Policy Update-Corporate Taxes : Income Tax laws

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Corporate Taxes

1. Focused advocacy on:

∘ the need to reassess Angel Tax provisions.

∘ clarity on Employee Stock Ownership Plan taxability in India

∘ need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such fund

∘ need for corporate tax parity for foreign banks operating as branches in India

∘ request for release of notification for enforcement of Most Favoured Nation clause in specific bilateral treaties

∘ request to extend benefit available to companies under section 115BAB specifically for manufacturing of automobile industry products, renewable generation projects such as solar power, wind power, hybrid power, green hydrogen, green ammonia

∘ transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc.

June 2024

1. Tax Forum hosted an industry interaction with Mr Rasmi Ranjan Das, Chief Commissioner of Income Tax (International Taxation) on June 12, 2024, in San Francisco, California

2. Tax Forum submitted a pre-budget memorandum on tax proposals to the Ministry of Finance, for the upcoming budget in July 2024

3. Focused advocacy on:

∘ The need to reassess Angel Tax provisions.

∘ Clarity on Employee Stock Ownership Plan (ESOP) taxability in India

∘ Clarity on Employee Stock Ownership Plan (ESOP) taxability in India

∘ Corporate tax parity for foreign banks operating as branches in India

∘ Need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ Need for corporate tax parity for foreign banks operating as branches in India

∘ Request for release of notification for enforcement of MFN clause in specific bilateral treaties

∘ Request to extend benefit available to companies under section 115BAB specifically for manufacturing of automobile industry products, renewable generation projects such as solar power, wind power, hybrid power, green hydrogen, green ammonia

∘ Advocacy on transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc

4. Forum met CBDT officials to discuss:

∘ Need for corporate tax parity for foreign banks operating as branches in India

∘ Clarifications required for ESOPs taxability in India

Tax Forum hosted an industry interaction with Mr Rasmi Ranjan Das, Chief Commissioner of Income Tax (International Taxation) on June 12, 2024, in San Francisco, California.
Tax Forum submitted a pre-budget memorandum on tax proposals to the Ministry of Finance, for the upcoming budget in July 2024.
∘ The need to reassess Angel Tax provisions.

∘ Clarity on Employee Stock Ownership Plan (ESOP) taxability in India

∘ Need for corporate tax parity for foreign banks operating as branches in India

∘ Clarifications required for ESOPs taxability in India

May 2024

1. Focused advocacy on

∘ Request for release of notification for enforcement of MFN clause in specific bilateral treaties

∘ Request to extend benefit available to companies under section 115BAB specifically for manufacturing of automobile industry products, renewable generation projects such as solar power, wind power, hybrid power, green hydrogen, green ammonia

∘ Advocacy on transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc

∘ request for release of notification for enforcement of MFN clause in specific bilateral treaties

∘ need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ request to extend benefit available to companies under section 115BAB specifically for manufacturing of automobile industry products, renewable generation projects such as solar power, wind power, hybrid power, green hydrogen, green ammonia

∘ need for corporate tax parity for foreign banks operating as branches in India

∘ Clarifications required for ESOPs taxability in India

∘ Advocacy on transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc

2. Forum to meet CBDT officials next week to discuss

∘ need for reciprocal tax treatment upon reorganization of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ Clarifications required for ESOPs taxability in India

∘ need for corporate tax parity for foreign banks operating as branches in India

∘ Request for release of notification for enforcement of MFN clause in specific bilateral treaties

∘ Request to extend benefit available to companies under section 115BAB specifically for manufacturing of automobile industry products, renewable generation projects such as solar power, wind power, hybrid power, green hydrogen, green ammonia

∘ Advocacy on transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc

∘ need for reciprocal tax treatment upon reorganization of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ Clarifications required for ESOPs taxability in India

∘ need for corporate tax parity for foreign banks operating as branches in India

April 2024

1. Focused advocacy on

∘ need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ request to extend benefit available to companies under section 115BAB specifically for manufacturing of automobile industry products, renewable generation projects such as solar power, wind power, hybrid power, green hydrogen, green ammonia

∘ need for corporate tax parity for foreign banks operating as branches in India

∘ Clarifications required for ESOPs taxability in India

∘ Forum to reinitiate advocacy on transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc

∘ need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ applicability of section 56(2)(x) in case of purchase of shares of a listed company pursuant to the valuation methodology under Rule 11UA

∘ request to extend benefit available to companies under section 115BAB specifically for manufacturing of automobile industry products, renewable generation projects such as solar power, wind power, hybrid power generation, green hydrogen, green ammonia

∘ need for corporate tax parity for foreign banks operating as branches in India

2. CBDT signs record number of 125 Advance Pricing Agreements (APAs) in FY 2023-24.

CBDT signs record number of 125 Advance Pricing Agreements (APAs) in FY 2023-24. Please access the press release here

3. Directorate (Systems) mandates e-filing various forms falling under Transfer Pricing domain and verification as per Income Tax Act.

Directorate (Systems) mandates e-filing various forms falling under Transfer Pricing domain and verification as per Income Tax Act. Official notification can be accessed here (Notification no. 01/2024).

4. Forum to reinitiate advocacy on transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc

5. Forum to initiate advocacy on transfer pricing mark-up issue relating to share-based payments made to Indian employees.

∘ need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ request to extend benefit available to companies under section 115BAB specifically for manufacturing of automobile industry products, renewable generation projects such as solar power, wind power, hybrid power, green hydrogen, green ammonia

∘ need for corporate tax parity for foreign banks operating as branches in India

∘ Clarifications required for ESOPs taxability in India

∘ Forum to reinitiate advocacy on transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc

CBDT signs record number of 125 Advance Pricing Agreements (APAs) in FY 2023-24. Please access the press release here
Directorate (Systems) mandates e-filing various forms falling under Transfer Pricing domain and verification as per Income Tax Act. Official notification can be accessed here (Notification no. 01/2024).
Forum to reinitiate advocacy on transfer pricing issues such as mark-up relating to share-based payments made to Indian employees, secondary adjustments rationalisation, safe harbour rules etc
∘ need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ applicability of section 56(2)(x) in case of purchase of shares of a listed company pursuant to the valuation methodology under Rule 11UA
Forum to initiate advocacy on transfer pricing mark-up issue relating to share-based payments made to Indian employees.

March 2024

1. CBDT proposes a ‘mismatch communication’ exercise for AY 2021-22 under e-Verification Scheme. Press release can be accessed

CBDT proposes a ‘mismatch communication’ exercise for AY 2021-22 under e-Verification Scheme. Press release can be accessed here

2. CBDT amends rules in Form 3CEB with respect to Specified Domestic Transactions (SDTs). Official notification can be accessed

CBDT amends rules in Form 3CEB with respect to Specified Domestic Transactions (SDTs). Official notification can be accessed here

3. Focused advocacy on

∘ applicability of section 56(2)(x) in case of purchase of shares of a listed company pursuant to the valuation methodology under Rule 11UA

∘ need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ request to extend benefit available to companies under section 115BAB specifically for manufacturing of solar modules, electrolysers and green hydrogen

∘ tax reforms for business trusts (REITs and InvITs)

∘ issue of obtaining mobile OTP by non-residents for e-filing of Form 10F

∘ enforceability of MFN clause as per India’s DTAA with a few OECD member countries

∘ Need for corporate tax parity for foreign banks operating as branches in India
CBDT proposes a ‘mismatch communication’ exercise for AY 2021-22 under e-Verification Scheme. Press release can be accessed here
CBDT amends rules in Form 3CEB with respect to Specified Domestic Transactions (SDTs). Official notification can be accessed here
∘ applicability of section 56(2)(x) in case of purchase of shares of a listed company pursuant to the valuation methodology under Rule 11UA

∘ need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds

∘ request to extend benefit available to companies under section 115BAB specifically for manufacturing of solar modules, electrolysers and green hydrogen

∘ tax reforms for business trusts (REITs and InvITs)

∘ issue of obtaining mobile OTP by non-residents for e-filing of Form 10F

∘ enforceability of MFN clause as per India’s DTAA with a few OECD member countries

Feb 2024

1. Focused advocacy on

∘ issue of obtaining mobile OTP by non-residents for e-filing of Form 10F

∘ enforceability of MFN clause as per India’s DTAA with a few OECD member countries

2. Government of India has notified the Finance Act, 2024

Official notification can be accessed here

3. CBDT issues order giving effect to the Budget proposal of remitting petty tax demands outstanding as on Jan 31, 2024

Official order can be accessed here

4. Forum to engage with CBDT to address issue of obtaining mobile OTP by non-residents for e-filing of Form 10F

5. Forum to initiate advocacy for withholding taxes on fees for technical services in light of enforceability of MFN clause as per India’s DTAA with a few OECD member countries

6. Continued advocacy on

Continued advocacy on :

1. Need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds.

2. Request to extend benefit available to companies u/s 115BAB specifically for manufacturing of solar modules, electrolysers and green hydrogen.

3. Tax reforms for business trusts (REITs and InvITs).

7. Ongoing advocacy with CBDT on industry request to extend benefit available to companies u/s 115BAB specifically for manufacturing of solar modules, electrolysers and green hydrogen

∘ issue of obtaining mobile OTP by non-residents for e-filing of Form 10F

∘ enforceability of MFN clause as per India’s DTAA with a few OECD member countries
Official notification can be accessed here
Official order can be accessed here
Forum to engage with CBDT to address issue of obtaining mobile OTP by non-residents for e-filing of Form 10F
Forum to initiate advocacy for withholding taxes on fees for technical services in light of enforceability of MFN clause as per India’s DTAA with a few OECD member countries
Continued advocacy on :

1. Need for reciprocal tax treatment upon reorganisation of foreign regulated funds investing in Indian securities as given in the home country of such funds.

2. Request to extend benefit available to companies u/s 115BAB specifically for manufacturing of solar modules, electrolysers and green hydrogen.

3. Tax reforms for business trusts (REITs and InvITs).
Ongoing advocacy with CBDT on industry request to extend benefit available to companies u/s 115BAB specifically for manufacturing of solar modules, electrolysers and green hydrogen

Jan 2024

1. CBDT, vide Circular No. 1/2024 dt. Jan 23, 2024, releases Explanatory Notes to the Provisions of Finance Act, 2023.

Refer the circular here

2. CBDT issues another set of guidelines for the deduction of tax at source on e-commerce transactions under Section 194-O of the Income-tax Act, 1961.

Refer the guidelines here and a summary of key clarifications issued here

3. CBDT notifies Investment in Financial Product by Non Residents With ‘IFSC Capital Market Intermediary’.

Refer the notification here

4. Forum submits representation with Central Board of Direct Taxes (CBDT) on challenges being faced by taxpayers during assessment proceedings

5. Forum to initiate advocacy on need for reciprocal tax treatment upon reorganization of foreign regulated funds investing in Indian securities as given in the home country of such funds.

6. Ongoing advocacy with CBDT on industry request to extend benefit available to companies u/s 115BAB specifically for manufacturing of solar modules, electrolysers and green hydrogen

7. Forum to initiate advocacy regarding certain tax reforms for business trusts (REITs and InvITs) to make them more investor friendly, improve liquidity and enhance their growth in India

8. Inputs invited on CBDT guidelines for the deduction of tax at source on e-commerce transactions under Section 194-O

Refer guidelines here and a summary of key clarifications here
Refer the circular here
Refer the guidelines here and a summary of key clarifications issued here
Refer the notification here
Forum submits representation with Central Board of Direct Taxes (CBDT) on challenges being faced by taxpayers during assessment proceedings
Forum to initiate advocacy on need for reciprocal tax treatment upon reorganization of foreign regulated funds investing in Indian securities as given in the home country of such funds.
Ongoing advocacy with CBDT on industry request to extend benefit available to companies u/s 115BAB specifically for manufacturing of solar modules, electrolysers and green hydrogen
Forum to initiate advocacy regarding certain tax reforms for business trusts (REITs and InvITs) to make them more investor friendly, improve liquidity and enhance their growth in India
Refer guidelines here and a summary of key clarifications here

Dec 2023

1. Forum submitted representation in connection with ad-hoc additions and uncorroborated information during assessment proceedings and other challenges being faced by taxpayers

Basis member inputs Forum submitted representation in connection with ad-hoc additions and uncorroborated information during assessment proceedings and other challenges being faced by taxpayers.

Nov 2023

1. Forum to host webinar on Supreme Court's judgment interpreting the Most Favored Nation (MFN) clause with DMD Advocates – November 7

The Supreme Court has delivered the much awaited judgment on interpretation of the Most Favoured Nation (MFN) clause in India’s tax treaties with several countries. The Supreme Court has held that the benefit of MFN clause will not be available unless it is notified by the central government. It is also held therein that where benefit of MFN clause in a tax treaty with India is sought to be claimed on the basis that India has given a more preferential treatment to another country which is a member of OECD, the other country should be a member of OECD at the time India entered into tax treaty with it and should not have become an OECD member at a later stage.

2. Budget 2024- Forum submitted industry recommendations for the interim budget 2024

3. Forum to submit representation in connection with ad-hoc additions and uncorroborated information during assessment proceedings and other challenges being faced by taxpayers

The Supreme Court has delivered the much awaited judgment on interpretation of the Most Favoured Nation (MFN) clause in India’s tax treaties with several countries. The Supreme Court has held that the benefit of MFN clause will not be available unless it is notified by the central government. It is also held therein that where benefit of MFN clause in a tax treaty with India is sought to be claimed on the basis that India has given a more preferential treatment to another country which is a member of OECD, the other country should be a member of OECD at the time India entered into tax treaty with it and should not have become an OECD member at a later stage.
Budget 2024- Forum submitted industry recommendations for the interim budget 2024
Forum to submit representation in connection with ad-hoc additions and uncorroborated information during assessment proceedings and other challenges being faced by taxpayers

Sep 2023

Further to introducing draft Rules and inviting public comments on the same, Central Board of Direct taxes has notified – Rule 11UA of the Income Tax Rules, 1962 for implementing the amendment made by the Finance Act, 2023 to bring consideration received from non-residents within the ambit of ‘angel tax’ provisions under Section 56(2)(viib) of the Income Tax Act, 1961. Press release is accessible here and notification here. You would recall that as a Forum we were working with the CBDT team and also joined the industry consultation sharing recommendations on the draft valuation rules. We are glad that many of our recommendations are part of the final rules.

G20 New Delhi Leaders Declaration: The G20 New Delhi declaration reaffirms commitment toward swift implementation of the two-pillar international tax package and continued cooperation towards a globally fair, sustainable and modern international tax system

OECD Secretary-General releases Tax Report to G20 leaders outlining the current status and progress on the Two-Pillar international tax reform package

August 2023

CBDT issues guidelines and notifies Rule 11UACA to clarify the taxation of income received from life insurance policy

Applicability of Safe Harbour Rules extended to Assessment Year 2023-24
CBDT releases Handbook on Board for Advance Rulings
CBDT notifies selection procedure and appointment terms for Dispute Resolution Committee
CBDT notifies 18 Dispute Resolution Committees across country
OECD invites public input on Amount B under Pillar One relating to the simplification of transfer pricing rules

July 2023

CBDT excludes fund relocation to IFSC from ambit of Sec.56(2)(x) of Income Tax Act

3rd G20 Finance Ministers and Central Bank Governors Meeting held on July 17-18. A High-Level Tax Symposium on Combatting Tax Evasion, Corruption and Money Laundering was also organised on the sidelines of this meeting. For more information click here.
OECD Secretary-General releases Tax Report to G20 Finance Ministers and Central Bank Governors. For more information click here.
15th Plenary Meeting of the OECD/G20 Inclusive Framework on BEPS was held on 11 July 2023, and approved the release of Outcome Statement on the Two-Pillar Solution. For more information click here.

May 2023

• Draft valuation rules released for public consultation, industry inputs invited

• Specified class of investors and start-up companies exempt from angel tax provisions notified
International credit card transactions over INR 700,000 to be brought under the ambit of Liberalised Remittance Scheme and subject to Tax Collection at Source of 20

February 2023

CBDT extends exemption from mandatory e-filing of Form 10F for non-residents up to September 30, 2023

The framework for the scheme can be accessed here.
The updated FAQs pertaining to the e-verification scheme can be accessed here.
The technical guidance titled ‘Agreed Administrative Guidance for the Pillar Two GloBE Rules’ can be accessed here.

December 2022

OECD released the latest mutual agreement procedure (MAP) statistics covering 127 jurisdictions. These statistics form part of the BEPS Action 14 Minimum Standard and the wider G20/OECD tax certainty agenda to improve the effectiveness and timeliness of tax-related dispute resolution mechanisms. Further details can be accessed here.
The Revenue Statistics 2022 report can be accessed here while the Consumption Tax Trends 2022 report can be accessed here.

November 2022

22 jurisdictions signed the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of information under the OECD Model Rules for Reporting by Digital Platforms, at the OECD Global Forum’s 15th Plenary Meeting.
OECD has published the compilation of public comments received on ‘Progress Report on the Administration and Tax Certainty Aspects of Amount A of Pillar One’. The report can be accessed here.

CBDT has released a draft format for a consolidated tax return, which also seeks information from Indians residing abroad on any business connections in India, and details of significant economic presence of such businesses, if any. This could have an impact on Indian traders on crypto exchanges even if not incorporated in India. The draft can be accessed here.

The due date for filing TDS Statement in Form 26Q for second quarter of FY 2022-23 has been extended by a month to Nov 30, 2022. The Circular No.21/2022 dated October 27, 2022 can be accessed here.
CBDT has released Explanatory Notes to Provisions of Finance Act, 2022 vide Circular 23/2022 dated November 03, 2022, which can be accessed here.
ICAI releases its Ninth Edition of the Guidance Note on Report under Section 92E which also incorporates amendments made by the Finance Act, 2022. The report can be accessed here.
The UN Sub-committee on Tax Matters has proposed to include a general “subject to tax” rule (STTR) in the United Nations Model Double Taxation Convention. The proposal can be accessed here.

October 2022

The OECD during the 14th plenary meeting of the G20 Inclusive Framework on BEPS released a Progress Report on the Administration and Tax Certainty Aspects of Amount A of Pillar One, and is now inviting public comments on the same. The report can be accessed here.

The OECD has released a new global tax transparency framework (named the ‘Crypto-Asset Reporting Framework’) for the reporting and exchange of information between countries on crypto-assets. The report can be accessed here.

The jurisdiction of CIT(A) for International Tax & Transfer Pricing cases across the country has been notified by CBDT. The applicable Notification No. 113/2022 dated October 13, 2022, can be accessed here.
The relevant Notification No. 112/2022 dated October 7, 2022 can be accessed here.

The Income Tax Department has published FAQs on filing of Form 27C. The FAQs can be accessed here.

September 2022

The World Bank has released a report titled ‘The Global Minimum Tax: from agreement to implementation’ analysing key elements of the Global Minimum Tax and its practical implementation in respective countries. The report can be accessed here.
The due date for filing tax audit report has been extended till October 07, 2022. The Circular No. 19/2022 dated September 30, 2022 can be accessed here.
CBDT notifies Rule 132 of the Income Tax Rules (with effect from October 01, 2022) prescribing rule and forms for taxpayers to make voluntary application with the tax authority for re-computation of total income to avoid deeming penal consequences for under-reported income on account of disallowance, on retrospective basis, of surcharge or cess as business deduction which was claimed and allowed in the past.
Deadline for filing Form ITR-A in the case of companies going through business re-organisation from April 01, 2022, to September 30, 2022 has been extended till March 31, 2023. The order dated September 26, 2022 can be accessed here.

The Central Board of Direct Taxes has issued further guidelines to address challenges in implementation of TDS under Section 194R of the Income Tax Act. The revised guidelines clarify many of the issues that the Tax Forum had advocated for on behalf of members.

CBDT issued Guidelines for Compounding of Offences under the Income-tax Act, which are set to supersede the earlier guidelines. The guidelines dated September 16, 2022 can be accessed here.

For further details please reach us here

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