Tax Submissions Direct Taxes- US-India Tax Forum

Representation submitted to Ministry of Finance on implications of TCS on payments toward employee stock compensation schemes

Submission on taxation of winnings from online gaming

Representation submitted to Ministry of Finance on coverage of international credit card transactions under LRS

Representaiton on draft angel tax valuation rules

Post-Budget Memorandum on Direct Tax Proposals under Finance Bill, 2023

Representation on issues emerging from proposed TCS amendments in Finance Bill 2023

Representation regarding TDS on Online games under Section 194BA of the Act

Representation on issues emerging from proposed TCS amendments in Finance Bill 2023

Representation on challenges in electronic furnishing of Form 10F for non-residents

The Forum made a detailed submission to the Ministry of Finance covering various suggestions on Transfer Pricing laws and policies, including compliances, audits, Advance Pricing Arrangements, and dispute resolution mechanisms.

US-India Tax Forum submitted its Pre-Budget Memorandum(s) to the Tax Planning Legislation Unit (for Direct Taxes) and Tax Research Unit (for Indirect Taxes – Customs) of the Ministry of Finance based on inputs received from more than 30 member companies across various sectors. Our recommendations cover duty rate changes, ease of compliance, ease of doing business, suggestions to reduce tax litigation, leveraging technology for tax administration etc., amongst other procedural and legislative changes. For further details, please write to Anikha Ashraf at aashraf@usinfoundation.org

Section 194R of the Income Tax Act mandates TDS on any benefit or perquisite provided to a resident in the course of business or profession. In response to numerous concerns and requests for clarification from the industry regarding the applicability of these provisions, the Central Board of Direct Taxes (CBDT) issued guidelines in Q&A form vide Circular No. 12, 2022 dated June 16, 2022. However, these guidelines resulted in further ambiguities on several practical and legal aspects. In continuation of its advocacy efforts, the Forum had collated details of these issues from its members and submitted a representation to CBDT earlier this week. We are now in the process of organising a consultation with concerned officials at CBDT to take the matter forward and seek necessary clarifications.

The Indian Government recently levied additional duties on export of domestically produced petroleum products by oil and gas companies as a ‘windfall tax’ to target the extraordinary gains made by these companies. As a Forum we would like to understand the broader industry perspective on these levies, and challenges faced if any, to enable us to engage with the Government and make appropriate representations as required. Further, the lack of parity in the corporate income tax rate between domestic and foreign companies discourages foreign investment in oil and gas exploration. We foresee this issue forming part of our broader pre-Budget consultations and engagements with the Government of India later in the year, and invite your inputs on the same.

Section 194-R, which came into effect on July 01, 2022 introduced TDS on benefits/ perquisites granted in the course of business to any resident taxpayer. While CBDT issued clarifications last month to address implementation issues arising from this levy, the industry has expressed numerous concerns from a practical and legal standpoint. In continuation of our advocacy efforts on Direct Tax matters, the Forum has collated details of such difficulties, and shall be organising a meeting with key officials from the Tax Policy and Legislation Unit of CBDT, and making a representation on behalf of the industry.

The Union Budget 2022 introduced a tax incident for virtual digital assets (VDA), bringing cryptocurrency transactions into the ambit of direct taxes. CBDT has now issued multiple clarifications recently to address ambiguities that may emerge from the applicability of TDS on VDAs:

• Guidelines dated June 22, 2022 in Q&A form clarifying aspects such as person responsible for TDS compliances under Section 194S in different scenarios, valuation of consideration, etc. (summary of these guidelines can be accessed on our website here)
• Guidelines dated June 28, 2022, to clarify aspects in relation to cryptocurrency transactions not routed through an Exchange
• Notification No. 73/2022 dated June 30, 2022 to notify quarterly TDS statement in Form No. 26QF to be filed by cryptocurrency Exchange where the Exchange has entered into an agreement to undertake TDS compliances in lieu of the buyer
• Notification No. 74/2022 dated June 30, 2022, to clarify that certain items (such as gift cards, vouchers, mileage/ reward points, website/platform subscriptions) shall be excluded from the scope of VDAs
• Notification No. 75/2022 dated June 30, 2022, to clarify that NFTs whose transfer results in transfer of ownership of underlying tangible asset, shall be excluded from the scope of VDAs.

As part of our post-Budget engagements, the Forum had shared concerns emerging from the wide definition of VDAs and the applicability of Crypto Tax. In continuation of our efforts, the Forum would like to invite broader feedback from the industry with respect to the aforementioned clarifications/guidelines issued by CBDT.