India: Early provident fund withdrawals; share buybacks

India: Early provident fund withdrawals; share buybacks

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

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  • Provident fund withdrawals: The Ministry of Labour and Employment issued guidance to amend the Employees’ Provident Funds Scheme, 1952 with regards to the provisions relating to the early withdrawal of provident fund accumulations on the cessation of employment. The notification’s effective date is 10 February 2016. Read a February 2016 report [PDF 279 KB]
  • Tax officer lacks authority to recomputed book profit for minimum alternate tax (MAT) provisions: The Karnataka High Court held that the Assessing Officer is not authorized to recompute the taxpayer’s book profit for MAT purposes, but instead, must rely on “authentic statements” of the company as (1) certified by the statutory auditors, (2) approved by the company in a general body meeting, and (3) then filed with the Registrar of Companies. The case is: Sri Hariram Hotels (P.) Ltd. Read a February 2016 report [PDF 287 KB]
  • Consultancy charges relating to construction activities, not taxable “fees for technical services”: The Delhi Bench of the Income-tax Appellate Tribunal held that the payment received for consultancy charges relating to highways, transportation, water supply, and waste management are not taxable as “fees for technical services” under provisions of the Income-tax Act, 1961 (the Act). The case is MSV International Inc. Read a February 2016 report [PDF 317 KB]
  • Tax on share buybacks prior to 1 June 2013: The Central Board of Direct Taxes (CBDT) clarified that consideration received with respect to a buyback of shares—for the period 1 April 2000 to 31 May 2013—is taxable as capital gains to the recipient, and is not a dividend. Read a February 2016 report [PDF 278 KB]

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