India: No minimum alternative tax, foreign companies, retroactive to 2001

India: No minimum alternative tax, retroactive to 2001

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

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  • Revenue from distribution of news and financial information products not taxable, absent a PE: The Mumbai Bench of the Income-tax Appellate Tribunal held that revenue related to the distribution of news and financial information products by the taxpayer is not taxable in India, absent a dependent permanent establishment (PE) and service PE under the India-United Kingdom income tax treaty. The case is: Reuters Ltd. Read a September 2015 report [PDF 435 KB].
  • Depreciation of aquaculture ponds: The Supreme Court held that ponds specially designed for the rearing and breeding of prawns are “tools” or a plant of the taxpayer’s business, and as such, are eligible for depreciation under section 32 of the Income-tax Act, 1961. The case is: Victory Aqua Farm Ltd. Read a September 2015 report [PDF 426 KB].
  • No minimum alternate tax (MAT) for foreign companies: Effective retroactively from 1 April 2001, it has been announced that India’s minimum alternate tax does not apply to foreign companies having no permanent establishment or place of business in India. Read a September 2015 report [PDF 376 KB].
  • Requirement to withhold tax at source: The Delhi High Court held that the mere “passing” of book entries that are subsequently reversed, does not give rise to an obligation to withhold (or as referred to in India “deduct”) tax at source because there was no debt acknowledged by the payer. Therefore, the taxpayer was not required to withhold tax at source. Read a September 2015 report [PDF 432 KB].

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