Tax
February 12, 2021

PAYMENT FOR OFFSHORE SERVICES ARE TAXABLE IN INDIA: AAR

Recently, in the case of Technip France SA, the Authority for Advance Rulings (the “AAR”) dealt with the issue of taxability in India of an offshore supply of equipment and provision of offshore services. The AAR held that the payment for the offshore supply was not taxable in India, as the delivery and title of…

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Tax
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February 1, 2021

HIGHLIGHTS OF INDIA’S BUDGET 2021-2022

Introduction India’s Union Budget (the “Budget”) was announced today (February 1, 2021), and the Finance Bill, 2021 (the “Finance Bill”) was tabled in Parliament. The Finance Bill will be discussed in Parliament before its enactment, and therefore, it is likely that the Finance Bill may be amended because of these discussions. Once enacted, unless specified…

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Financial Services, Ravi S. Raghavan, Tax
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October 3, 2020

NEW PROVISIONS ON WITHHOLDING TAX AND TAX COLLECTION AT SOURCE IN INDIA

India’s Central Board of Direct Taxes has issued Circular 17/2020 dated September 29, 2020 (effective October 1, 2020) (the “CBDT Circular”), providing important clarifications in respect of withholding tax on e-commerce transactions and tax collection at source on the sale of goods under the Income-tax Act, 1961 (the “IT Act”).

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Ravi S. Raghavan, Tax
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July 23, 2020

TAXATION OF SECONDED EMPLOYEE SALARY REIMBURSEMENTS AND PERMANENT ESTABLISHMENT IMPACT

In the recent case of Yum Restaurants (Asia) Pte, the Delhi Income Tax Appellate Tribunal (Delhi Tribunal) has held that payments received by a Singapore company from an Indian group company towards salary reimbursement costs in the case of a seconded employee is not in the nature of “fees for technical services” and, therefore, not…

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Tax
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May 8, 2020

WHEN CAN A LIAISON OFFICE OR A PLACE OF BUSINESS BE TAXED IN INDIA?

In the recent case of the UAE Exchange Centre, India’s Supreme Court (SC) highlighted the principles surrounding the taxability of foreign entities having a liaison office or a place of business in India. It should not be presumed that a liaison office will not constitute a permanent establishment in India merely because the Reserve Bank…

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Tax
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April 13, 2020

SEBI PROVIDES PREFERENTIAL TREATMENT TO FPIs, BUT WILL THE INDIAN TAX AUTHORITIES RELENT?

In September 2019, with a view to easing the regime for investments by foreign portfolio investors (“FPIs”), the Securities and Exchange Board of India (the “SEBI”) notified the SEBI (FPI) Regulations, 2019, which replaced the erstwhile SEBI (FPI) Regulations, 2014. The new regulations categorized FPIs into two different groups namely, Category I and Category II…

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Tax
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September 20, 2019

INDIAN GOVERNMENT ANNOUNCES KEY TAX PROPOSALS

Today (September 20, 2019) the Indian government has introduced the Taxation Laws (Amendment) Ordinance, 2019, to make certain amendments in the Income-tax Act 1961 (the “IT Act”). We have summarized below some of the key changes. Option to pay a reduced corporate tax rate of 22% In order to promote growth and investment, a new…

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Tax
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July 12, 2019

INDIA’S BUDGET 2019-20 – KEY HIGHLIGHTS

Introduction India’s Union Budget (the “Budget”) was announced on July 5, 2019, and the Finance Bill, 2019 (the “Finance Bill”) was tabled in Parliament. The Finance Bill will be discussed in Parliament before its enactment, and therefore, it is likely that the Finance Bill may be amended as a result of these discussions. Once enacted,…

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Tax
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January 21, 2019

DELHI HIGH COURT HOLDS THAT 24 GE GROUP ENTITIES HAVE A PE IN INDIA

Recently, the Delhi High Court (the “DHC”) upheld a judgement of the Delhi Bench of the Income-tax Appellate Tribunal (the “Delhi Tribunal”) in the case of GE Energy Parts, Inc. (the “Taxpayer”).  The DHC held that the liaison office established by the Taxpayer in New Delhi with the permission of the Reserve Bank of India…

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Tax
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December 27, 2018

RECENT UPDATES ON GAAR, ANGEL TAX AND TAX EXEMPT CONVERSIONS

Recent developments The Indian tax authorities have started invoking the general anti-avoidance rules (“GAAR”) under India’s Income-tax Act, 1961 (the “IT Act”).  In the last twelve (12) months, tax notices have been issued to many Indian subsidiaries of foreign companies to question transactions such as mergers, demergers, hive-offs, stock purchase transactions in Indian subsidiaries where…

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Tax
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November 15, 2018

FEES FOR INCLUDED SERVICES, TECHNICAL SERVICES AND PREPARATORY ACTIVITIES EXPLAINED

Financial, legal and risk management services not “Included Services” In the case of US Technology Resources Private Ltd v. DDIT, the Kerala High Court (the “KHC”) has held that management, financial, treasury and risk management services, and advising on legal matters or undertaking public relations activities (collectively, the “Services”) provided by a non-resident to an…

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Tax
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April 21, 2018

A YEAR ON, THE RESERVE BANK OF INDIA NOTIFIES REGULATIONS ON CROSS BORDER MERGERS

The Companies Act, 1956 permitted inbound mergers, i.e., merger of a foreign company into an Indian company.  Even then, there were no foreign exchange regulations on inbound mergers.  A key change that was introduced by the Companies Act, 2013 (the “Companies Act”) was to enable outbound mergers as well, i.e., merger of an Indian company…

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Corporate/M&A, Foreign Investment, Tax
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February 2, 2018

INDIA’S BUDGET 2018-19 – KEY HIGHLIGHTS

Introduction India’s Union Budget (the “Budget”) was announced on February 1, 2018, and the Finance Bill, 2018 (the “Finance Bill”) was tabled in Parliament.  Most of the income tax proposals in the Finance Bill will be effective from the financial year commencing on April 1, 2018, unless specified otherwise. The Finance Bill will be discussed…

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Tax
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November 9, 2017

INDIA’S TAX REGULATOR “CLARIFIES” INDIRECT TRANSFER PROVISIONS IN CASE OF REDEMPTION OF SHARES OUTSIDE INDIA

Under the provisions of the Income-tax Act, 1961 (the “ IT Act”), the income of a non-resident will be deemed to accrue or arise in India if it arises, directly or indirectly, through or from any business connection, property, asset or source of income, or from a transfer of a capital asset (shares or other interest) situated in India. The indirect transfer provision was introduced in the Finance Act, 2012, by way of Explanation 5 to Section 9(1)(i) of the IT Act, clarifying that an offshore capital asset will be treated as situated in India if it substantially derives its value (directly or indirectly) from assets located in India.

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Private Equity and Venture Capital, Tax
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September 22, 2017

NTT DOCOMO FINDS ITSELF IN A TAX BIND

On March 25, 2009, NTT DoCoMo Inc., a company incorporated in Japan (“ NTT”), entered into a shareholders’ agreement with Tata Teleservices Ltd. (“TTL”). Under the terms of the agreement, it was agreed that if TTL failed to satisfy certain “key performance indicators” within a period of five (5) years, then TTL would be required to find a buyer to purchase NTT’s shares (26%) of TTL at the sale price that was higher of: (a) the fair value of those shares as of March 31, 2014; or (b) 50% of the price at which NTT purchased those shares. In July 2014, when TTL could not fulfill the performance indicators and, thereafter, could not find a buyer to purchase NTT’s shares, NTT requested TTL to buy the shares at the price of INR58.04 per share.

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Tax
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