer of ownership and control of Indian companies and downstream investment by Indian companies – comprehensive guidelines by RBI

    July 4 2013

    It was a moment of joy for foreign investors when Government of India allowed Foreign Direct Investment (FDI) in the Civil Aviation Sector. However, as is the case with the most of recent initiatives taken up by the government; there lacks the ground work, required to successfully implement such initiatives. Be it the prolonged Jet-Etihad deal or one may even go back to the introduction of negative list based service tax regime.

    RBI has, in consultation with the Government of India has issued circular RBI/2013-14/117 A.P. (DIR Series) Circular No.01 providing a comprehensive guidelines on how to calculate total foreign investment in Indian Companies, requirement of ownership by Indian residents in certain sectors falling under approval route, conditions with respect to downstream investments etc..

    Earlier Government vide vide Press Notes 2 and 3 (2009 series) dated February 13, 2009, had issued guidelines for calculation of total foreign investment, i.e., direct and indirect foreign investment in Indian companies and for establishment of Indian companies/ transfer of ownership or control of Indian companies from resident Indian citizens to non-resident entities, in sectors with caps

    A very interesting situation is that with the introduction of such revised comprehensive guidelines, Indian companies will have to check for any such transactions entered into between 13 February, 2009 till 07th June, 2013 i.e the date of notification of above circular & have to intimate to RBI within 90 days from the date of this circular about the compliance of such transactions with regulatory framework prescribed now!!!!!????

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  • Transfer Pricing Controversies_Published by Corporate Law Reporter

    June 18 2013

    Transfer Pricing controversies - The debate between the tax authorities & the tax payers seems to never die down; especially when it comes to application of transfer pricing provisions...Here are some such recent controversies analysed by us & published in an online journal

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