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India: Retroactive tax law changes; 10-year period for tax benefits

India: Retroactive tax law changes

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).

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  • Determining when legislative changes apply retroactively: The Supreme Court of India held that when the amount of withheld tax is remitted to the government after the end of the financial year but before the due date for filing the tax return, a legislative amendment that there is no disallowance of a deduction when the tax withheld is deposited with the government before the due date of the return filing applies retroactively (from the effective date of the affected section of the tax law). The case is: Calcutta Export Company. Read a May 2018 report [PDF 441 KB]
  • Determining what triggers the 10-year period for specific tax benefits: The Supreme Court of India—in a case concerning the period for measuring a 10-year tax benefit available under a provision of Indian tax law—held that the period is limited to eligible industrial undertakings or enterprises that are set-up in the north-eastern region and that because the taxpayer’s substantial expansion was completed by 1 April 2005, the 10-year period applies from Assessment Year (AY) 2006-07 onwards. The case is: Mahabir Industries. Read a May 2018 report [PDF 683 KB]
  • Payments for marketing and distribution rights held taxable royalty: The Bangalore Bench of the Income-tax Appellate Tribunal held that payments for marketing and distribution rights of an “adwords” program were taxable as income. Under the adwords program’s distribution and service agreements, the taxpayer was licensed to use certain confidential information, technical know-how, trade mark, brand features, derivative works, etc., but ownership of these intangibles remained with the foreign company. The tribunal found this license was not merely an agreement to provide advertisement space but was a license to be used in facilitating the display and publishing of an advertisement to targeted customers. The case is: Google India Private Ltd. Read a May 2018 report [PDF 610 KB]
  • Charges under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952: A notice concerns revisions to the rate of administrative charges under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, and is effective 1 June 2018. Read a May 2018 report [PDF 658 KB]

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