India: LOB clause under Singapore treaty | KPMG | GLOBAL

India: LOB clause under Singapore treaty; determining taxable “presumptive income”

India: LOB clause under Singapore treaty

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


Related content

  • Limitation of benefit clause: The Rajkot Bench of the Income-tax Appellate Tribunal held that the benefit of the India-Singapore income tax treaty is not to be denied to a taxpayer by applying provisions of the limitation of benefit (LOB) clause because the subject income was already subject to tax on an accrual basis in Singapore. The tribunal noted that the LOB provisions can only be triggered when two conditions are satisfied: (1) there is low or no taxability in the source jurisdiction; and (2) there is taxation on a “receipt basis” in the residence jurisdiction. In this case, the taxpayer had remitted its freight income to a UK account, but the tribunal allowed the taxpayer the benefit of the tax treaty provisions. The case is: Alabra Shipping Pte Ltd, Singapore / GAC Shipping India Pvt Ltd.
  • Service tax collected: The Delhi High Court held that the amount of service tax collected in relation to services rendered in connection with the business of exploration of mineral oils is not included in gross receipt for purposes of computing “presumptive income” under section 44BB of the Income-tax Act, 1961. The service tax collected by the taxpayer did not have any element of income and therefore could not form part of gross receipt, the court concluded. The case is: Mitchell Drilling International Pvt Ltd.

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.

Connect with us


Request for proposal