India’s Ministry of Finance recently amended service tax rules related to online information and database access or retrieval (OIDAR) services.
The government said it is imposing a 15% tax on downloads and purchases of digital goods from offshore retailers.
Here are some key changes, effective from December 1, 2016: (more…)
The treaty signed between India and Mauritius in 1983, a decade before India opened its door to foreign investors made Mauritius the most favored route to invest in India. Many foreign companies incorporated a holding company in Mauritius which held shares in an Indian company. The sale of shares in Indian company would not result in capital gains tax in India and Mauritius- thereby making it a preferred vehicle for foreign investment.
According to government data, from 2000 – 2015, about $94 billion, a third of all foreign direct investment into India, came via Mauritius. It was a boon to the Indian economy at the brink of liberalization in 1990’s, but gave rise to “round tripping” i.e., Income on which taxes were not paid was routed via Mauritius companies to avoid tax, revenue loss and treaty abuse. (more…)
FASB Simplifies Reporting for Share Based Payments
Yet another simplification initiative from the Financial Accounting Standards Board (FASB), especially for nonpublic companies, arrives in the form of ASU 2016-09 Improvements to Employee Share-Based Payment Accounting and quite likely offers welcome relief for technology companies around the Silicon Valley. Some of the key simplification measures under this guidance that is effective for annual periods beginning after December 15, 2017 for nonpublic companies and annual periods beginning after December 15, 2016 for public companies are: (more…)
India’s Central Board of Direct Taxes (CBDT) recently clarified that income from the transfer of unlisted shares will be taxed as a lower rate capital gain rather than as business income.
The tax department’s move is aimed at avoiding tax disputes/litigation and maintaining a uniform approach. However, such treatment isn’t applicable in situations where:
- The genuineness of transactions in unlisted shares itself is questionable,
- The transfer of unlisted shares is related to an issue pertaining to lifting of the corporate veil, or
- The transfer of unlisted shares is made along with the control and management of the underlying business.
Seems like everywhere I look these days, there’s an article about key issues for US companies wanting to do business in India. And if that wasn’t enough, several of my clients now have a presence in India requiring me to once again get familiar with the nuances of Indian laws and regulations. While I leave it to the other experts to opine on organization structure, relevant labor and currency laws and tax considerations, such as in Journal of Accountancy’s March 2013 article, How to Do Business in India, I’d like to share my two cents (or ₹1.09 at current exchange rates) on how an Indian subsidiary (component) impacts the financial reporting for the group by the parent US company…
It never ceases to amaze me how much I learn about current affairs through status updates, posts and comments on my various social networking sites. One such topic that piqued my interest was the recent nationwide strike in India, where traders across the nation shut down in protest of the government’s decision to further relax foreign direct investment (FDI) regulations. Under the proposed move…