Transfer Pricing and location savings - An Indian perspective
By S. Sriram
Relocation of business from one country to another, where the labor and other costs are comparatively cheaper, results in cost saving to the Multi National Enterprise (‘MNE’) groups. The net cost so saved is Location Savings (‘LS’) as explained by the Organization for Economic Co-operation and Development (‘OECD’) [see end note 1].The United Nations further expands the scope of ...
Tax issues surrounding human capital movement
By Ashish Karundia
Globalisation has led Multinational Companies (MNCs) to increase cross border secondment of technical, managerial and other employees to their subsidiaries located in low cost jurisdictions such as India. The rationale behind seconding such employees is sometimes to help the subsidiaries avail the benefit of skill and expertise of the seconded employees in respective fields...
Valuation of asset - A tax riddle faced by real estate firms
By Rajat Juneja & Sumeet Khurana
When a partnership firm is formed for carrying on real estate business and a partner contributes land or building therein then the tax consequence of contribution of such land or building becomes a tricky issue. The computation of the capital gain on this transaction is a challenge because of two Sections that are apparently applicable but conflicti...
Incentive by State Government is disincentive to excise assessees
By Nirav Karia
The Supreme Court in Super Synotex [see end note1] case had considered the Sales Tax Incentive Scheme extended by State of Rajasthan. Under that scheme, it appears that the assessee was entitled to retain with him 75% of the sales tax collected from his buyers and pay only 25% to the State Government. The State of Rajasthan instead of giving certain amount towards industrial ...
Emerging jurisprudence in export restraint measures in trade
By Lakshmi Neelakantan
Export restraints generally refer to measures imposed by an exporting country on the export of certain goods which may take the form of export quotas, duties, and licensing or minimum price requirements. As compared to the frequently discussed topics of import controls under WTO law, like customs duties, import quotas, anti-dumping, subsidies and safeguard measures, exp...
TDS default on payments made to non-residents – Disallowance @ 30%?
By Rajat Juneja & Sumeet Khurana
Tax reforms can play a decisive role in supporting growth, by removing distortions, enhancing transparency and ensuring certain level of stability in the area of international taxation. Indian economy has grown at an impressive pace over the past couple of decades as a result of wide-ranging structural reforms however lack of a stable tax regime h...
Compulsory pre-deposit & complete withdrawal of discretion to grant stay
By Iype Mathew
One of the important changes made as part of the amendments brought by Finance (No. 2) Act, 2014 is the amendment to the provisions relating to pre-deposit and grant of stay in Customs, Excise and Service Tax laws. Earlier, though pre-deposit of the full disputed amount was prescribed yet the appellate authority was vested with the discretion to waive pre-deposit and to grant ...
Procedural conundrum of Indian safeguard law
By T.D. Satish
Even though the mechanism set up by India in applying the provisions of Article XIX of GATT and Agreement on Safeguards (AOS) in India through its domestic safeguard provisions [see end note 1] satisfy the basic requirements required for its implementation, however, when compared to other countries, there remain a lot of procedural loop-holes still to be filled in to make the s...
US provisions violate WTO’s SCM agreement – DSB Panel
The Panel composed by Dispute Settlement Body of the World Trade Organization (Panel) in United States – Countervailing Measures on certain Hot-rolled carbon steel flat products from India released its report on 14-7-2014. The dispute was filed by India in 2012 and it relates to WTO compatibility of the United States' law pertaining to countervailing duty investigation as well as CVD measures i...
Legal status of clarifications through Budget instructions of CBEC
By V. Sivasubramanian
In this year’s budget, i.e. Budget 2014-15, the Joint Secretary, Tax Research Unit [JS (TRU)-I], Central Board of Excise & Customs [‘CBEC’ or ‘Board’], has sought to clarify the legal position involving interpretation of certain Customs and Central Excise notifications through an annexure to his covering letter [see end note 1] addressed to the Chief Commissioners and Co...
Tax treatment of exchange fluctuation loss on ECB
By Sumeet Khurana and Rajat Juneja
One of the most apprehensive subjects for India for last couple of years has been the dwindling rupee value which besides triggering inflation and broadening the current account deficit has also augmented certain tax related issues. One such issue stems from the concerns relating to the treatment of foreign exchange loss arising on revaluation of ...
Investment protection - Investing in confidence
By R. Subhashree
The divergence between a nation’s domestic laws and the provisions in international treaties is not something new. It is noticed that the general practice at the time of entering into investment promotion agreements, the priority is to accord favourable treatment to the foreign investor following standard texts/mechanisms like ISDS. However, when a State does not adopt proper...
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