international taxation

Common strategies used to avoid Permanent Establishment status

Income Tax - Avoidance of Permanent Establishment (PE) status of Non-Residents are made through various arrangements. Company structures their business in way that status of PE can artificially be avoided. The definition of permanent establishment included in tax treaties is therefore crucial in determining whether a non-resident enterprise must pay i...

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Introduction to U.S. Tax Returns

Income Tax - Just as we have different tax return forms for different purposes, The United States of America is no exception. U.S. also prescribes different types of tax returns for different purposes. The tax returns are differentiated on the basis of the income on which one is liable to pay taxes. This is similar to filing of […]...

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International taxation has become complex

Income Tax - Complex tax laws pose problems both in interpretation and implementation. Which is why tax legislation and treaties should be simple and understandable to the common man and those in trade, reasoned Chief Justice Swatanter Kumar of the Bombay High Court when speaking at the International Tax Conference, organised by IFA (International Fis...

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Analysis of Section 172 applicable on Profit of foreign Shipping Company

Income Tax - Section 172 of income tax act is a special provision which deals with levy and recovery tax from foreign shipping companies. It specifies that every foreign shipping company has to declare a certain percentage of profit on its freight income and pay tax on it....

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Tax planning for foreign Chinese-invested enterprises in Kenya

Income Tax - In this article we look at need for tax planning for foreign Chinese-invested enterprises in Kenya. What is a foreign Chinese invested enterprise? Guo Shui Fa [2009] No. 82 (circular by SAT) defines a foreign Chinese invested enterprise as an enterprise ‘registered and established outside the territory of China in accordance with the la...

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Background Material of Diploma in International Taxation

Income Tax - Background Material of Diploma in International Taxation (2020 – Fifth edition) containing: -International Tax – Transfer Pricing -International Tax – Practice (Part I & II) Tax laws in India are becoming more and more complex. Globalization of economies, signing and review of free trade agreements, increase in the number of...

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Technical Guide on BEPS Action Plans and Multilateral Instrument

Income Tax - Technical Guide on BEPS Action Plans and Multilateral Instrument (MLI) – 2020 – First edition   Considering the issue that profits should be taxed where the economic activities take place and no profit should suffer double taxation, in September 2013, the Finance Ministers of the G20 nations came out with a comprehensive action p...

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Basics of International Taxation

Income Tax - Basics of International Taxation – 2020 (fourth edition) – (Earlier known as Aspects of International Taxation – A Study) International Taxation due to its dynamic and ever changing nature has always been a complex subject not only to study but to practice. Due to increase in cross border transactions, mergers and acquisitions, ...

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Guidance Note on Transfer Pricing Report U/s. 92E of Income Tax Act, 1961

Income Tax - ICAI has released the 8th Edition (August 2020) of the Guidance Note on Report Under Section 92E of the Income Tax Act, 1961 (Transfer Pricing). This Guidance Note was last revised in November, 2019. The ICAI has revised Guidance note on Report under Section 92E of the Income Tax Act, 1961 (Transfer Pricing) based on […]...

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Income tax Authority before whom particulars of parent entity and alternate reporting entity to file CbC Report

Income Tax - Income Tax Department designates Income tax Authority before whom particulars of parent entity and alternate reporting entity to file Country-by-Country Report would be notified...

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Mitsui India is not a Dependent Agent Permanent Establishment of Mitsui, Japan

ACIT Vs Mitsui & Co. Ltd. (ITAT Delhi) - ACIT Vs Mitsui & Co. Ltd. (ITAT Delhi) The facts in brief are that the assessee-company is incorporated in Japan and had a subsidiary in India, Mitsui India Pvt. Ltd. (MIPL). In India, assessee has undertaken several projects in connection with big natural installment and power projects during t...

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Mere inspection of quality of fabric not amounts to fees for technical services

DIT Vs Jeans Knit Pvt. Ltd. (Karnataka High Court) - DIT Vs Jeans Knit Pvt. Ltd. (Karnataka High Court) From the agreement executed by the assessee with the non-resident company, it is evident that the non-resident company is required to inspect the quality of fabric and other accessories in accordance with the sample approved by the assessee and coor...

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Income from time charter services rendered by vessel cannot be treated as ‘royalty‘

Smit Singapore Pte Ltd. Vs DCIT (ITAT Mumbai) - Smit Singapore Pte Ltd. Vs DCIT (ITAT Mumbai) Assessee had received charges on account of time charter services rendered by its vessel ‘Smit Borneo‘ along with the crew to Leighton India Contractor Pvt. Ltd., and not for allowing the latter the ‘use‘ or ‘right to use‘ of indu...

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Risk adjustment / Benchmarking of international transactions- ITAT Remands case back to AO

GCO Technologies Centre Private Ltd. Vs ITO (ITAT Mumbai) - GCO Technologies Centre Private Ltd. Vs ITO (ITAT Mumbai) We have deliberated at length on the aforesaid issue under consideration and are unable to persuade ourselves to subscribe to the projection of the aforesaid comparable company viz. M/s Cather Consultancy Services Pvt. Ltd by the assessee as ...

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Modification due to Notification has Effect of Deleting Old Rule & Making New Rule Operative

DIT Vs Autodesk Asia Pvt Ltd (Karnataka High Court) - whether the Tribunal was correct in holding that the assessee is liable to be taxed at 10% in view of replacement of 15% with 10% of tax in Article 12 of the DTAA without taking into consideration that the modification of rate of tax by way of notification?...

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Mutual Agreement Procedure (MAP) Guidance by CBDT

MAP GUIDANCE/2020 - (07/08/2020) - Though erstwhile rules 44G and 44H were in existence for a number of years, detailed information regarding MAP processes and guidance on issues related to such processes were not available in a comprehensive and consolidated manner....

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Clarification in respect of residency – section 6 of Income-tax Act, 1961​

Circular No. 11/2020-Income Tax / Release ID: 1622386 dated 09/05/2020 - (08/05/2020) - CBDT issues Circular No. 11 of 2020 and excluded period of forced stay in India from 22nd March, 2020 to 31st March, 2020 in computation of residential status in India for Financial Year 2019-20. Circular No. 11 of 2020 F. No. 370142/18/2020-TPI, Government of India Ministry of Finance Department of...

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CBDT notifies Protocol Between India And Austria

Notification No. 22/2020-Income Tax [S.O. 1370(E)] - (24/04/2020) - Protocol Between The Government Of The Republic Of India And The Government Of The Republic Of Austria Amending The Convention For The Avoidance Of Double Taxation And The Prevention Of Fiscal Evasion With Respect To Taxes On Income, Which Was Signed At Vienna On 8 November, 1999...

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Agreement between India & Brunei for Exchange of Information notified

NA - (17/03/2020) - The Agreement between the Government of the Republic of India and the Government of Brunei Darussalam for the exchange of information and assistance in collection with respect of taxes (hereinafter referred to as the Agreement), was signed in New Delhi, India on 28th of February, 2019. The Agreement...

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Cabinet approves amendment in DTAA with Sri Lanka

NA - (12/02/2020) - Press Information Bureau Government of India Cabinet 12-February-2020 Cabinet approves protocol amending the Agreement between India and Sri Lanka for avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income The Union Cabinet, chaired by the Prime Minister Sh...

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Recent Posts in "international taxation"

Mitsui India is not a Dependent Agent Permanent Establishment of Mitsui, Japan

ACIT Vs Mitsui & Co. Ltd. (ITAT Delhi)

ACIT Vs Mitsui & Co. Ltd. (ITAT Delhi) The facts in brief are that the assessee-company is incorporated in Japan and had a subsidiary in India, Mitsui India Pvt. Ltd. (MIPL). In India, assessee has undertaken several projects in connection with big natural installment and power projects during the relevant year through its project off...

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Mere inspection of quality of fabric not amounts to fees for technical services

DIT Vs Jeans Knit Pvt. Ltd. (Karnataka High Court)

DIT Vs Jeans Knit Pvt. Ltd. (Karnataka High Court) From the agreement executed by the assessee with the non-resident company, it is evident that the non-resident company is required to inspect the quality of fabric and other accessories in accordance with the sample approved by the assessee and coordinate with the suppliers to ship the [&...

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Common strategies used to avoid Permanent Establishment status

Avoidance of Permanent Establishment (PE) status of Non-Residents are made through various arrangements. Company structures their business in way that status of PE can artificially be avoided. The definition of permanent establishment included in tax treaties is therefore crucial in determining whether a non-resident enterprise must pay i...

Read More
Posted Under: Income Tax |

Income from time charter services rendered by vessel cannot be treated as ‘royalty‘

Smit Singapore Pte Ltd. Vs DCIT (ITAT Mumbai)

Smit Singapore Pte Ltd. Vs DCIT (ITAT Mumbai) Assessee had received charges on account of time charter services rendered by its vessel ‘Smit Borneo‘ along with the crew to Leighton India Contractor Pvt. Ltd., and not for allowing the latter the ‘use‘ or ‘right to use‘ of industrial, commercial, or scientific equipm...

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Risk adjustment / Benchmarking of international transactions- ITAT Remands case back to AO

GCO Technologies Centre Private Ltd. Vs ITO (ITAT Mumbai)

GCO Technologies Centre Private Ltd. Vs ITO (ITAT Mumbai) We have deliberated at length on the aforesaid issue under consideration and are unable to persuade ourselves to subscribe to the projection of the aforesaid comparable company viz. M/s Cather Consultancy Services Pvt. Ltd by the assessee as a profit making company during the finan...

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Modification due to Notification has Effect of Deleting Old Rule & Making New Rule Operative

DIT Vs Autodesk Asia Pvt Ltd (Karnataka High Court)

whether the Tribunal was correct in holding that the assessee is liable to be taxed at 10% in view of replacement of 15% with 10% of tax in Article 12 of the DTAA without taking into consideration that the modification of rate of tax by way of notification?...

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Liaison Office & Land Earth Station not Constitute PE in India

Inmarsat Global Ltd. Vs DCIT (International Taxation) (ITAT Mumbai)

The issue under consideration is whether DRP is correct in considering the Liaison Office (LO) and Land Earth Station ('LES') constitutes a permanent establishment (PE) in India?...

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Background Material of Diploma in International Taxation

Background Material of Diploma in International Taxation (2020 – Fifth edition) containing: -International Tax – Transfer Pricing -International Tax – Practice (Part I & II) Tax laws in India are becoming more and more complex. Globalization of economies, signing and review of free trade agreements, increase in the number of...

Read More
Posted Under: Income Tax |

Technical Guide on BEPS Action Plans and Multilateral Instrument

Technical Guide on BEPS Action Plans and Multilateral Instrument (MLI) – 2020 – First edition   Considering the issue that profits should be taxed where the economic activities take place and no profit should suffer double taxation, in September 2013, the Finance Ministers of the G20 nations came out with a comprehensive action p...

Read More
Posted Under: Income Tax |

Basics of International Taxation

Basics of International Taxation – 2020 (fourth edition) – (Earlier known as Aspects of International Taxation – A Study) International Taxation due to its dynamic and ever changing nature has always been a complex subject not only to study but to practice. Due to increase in cross border transactions, mergers and acquisitions, ...

Read More
Posted Under: Income Tax |

Guidance Note on Transfer Pricing Report U/s. 92E of Income Tax Act, 1961

ICAI has released the 8th Edition (August 2020) of the Guidance Note on Report Under Section 92E of the Income Tax Act, 1961 (Transfer Pricing). This Guidance Note was last revised in November, 2019. The ICAI has revised Guidance note on Report under Section 92E of the Income Tax Act, 1961 (Transfer Pricing) based on […]...

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Posted Under: Income Tax |

Introduction to U.S. Tax Returns

Just as we have different tax return forms for different purposes, The United States of America is no exception. U.S. also prescribes different types of tax returns for different purposes. The tax returns are differentiated on the basis of the income on which one is liable to pay taxes. This is similar to filing of […]...

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Posted Under: Income Tax |

Mitsui India Pvt. Ltd (MIPL) is not a DAPE of Mitsui & Co. Japan

ACIT Vs Mitsui & Co. Ltd. (ITAT Delhi)

ACIT Vs Mitsui & Co. Ltd. (ITAT Delhi) The AO asked the assessee to explain why Mitsui India Pvt. Ltd (MIPL) should not be treated Dependant Agent Permanent Establishment (DAPE) in India and also why the assessment should not be completed as per the preceding assessment year since the facts remain the same. Rejecting the […]...

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International taxation has become complex

Complex tax laws pose problems both in interpretation and implementation. Which is why tax legislation and treaties should be simple and understandable to the common man and those in trade, reasoned Chief Justice Swatanter Kumar of the Bombay High Court when speaking at the International Tax Conference, organised by IFA (International Fis...

Read More
Posted Under: Income Tax |

Analysis of Section 172 applicable on Profit of foreign Shipping Company

Section 172 of income tax act is a special provision which deals with levy and recovery tax from foreign shipping companies. It specifies that every foreign shipping company has to declare a certain percentage of profit on its freight income and pay tax on it....

Read More
Posted Under: Income Tax |

Tax planning for foreign Chinese-invested enterprises in Kenya

In this article we look at need for tax planning for foreign Chinese-invested enterprises in Kenya. What is a foreign Chinese invested enterprise? Guo Shui Fa [2009] No. 82 (circular by SAT) defines a foreign Chinese invested enterprise as an enterprise ‘registered and established outside the territory of China in accordance with the la...

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Posted Under: Income Tax |

ALP of higher AMP expenditure cannot be determined without first establishing that it is an international transaction

Yakult Danone India Pvt. Ltd. Vs DCIT (ITAT Delhi)

Approach of the learned transfer pricing officer of determining ALP of international transaction of incurring of higher AMP expenditure cannot be benchmarked either on Bright line test bases or on transactional net margin method unless first it is established that there existed an international transaction. Accordingly all the grounds of ...

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What makes an Income Accrue or Arise in India although earned outside India?

A look at what constitutes as Income on Indian soil and what is not from the perspective of the IT department. The IT department defines certain incomes as Accruing or Arising in India. This is the basis of calculating your income and income tax. Let’s know more. The IT department says that for any company […]...

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Posted Under: Income Tax |

Section 91: Assessee entitled to foreign tax credit of federal as well as state taxes

Aditya Khanna Vs DDIT (ITAT Delhi)

Aditya Khanna Vs DDIT (ITAT Delhi) The Income-tax in relation to any country includes Income-tax paid in any part of the country or a local authority. It applies to cases where in a federal structure a citizen is made to pay federal Income-tax and also the State income tax. The Income-tax in relation to any […]...

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India issues comprehensive guidance on cross-border tax dispute resolution

India issues comprehensive guidance on cross-border tax dispute resolution India on 7 August issued detailed guidance on the procedure for resolving cross-border tax disputes under the mutual agreement procedure (MAP) set out in India’s tax treaties with other nations. The guidance addresses critical issues that arise during the MAP pro...

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Posted Under: Income Tax |

U S Taxation: Economic Impact payments for tax payers- Did you receive your check?

U.S. citizens and U.S. resident aliens will receive the Economic Impact Payment of $1,200 or $2,400 if they filed married filing jointly and if they are not a dependent of another taxpayer and have a work-eligible Social Security number with adjusted gross income up to: -$150,000 for married couples filing joint returns -$112,500 for head...

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Posted Under: Income Tax |

What is a technical service, Kenya tax?

The definition of a technical service under Kenya tax is a bit complex. This is for a number of reasons. First, technical services overlap in many instances with payments for royalties. This would arise where someone supplies software installation services, user training services and similar services. You may read more about this possible...

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Posted Under: Income Tax |

Mutual Exchange Procedure remedy, Kenya – France DTA

The mutual exchange procedure was invoked in the Kenya France DTA in the case analysed below. This is an interesting remedy that taxpayers in Kenya should adopted regularly. This is especially taxpayers making payment to a country which Kholds a Doubel Tax Agreement with Kenya. Kenya has 15 effective Double Tax Agreements. This includes K...

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Posted Under: Income Tax |

Tax Treaties and Investments Made Outside India

Nations around the world engage in many kinds of agreements related to financial matters. Such treaties and agreements prove to be beneficial for the residents (individuals as well as business entities) of those countries who are active parties in the agreement. They can provide a tax credit, tax exemptions, and an overall cut in the [&he...

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Posted Under: Income Tax |

Rules on interpretation of tax legislation in Kenya

A. Introduction The rules on interpretation of tax legislation are important to understand as they play a key role in the outcome of tax disputes in Kenya. Chinese companies operating in Kenya would greatly benefit from this knowledge. The thesis considers several High Court decisions on the issue. It then considers possible queries that ...

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Posted Under: Income Tax |

Preparatory & Auxiliary activities in Permanent Establishment: How does India cope with the dearth in determining provisions?

With the incessant global growth, the relevance of Permanent Establishment (PE) in international taxation has become paramount. In simpler terms, the expression ‘Permanent Establishment’ means a fixed place of business through which the business of an enterprise is wholly or partly carried on....

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Posted Under: Income Tax |

Understanding OECD’s Two-Pillar Approach

In this dynamic era, the brick and mortar business models are turning digital and Multi-National Companies (MNCs) are effectively operating out of various jurisdictions without having a physical presence. From a taxation perspective, it is way more challenging when the value creation, income generation and the adjoining taxability cut acr...

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Posted Under: Income Tax |

Sale of software- Transfer of copyright or transfer of a copyrighted article?

Since past two-decade, software industry has undergone tremendous technological changes and accordingly such industry has emerged to be one of the fastest growing industry worldwide. India being a developing country provides ample opportunities for Multi-national Enterprises (MNEs) to expand their business in India. The technological adva...

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Posted Under: Income Tax |

Pandemic challenge– Re energized response by tax administrators of nations

COVID 19, now named a pandemic, came as an unwanted visitor, merged with as many people as possible unknowingly and then tens of millions of the whole world including the whole ecosystem just succumbed to its pressure. But how many of us know the extraordinary steps taken by the tax administrators of various nations without […]...

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Posted Under: Income Tax |

Taxability of ‘Referral fees’ for technical services under India-Singapore DTAA

Edenred Pte Ltd. Vs DDIT (International Taxation) (ITAT Mumbai)

Edenred Pte Ltd. Vs DDIT (ITAT Mumbai) In the instant case, the appellant has received fees for referral services/other services of Rs.39,94,209/- from Surf Gold in the year under consideration. It is relevant to mention here that as per the India-Singapore DTAA, the services in the nature of managerial, technical or consultancy nature ar...

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EU General Court annuls decision of European Commission & rules in favour of Apple by holding no Irish State Aid

Ireland And Others V European Commission (General Court of the European Union, Luxembourg)

Ireland And Others V European Commission (General Court of the European Union, Luxembourg) EU General Court annuls decision of European Commission and rules in favour of Apple by holding no Irish State Aid The General Court, Luxembourg (GC), the second highest judicial body in EU finally rendered its long-awaited judgment in the cases of ...

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Posted Under: Income Tax |

Are you irregular in filing US Individual tax returns?

Are you irregular in filing US Individual tax returns? Current guidelines to solve them It is once or many times US Citizen or permanent residents (Green Card Holders) ring me about the instances of their passport being held up by American embassy officials or being asked about their filing US Tax returns for global income […]...

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Posted Under: Income Tax |

International Taxation: Decoding DTAA & Foreign Tax Credit

A. WHAT IS DOUBLE TAXATION OF INCOME? When the same income is taxed more than once, it creates double taxation. This may be due to when a person is taxed in more than one country for the same income which he had earned, leads to double taxation. Countries have started entering into Double Taxation Avoidance […]...

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Posted Under: Income Tax |

Mutual Agreement Procedure (MAP)

The mutual agreement procedure is a well-established means through which tax administrations consult to resolve disputes regarding the application of double tax conventions. This procedure, described and authorized by Article 25 of the OECD Model Tax Convention, can be used to eliminate double taxation that could arise from a transfer pri...

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Posted Under: Income Tax |

Applicability of Section 2(47)(vi) in Offshore Indirect Transfer of Immovable Property

This article introduces a fresh perspective to the taxation of offshore indirect transfer of immovable property. It argues that such offshore indirect transfer can be taxed under the specific anti-abuse provisions of Section 2(47)(vi) of the Income-tax Act 1961 as they stood prior to the retrospective amendments brought into the Act throu...

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Posted Under: Income Tax |

Mutual Agreement Procedure (MAP) Guidance by CBDT

MAP GUIDANCE/2020 (07/08/2020)

Though erstwhile rules 44G and 44H were in existence for a number of years, detailed information regarding MAP processes and guidance on issues related to such processes were not available in a comprehensive and consolidated manner....

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Transfer Pricing- Corporate Guarantee as an International Transaction

In Transfer pricing proceedings, corporate guarantee given by assessee to its foreign AE is always disputed by the department as an international transaction and adjustment determined on the basis of average bank guarantee rates. However, in number of judgements by tribunal and HC, the stand of the department is overruled and relief grant...

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Posted Under: Income Tax |

OECD’s Multilateral Instrument and its impact on BEPS

One of the biggest problems in today’s international tax regime is the loss of billions of global corporate income tax revenues through the use of legal tax avoidance strategies. ‘Base Erosion and Profit Shifting (BEPS) is a phrase commonly used to refer to tax avoidance strategies that taxpayers use to shift their profits from hi...

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Posted Under: Income Tax |

Office established merely for communication is not a PE under India-Korea DTAA

Director of Income Tax Vs Vs Samsung Heavy Industries Co. Ltd. (Supreme Court)

whether the office which is established merely for the sake of communication is covered under the character of Permanent Establishment (PE) under India-Korea DTAA?...

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International Taxation: Basics of Taxation in Australia

If you are keenly interested in knowing about basics of taxation in Australia, a country which contributes almost maximum of its revenue from taxes, then this article is surely going to help you in enhancing your knowledge....

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Posted Under: Income Tax |

YRIPL & YRMPL do not constitute DAPE or PE of Yum! Restaurants in India

DDIT Vs Yum! Restaurants (Asia) Pte. Ltd. (ITAT Delhi)

The issue which is arising in the present appeal is whether there is DAPE. The Assessing Officer has alleged the existence of DAPE on account of alleged marketing activities undertaken by Indian entity on behalf of the assessee company....

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All about Foreign Tax Credit and its Indian Context

Corporate India today serves global needs and brings in overseas income which is chargeable to Indian tax net as a resident of India. Flip side of this paves way for claim for taxes paid at foreign jurisdiction based on the source of income....

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Posted Under: Income Tax |

Singapore Taxation Basics to Corporate Taxes in Singapore

Introduction The Fiscal Policy is the government’s means to influence and regulate the economy by means of revenue and expenditure. The two main tools of fiscal policy are – Taxation (for raising revenue and is the major source of Income for government). Expenditure (on public welfare for achieving desirable social and economic goals)...

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Posted Under: Income Tax |

Corporate Tax Regime In Dubai (UAE) An Overview

Dubai, a major business center in the Middle East has been treated as a tax haven for the Investors / Businessmen. The Taxation system is very satisfactory for the Businessmen and Investors. The corporate tax is set at a maximum rate in the oil and bank sectors in the Emirates. Taxation aspects for Companies in […]...

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Posted Under: Income Tax |

Impact of MLI on Indian Tax Treaties under International Taxation

Multilateral Instruments (MLI) is indeed the talk of the town in the world of International Taxation. Under the OECD*/G20 inclusive framework on Base Erosion and Profit Shifting (BEPS), more than 125 countries are collaborating to put an end to tax avoidance strategies that exploit the gap and mismatches in tax rules to avoid paying taxes...

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Posted Under: Income Tax |

Non-compete fees paid to employee is part of salary & hence Not Taxable in India as per DTAA

The Director of Income-Tax Vs Sasken Communication Technologies Ltd. (Karnataka High Court)

The issue under consideration is whether the amount paid to the employees under the non-compete agreement is covered by the expression ‘salary/profits in lieu of salary’ or not? and If not then whether the TDS will be applicable or not?...

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Tax in Delaware, United States of America: Most friendly state for business

Delaware, U.S.A., is one of the most tax-friendly states which attracts the maximum number of business entities to do the business with the most business-friendly policies. I get a maximum number of calls/inquiries about the individual tax/corporate tax or other tax-related matters. Though I have written the maximum number of articles on ...

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Posted Under: Income Tax |

Mere Form No. 3CEB filing cannot make assessee liable for Section 92BA investigation

Ashish Subodhchandra Shah (HUF) Vs PCIT (ITAT Ahmedabad)

Merely because a prescribed Form No. 3CEB was filed in accordance with Rule 10E r.w.s. 92BA of the Act would not make an assessee susceptible to onerous investigation proceedings on such transactions where the assessee prima facie demonstrates that Section 92BA of the Act is wholly inapplicable in any manner at the first instance...

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If Agent paid remuneration on ALP & taxed in India no further taxation in the hands of DAPE

OT Africa Line Limited (now known as Delmas UK Limited) Vs DDIT-nternational Taxation (ITAT Mumbai)

Whether the agent in India was a ‘Dependent Agent’ constituting a permanent establishment (PE) and the appellant was, therefore, liable to be taxed as per India UK DTAA?...

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Using the Most Favoured Nation (‘MFN’) clause for better cash flows

Everyone is conversant with the proverb ‘Old wine in new bottles‘.  On similar lines, the Finance Act, 2020 shifts the incidence of taxation of dividends in the hands of shareholders by abolishing the DDT regime.  Under the new regime (effective 1 April 2020), the dividends earned by foreign shareholders are usually subject ...

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Posted Under: Income Tax |

Acquisition & Transfer of Immovable Property In India : Fema & International Taxation Perspective

Acquisition And Transfer of Immovable Property In India: FEMA and International Taxation Perspective ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY – A NRI or an OCI may acquire immovable property in India other than an agricultural land or farm house or plantation property. POI as a category is no longer eligible to acquire immovab...

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Posted Under: Income Tax |

Interesting Cases for TDS u/s 195 – Foreign Remittance from India

Withholding taxes u/s 195 in respect of transactions with Non-Residents has always been a bone of contention between Assessee and tax authorities. Though liability for deduction of TDS is clear in respect of some transactions like royalties, fees for technical services, interest etc., ...

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Posted Under: Income Tax |

India Widens Taxation of Cross Border E-Commerce Transactions

Taxation of cross border e-commerce transactions has been a challenge for the whole world, including India due to location of the supplier, absence of physical presence, characterizing the nature of transaction (goods or service), administrative challenges in tracking and collecting taxes and taxing jurisdiction....

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Posted Under: Income Tax |

India-Singapore Double Tax Avoidance Treaty

Double Tax Avoidance Treaty India-Singapore The Double Taxation Avoidance Agreement is a tax accord between two countries to avoid taxing of same income by two countries levying their own tax. Double Taxation unjustly penalizes income flow between the countries and thereby discourages trade & commerce between the countries. To mitigat...

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Posted Under: Income Tax |

OECD Project to Tax Digital Economy: At the Brink of Collapse?

Last two years have witnessed a large-scale collaborative effort by the international community, under the umbrella of the OECD, towards finding a consensus-based solution for the problem of taxation within the digitalized economy....

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Posted Under: Income Tax |

Payment of expense for marketing ‘Marriott / Rennaisance’ brands is Royalty

Marriot International Inc. Vs DDIT- International Taxation (ITAT Mumbai)

Marriot International Inc. Vs DDIT-International Taxation (ITAT Mumbai) In the instant case, the assessee has undertaken the job of marketing the “Marriott / Rennaisance” brands. There is no doubt that the assessee company belongs to Marriott group. Further the claim of the assessee that it was undertaking the marketing work on cost t...

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Taxation of Offshore Poker Sites

This research paper will be focusing on online poker sites with regards to non-residents whose income is accruing in India. There has been a certain boom when it comes online sites wherein more and more people are going online and getting involved in games such as rummy, poker and fantasy leagues. The industry has through […]...

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Posted Under: Income Tax |

Reimbursement of Audit fees to foreign parent company: Taxable

SPX India Pvt. Ltd. Vs CIT (ITAT Delhi)

SPX India Pvt. Ltd. Vs CIT (ITAT Delhi) Tax was required to be deducted at source on share of ISO audit expenses paid to foreign parent company, as element of income was embedded in receipt of auditor.  FULL TEXT OF THE ITAT JUDGEMENT Assessee is in appeal before us against the order of ld. CIT […]...

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Reimbursement of technical expenses-Cost Allocation: Non-Taxable

Bureau Veritas-Indian Division Vs ADIT (ITAT Mumbai)

Bureau Veritas-Indian Division Vs ADIT (ITAT Mumbai) Technical expenses allocated by head office to assessee-Indian division was in nature of reimbursement of technical expenses to head office and not on account of any specific technical services having been ‘made available’ and, therefore, such amount could not be brought to ...

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No TDS on reimbursement of expenses to Sister concern on Cost basis

ITO Vs Vishinda Diamonds (ITAT Mumbai)

ITO Vs Vishinda Diamonds (ITAT Mumbai) Sister concern made purchases of rough diamonds on behalf of assessee. Sister concern made payment of core service charges to vendor after deducting tax at rate of 15 per cent as per article 13 of the India-UK DTAA. Assessee reimbursed expenses to sister concern. HELD, There was no element […]...

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Per-Day Allowance during employee stay abroad: Non-Taxable

CIT Vs Information Architects (Bombay High Court)

CIT Vs Information Architects (Bombay High Court) The amounts paid by the assessee to its employees towards overseas maintenance allowance. These amounts were paid towards expenses at the rate of IEP 50 per day per employee. Held that these amounts constitute only reimbursement for the expenses incurred by the employees at a particular am...

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No TDS on Reimbursement of cost to cost management expenses to parent company

CIT Vs Expeditors International (India) (P.) Ltd. (Delhi High Court)

CIT Vs Expeditors International (India) (P.) Ltd. (Delhi High Court) Assessee-company was engaged in business of supplying chain management, logistics and freight forwarding related to movement of goods and cargo within India or outside by road, rail, air or ship – It involved activities of packing, loading/unloading, trucking, tend...

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No Tax on Payment for link charges to USA telecom service providers

Convergys Customer Management Group Inc. Vs ADIT (ITAT Delhi)

Convergys Customer Management Group Inc. Vs ADIT (ITAT Delhi) The assessee made payment for link charges to telecom service providers in the USA and cross-charged the portion of the cost incurred by it in connection with the India half link to CIS, which was accordingly reimbursed by CIS to assessee. The assessee has merely procured [&hel...

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Income from cloud hosting services was not taxable as royalty

Rack space, US Inc . Vs DCIT (international Taxation) (ITAT Mumbai)

Income from cloud hosting services had erroneously held as royalty within the meaning of explanation (2) to section 9(1)(vi) as well as Article 12(3)(b) of the Indo-USA DTAA by AO and DRP as  the Data Centre and Infrastructure therein was used to provide services belonged to assessee and customer did not have physical control or possessi...

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Decoding Article 14 of Tax Treaty: Independent Personal Services

Before proceeding into detailed discussion on this topic, let us first have a glimpse of Article 14 of Model tax convention.  Article 14 of the Model tax convention read as under: “1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be [&hellip...

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Posted Under: Income Tax |

Introduction of Digital Services Tax in Brazil – CIDE-digital

Taxation on income of companies which are engaged in technological goods & services have always been a niche and debatable issue among the countries since inception due to the disruptive businesses models which allow companies to operate in a country without having any physical presence, or having its permanent office. These companies...

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Posted Under: Income Tax |

Tax odds in favor of Bahrain

Two Negatives maketh a Positive. Not so often, but sometimes, this mathematical formula does apply to real life economic situations. With the omnipresent Covid Pandemic there is no searching for the first negative, and second negative is the dire state of economy of Bahrain’s neighboring country Saudi Arabia. New economy revival measure...

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Posted Under: Income Tax |

A brief Study on International Taxation

International taxation in a simple language means the study of Taxation beyond the National Level. Though we all are very much aware about our Indian Taxation Laws but as time is demanding something more so, there is a need to study the taxation at another level....

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Posted Under: Income Tax |

Case Analysis: Union of India v. Azadi Bachao Andolan (2004)

Union Of India and Anr Vs. Azadi Bachao Andolan (Supreme Court)

The law with regards to the DTAA and the powers of Income Tax and other administrative authorities in its implementation have evolved with the development of various judicial trends ranging from the case of McDowell, Azadi Bachao Andolan to Vodafone-Hatchison Case, to name a few....

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Are you creating a Dependent PE taxable in India by appointing a sales agent in India ?

A foreign entity in Japan is appointing an sales agent in India to market and sell their products. They are not setting up an Indian entity, not hiring an employee in India but only appointing a full time agent in India. Can such a person be construed as a permanent establishment (PE) for the Japanese […]...

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Posted Under: Income Tax |

Recent Changes & Issues in Income Tax & International Taxation

Article explains guidelines for Mutually Agreed Procedure (MAP), Changes in Tax Residency Rules, Changes in equalization levy, Amendments w.r.t. Dividend Distribution Tax (DDT), Applicability of S 269 SU to B2B Businesses, Deferment for Approval/ Registration of Charitable Trusts & Exempt Institutions, Reduction in TDS/TCS Rates, TDS ...

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Posted Under: Income Tax |

Safe Harbour – The Income Tax Rules

Safe Harbour – What is means Safe harbour refers to a legal provision to reduce or eliminate liability in certain situations as long as certain conditions are met. In other words, it refers to the circumstances under which the Income Tax authorities shall accept the transfer price declared by the assessee and the same shall […]...

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Posted Under: Income Tax |

Multilateral Instruments : A beginning

The Multilateral Convention / Multilateral Instrument to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, sometime abbreviated BEPS multilateral instrument, is a multilateral convention of the Organisation for Economic Co-operation and Development to combat tax avoidance by multinational enterprises throu...

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Posted Under: Income Tax |

Interlinkage between Valuation and Transfer Pricing

We see that whenever there is any TP litigation in relation to valuation of assets or shares, following are the issues that are raised by the IRD while evaluating the valuation report:...

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Posted Under: Income Tax |

Pioneers in taxation of digitally growing economy

With the expansion of information and communication technology influencing the modes and scales of supply and procurement of goods and services exponentially, the digital economy has enabled conducting of businesses without regard to national boundaries and physical presence.  The same has also resulted in novel issues in the tax regime ...

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Posted Under: Income Tax |

Income Tax & FEMA provisions applicable to Non Residents

In this part you can gain knowledge about various provisions of Income-tax Law and Foreign Exchange Management Act, 1999 (FEMA) which are useful to a non-resident. The first part deals with provisions of Income-tax Law and the second part deals with the provisions of FEMA....

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Posted Under: Income Tax | ,

BEPS -Overview of OECD’S International Tax Structure

The Policy of Liberalization, Privatization and globalization has developed economy globally. The Foreign Direct Investment received by the countries because of above-mentioned policies has helped them in developing and boosting their economy.2 One of the key-policy i.e. globalization has integrated various economies into one and helped b...

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Posted Under: Income Tax |

No addition for TP Adjustment towards interest on debentures invested in AE

Gurgaon Investment Ltd. Vs DDIT (ITAT Mumbai)

Gurgaon Investment Ltd. Vs DDIT (ITAT Mumbai) The issue under consideration is whether addition made on account of Transfer Pricing Adjustment towards interest on debentures invested in the Associated Enterprise (AE) Vital Construction Pvt. Ltd. (VCPL) is justified or not? Assessee, a non-resident company incorporated in Mauritius. Throug...

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Countrywise Withholding tax rates / Chart as per DTAA

Country wise Withholding tax rate on Dividend (not being covered under Section 115-O), Interest, Royalty and Fee for Technical Services ...

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Posted Under: Income Tax |

Countrywise Withholding Tax rates as per IT Act vis a vis Tax Treaties/DTAA

Certain income of non-resident, inter-alia, dividend, interest, royalty or fees for technical services shall be taxable as per the rates prescribed under the Income-tax Act or as per the rates prescribed under the DTAAs, whichever is more beneficial to such non-resident. ...

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Posted Under: Income Tax |

Some of the tax challenges in India in Current Global Crisis

In this article, we have tried to explain the difficulties or challenges that tax officials or taxpayers are facing in the current crises. Article explains Residential status of Internationally Mobile Employees, Residential Status of companies (Place of Effective Management), Risk of creation of Service Permanent Establishment (PE), Exten...

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Posted Under: Income Tax |

Income Tax Provisions applicable to non-residents

Every year the residential status of the taxpayer is to be determined by applying the provisions of the Income-tax Law designed in this regard (discussed later) and, hence, it may so happen that in one year the individual would be a resident and ordinarily resident and in the next year he may become ...

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Posted Under: Income Tax | ,

COVID-19 PANDEMIC: Relaxation on Residential Status under Income Tax Act, 1961

In this article, I have covered the need and relaxations provided by the Central Government on Residential Status in Circular no. 11 dated May 8, 2020. As per the provisions of section 6 of the Income-tax Act, 1961 ‘period of stay’ of an individual is used to determine the residential status of individual taxpayers. Ordinarily, [&hell...

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Posted Under: Income Tax |

Lockdown period not to be counted in residential status determination

Recent clarification issued by CBDT – Lockdown time period will not be counted in the determination of residential status of NRIs for the FY 2019-20 Considering the impact of Covid 19 and amidst the situation of lockdown and suspension of international flights CBDT has recently issued Circular No 11 of 2020 dated 8 May 2020 [&hellip...

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Posted Under: Income Tax |

Lockdown period not to be counted for Determining Residency Status of NRIs, Foreign Nationals: CBDT

Lockdown Period Not to Be Counted For Determining Residency Status of NRIS, Foreign Nationals ; CBDT clarifies in respect of residency under section 6 of the Income-tax Act, 1961 Finance Minister Nirmala Sitharaman on Friday (8th May, 2020) allowed discounting of prolonged stay period in the country for determining the residency status, ...

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Posted Under: Income Tax |

Basic aspects of international Taxation and DTAA

Technically speaking there is no concept such as International taxation. But for our convenience we say, the international aspects of income tax laws of a particular nation as international taxation. ...

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Posted Under: Income Tax |

CBDT clarification on Residential Status & open issues of International Taxation

In India, the status of tax residency of an individual is determined based on his number of days of stay in India during a financial year. Every year, various Non-Resident Individuals (‘NRI’) visit India to manage their family affairs/investment in India. Such individuals plan their stay in India in a manner that they remain non-resid...

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Posted Under: Income Tax |

NRI – NRO NRE Account difference, Filing Income Tax Return Investment and Currency Risk

A person of Indian origin (PIO) is a person of Indian origin or ancestry who was or whose ancestors were born in India or nations with Indian ancestry but is not a citizen of India and is the citizen of another country. A PIO might have been a citizen of India and subsequently taken the citizenship of another country. ...

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Posted Under: Income Tax |

Clarification in respect of residency – section 6 of Income-tax Act, 1961​

Circular No. 11/2020-Income Tax / Release ID: 1622386 dated 09/05/2020 (08/05/2020)

CBDT issues Circular No. 11 of 2020 and excluded period of forced stay in India from 22nd March, 2020 to 31st March, 2020 in computation of residential status in India for Financial Year 2019-20. Circular No. 11 of 2020 F. No. 370142/18/2020-TPI, Government of India Ministry of Finance Department of Revenue Central Board of Direct [&helli...

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Place of Effective Management Establishments – Corporate Tax Residency

International Tax Perspective – Part II : Place of Effective Management (POEM) Establishments – Corporate Tax Residency Introduction Businesses are currently dealing with a multitude of issues as a result of the measures taken to stop the global spread of the COVID-19. One aspect that might not currently feature at the top of the list...

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Posted Under: Income Tax |

International Tax Perspective – Part I Permanent Establishments (PE)

What are Permanent Establishments? The most important issue in the treaty based international fiscal law is the concept of Permanent Establishment (PE). All the models of conventions namely:...

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Posted Under: Income Tax |

How To Get Relief From Double Taxation?

In case , one earns income which suffers tax outside India, the Income Tax Act has clear provision of relief from such double taxation. The relevant provision are contained in section 90 and section 91 of the I T Act. Section 90 is applicable for the cases when the tax has been paid in a country with which India has signed comprehensive d...

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Posted Under: Income Tax |

Tax FAQs for Non-resident Indian

Each family in India has at least one family which is resident outside India. Previously, the number of transactions between a resident and non-resident were limited but with growing number of family members now settling outside India, there is a tremendous increase in inflow and outflow of money between the two. This has made the tax dep...

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Posted Under: Income Tax |

A Road Map to NRI Taxation

The income tax rules and perks allowed to a Non-Residential Indian is drastically different from those applicable to resident Indians. NRI taxation in India is a constant matter of concern for the vast number of Indians living all over the world who have to send money to home and make investment planning for themselves and […]...

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Posted Under: Income Tax |

GST & Income Tax Implication on Non-Resident Sportsmen Coming to India

When a non-resident sportsman comes to India for participating in any game or sport then a question arises which country has right to charge tax on such income earned by sportsmen by participating in game or sport and what are the tax implications on such income earned. Non-Resident Sportsmen means he is not the Citizen […]...

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Posted Under: Income Tax |

Use of Tie Breaker in Residential Status of NRI’s

Finance Act 2020 applicable for AY 2021-22 has altered the provisions for Indian Citizens and Persons of Indian Origin (PIO). Accordingly the period of 182 days specified in the Explanation for Indian citizen and person of Indian origin with total income other than income from foreign sources more than Rs. 15 Lacs, has been reduced to [&...

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Posted Under: Income Tax |

Residential Status of an Individual – Amended by Finance Bill 2020

Residential Status of an Individual under the Income Act,1961 as amended by Finance Bill 2020 Residential Status of an Individual determines the liability of an individual to tax in India according to the nature, source, accrual or receipt of Income.  Section 6 of the Income Tax Act, 1961 lays down the criteria for determining the [&hell...

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Posted Under: Income Tax |

CBDT notifies Protocol Between India And Austria

Notification No. 22/2020-Income Tax [S.O. 1370(E)] (24/04/2020)

Protocol Between The Government Of The Republic Of India And The Government Of The Republic Of Austria Amending The Convention For The Avoidance Of Double Taxation And The Prevention Of Fiscal Evasion With Respect To Taxes On Income, Which Was Signed At Vienna On 8 November, 1999...

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Residency Test in India – for Individuals

Taxation of a person depends on his residential status in the country.  Section 6 sub-section (1) of the Income Tax Act, 1961 provides the circumstances under which an INDIVIDUAL is said to be Resident in India.  Once the INDIVIDUAL is said to be resident in India, then we need to find out if he qualifies […]...

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Posted Under: Income Tax |

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