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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 [email protected]
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:
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.
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 [email protected]
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:
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.
The Hon’ble Finance Minister of India presented the Union Budget 2022 on February 1 2022. We have summarized some of the key tax announcements made in the Budget and you can access the updates here and here. Basis the feedback received from our members, USISPF shared a detailed to the Government on tax amendments proposed under the Finance Bill 2022.
CBDT releases Notification No. 117/2021 dated 24th September 2021 to extend applicability of Safe Harbour Rules under Rule 10TD of Income-tax Rules to AY 2021-22. Please access the notification here .
CBDT has announced further extension of due dates considering difficulties reported by the taxpayers and other stakeholders in e-filing of various Forms including the returns for Equalization levy. Click here to read CBDT Press Release.
Further to the difficulties reported in electronic filing of Forms 15CA/15CB on the portal CBDT has extended the date of filing Forms 15CA/15CB to Aug 15, 2021. Taxpayers can now submit the said Forms in manual format to the authorized dealers, advises authorized dealers to accept the Forms till Aug 15, 2021 for the purpose of foreign remittances. Click here to read CBDT Press Release.
Click here to read and download the CBDT Notification Nos. 23, 24 & 25 of 2021.
CBDT has introduced the Income-tax (9th Amendment) Rules, 2021 effective from April 1, 2021. It has further amended Rules 10DA and 10DB of the Income-tax Rules dealing with Master file and CbCR reporting for specified transactions of constituent entities of an international group. Please refer to the notification here.
The Central Board of Direct Taxes has issued second round of 34 Frequently Asked Questions (FAQs) to address the issues raised by stakeholders relating to the operation of The Direct Tax Vivad Se Vishwas Act 2020. The Circular is issued in continuation of an earlier circular (here) which contained the first round of 55 FAQs. In the same manner as the first round, the clarifications in second round deal with the issues of eligibility of a taxpayer to settle its case under the scheme in different situations, manner of computing the quantum of disputed tax payable, consequences of settlement under the scheme, certain procedural aspects etc. Please refer to the circular here and For further details please reach us here
As the world deals with disruption caused by the Pandemic and adopt measures to return to normalcy, containment measures ranging from lockdowns to ban on international travel may have resulted in employees of MNCs/U.S based entities to be stranded in non-home office locations/India. Recent announcement by the U.S to suspend H1B and other visas, are seen as an effort to augment employment in the U.S and may have also caused such visa holders to continue working from India for longer than planned/permissible. These can lead to concerns from a tax standpoint, such as creation of a taxable presence of the employer in India due to extended periods of stay by their employees, impact on employees taxation in India due to applicability of domestic residency rules as well as social security implications etc. Immigrations matters in such cases also add to the complications. While the OECD has expressed its views to address potential tax implications arising due to COVID, the Indian Revenue has limited its guidance to tax residency rules for such individuals which currently is applicable for year ended 31 March 2020. In this regards forum submitted a detailed note to CBDT with recommendations on urgent clarifications.
Forum has submitted recommendations regarding the Income tax exemption for foreign OEMs in respect of contracts with DPSUs (currently such exemption is available only for contracts with Ministry of Defence.
The Finance Act 2020 amended the scope of Equalisation Levy with effect from 1 April 2020 to cover consideration received/ receivable by non-resident e-commerce operators for e-commerce supply or services provided to specified persons subject to certain conditions. The new levy came into force from 1 April 2020. In order to enable the payment of equalisation levy within the due date of 7 July, the Central Board of Direct Taxes amended the existing EL payment challan ITNS 285 so as to permit the use of the same challan for payment of ESS EL. The modified challan includes an option to select “E-commerce operator for e-commerce supply or services” under the “Type of Deductor” head. Forum requested Ministry of Finance to bring out clarifications around the compliance difficulties being faced by companies.
While the request for a deferral of the levy continues to be a larger industry ask, USISPF continues with its efforts to make its voice heard on some of the key clarifications required under the law. Forum recently shared industry recommendations to the Central Board of Direct Taxes.
Section 194O as introduced in the Finance Act 2020 having an implication of 1% TDS levy on E-commerce companies was deferred to be implemented from 1st October 2020. USISPF had as part of our Tax Forum engagements held in February 2020 committed to support the GOI with draft FAQs on the TDS levy which will help clarify several ambiguities around the provision.
Union Budget 2020 proposed to insert a new section 194O under the Income-tax Act, 1961 where in it is proposed to levy withholding tax at the rate of one per cent on the payments made by e-commerce operator to e-commerce participants for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform. Forum has submitted a detailed note on how the said provisions can be implemented effectively with few clarifications.
Budget 2019 introduced a 2% TDS on the cash withdrawal of more than Rs. 1 crore from a bank account within a financial year. On behalf of our members USISPF has recommended to Ministry of Finance on the need to relook at this provision in the interest of Money Transfer companies.
Budget 2019 imposes a high surcharge on non- corporate FPIs impacting the overall investment climate. On behalf of our members USISPF has submitted a detailed note highlighting the impact of this provision and how can this be a dampener to the economic objective of driving investments in the country.
Taking into cognizance, the significance of issues related to attribution of profits to a permanent establishment, as well to ensure better clarity and predictability in the tax regime on this debatable issue, a Committee was constituted by the CBDT to examine the existing provisions in the domestic income tax law and tax treaties inviting comments. After an extensive consultation with its members USISPF shared a detailed feedback to the CBDT.
Broadly our suggestions are around the following key areas :
For further details please reach us here
As the world deals with disruption caused by the Pandemic and adopt measures to return to normalcy, containment measures ranging from lockdowns to ban on international travel may have resulted in employees of MNCs/U.S based entities to be stranded in non-home office locations/India. Recent announcement by the U.S to suspend H1B and other visas, are seen as an effort to augment employment in the U.S and may have also caused such visa holders to continue working from India for longer than planned/permissible. These can lead to concerns from a tax standpoint, such as creation of a taxable presence of the employer in India due to extended periods of stay by their employees, impact on employees taxation in India due to applicability of domestic residency rules as well as social security implications etc. Immigrations matters in such cases also add to the complications. While the OECD has expressed its views to address potential tax implications arising due to COVID, the Indian Revenue has limited its guidance to tax residency rules for such individuals which currently is applicable for year ended 31 March 2020. In this regards forum submitted a detailed note to CBDT with recommendations on urgent clarifications.
Forum has submitted recommendations regarding the Income tax exemption for foreign OEMs in respect of contracts with DPSUs (currently such exemption is available only for contracts with Ministry of Defence.
The Finance Act 2020 amended the scope of Equalisation Levy with effect from 1 April 2020 to cover consideration received/ receivable by non-resident e-commerce operators for e-commerce supply or services provided to specified persons subject to certain conditions. The new levy came into force from 1 April 2020. In order to enable the payment of equalisation levy within the due date of 7 July, the Central Board of Direct Taxes amended the existing EL payment challan ITNS 285 so as to permit the use of the same challan for payment of ESS EL. The modified challan includes an option to select “E-commerce operator for e-commerce supply or services” under the “Type of Deductor” head. Forum requested Ministry of Finance to bring out clarifications around the compliance difficulties being faced by companies.
While the request for a deferral of the levy continues to be a larger industry ask, USISPF continues with its efforts to make its voice heard on some of the key clarifications required under the law. Forum recently shared industry recommendations to the Central Board of Direct Taxes.
Section 194O as introduced in the Finance Act 2020 having an implication of 1% TDS levy on E-commerce companies was deferred to be implemented from 1st October 2020. USISPF had as part of our Tax Forum engagements held in February 2020 committed to support the GOI with draft FAQs on the TDS levy which will help clarify several ambiguities around the provision.
Union Budget 2020 proposed to insert a new section 194O under the Income-tax Act, 1961 where in it is proposed to levy withholding tax at the rate of one per cent on the payments made by e-commerce operator to e-commerce participants for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform. Forum has submitted a detailed note on how the said provisions can be implemented effectively with few clarifications.
Budget 2019 introduced a 2% TDS on the cash withdrawal of more than Rs. 1 crore from a bank account within a financial year. On behalf of our members USISPF has recommended to Ministry of Finance on the need to relook at this provision in the interest of Money Transfer companies.
Budget 2019 imposes a high surcharge on non- corporate FPIs impacting the overall investment climate. On behalf of our members USISPF has submitted a detailed note highlighting the impact of this provision and how can this be a dampener to the economic objective of driving investments in the country.
Taking into cognizance, the significance of issues related to attribution of profits to a permanent establishment, as well to ensure better clarity and predictability in the tax regime on this debatable issue, a Committee was constituted by the CBDT to examine the existing provisions in the domestic income tax law and tax treaties inviting comments. After an extensive consultation with its members USISPF shared a detailed feedback to the CBDT.
Broadly our suggestions are around the following key areas :
USISPF submits recommendations for Union Budget 2019 – June 2019 – others
The Union Budget will be presented by the newly-appointed Finance Minister Ms Nirmala Sitharaman on July 5, 2019 in first session of Parliament for the new Government that begins June 17 and continues till July 26, 2019. USISPF has submitted our key asks for Budget 2019 across industries as our Pre-budget memorandum. Focus of our recommendations this year is:
