India’s Central Board of Direct Taxes issued draft changes to the income tax rules and forms to align them more closely with the OECD’s base erosion and profit shifting (BEPS) Action 5 relating to permanent establishment-related rulings.
Under BEPS Action 5, permanent establishment-related rulings (by India’s Authority for Advance Rulings) are required to be exchanged not only with the countries of residence of all related parties with whom a taxpayer enters into transactions but also with the country of residence of the immediate parent company and the ultimate parent company.
To implement the recommendations made under BEPS Action 5 and to bring greater transparency in cross-national transactions, Forms 34C and 34D (the forms in India for advance rulings) need to be modified so that certain information—such as the name, address, and country of residence of a non-resident’s immediate parent company or ultimate parent company—is captured at the application stage. The Finance Act, 2017 amended the definition of the term “applicant” for the purpose of advance rulings under the Income-tax Act, 1961. However, no consequential amendments were made in Rule 44E of the Income-tax Rules, 1962 (that is, the rules relating to application for obtaining an advance ruling) and the applicable forms to bring them in harmony with the relevant amendment to the tax law. Accordingly, the Central Board of Direct Taxes issued a draft notification proposing amendments to Rule 44E and to Forms 34C, 34D and 34DA.
Read an April 2018 report [PDF 362 KB] prepared by the KPMG member firm in India
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.