India: GST update; tax treatment of managerial services, intangible assets

India: GST update; tax treatment of managerial services

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

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  • GST legislative update: The Union Cabinet approved changes in the bill that would provide a goods and services tax (GST) regime. The GST Constitution Amendment Bill was approved by the Cabinet on 27 July 2016, and then “tabled” (presented) before the Upper House of Parliament on 3 August 2016 which approved the bill by a majority vote. Read an August 2016 report [PDF 305 KB]
  • Managerial services under treaty with France: The Delhi High Court held that payment for managerial services are not to be taxed as “fees for technical services” in view of the “most favoured nation” clause under the India-France income tax treaty. Accordingly, the payments were not subject to tax withholding. The case is: Steria (India) Ltd. Read an August 2016 report [PDF 296 KB]
  • Warehousing requirements for export-oriented units: As a trade facilitation measure, the Central Board of Excise and Customs removed a requirement for export oriented units—including software technology park, electronic hardware technology park units and bio technology park units—to operate under customs bond, effective 13 August 2016. Read an August 2016 report [PDF 285 KB]
  • Tax collected at source: Under the provisions of India’s tax law, sellers of certain goods are required to collect tax at source from the buyer. Alternatively, the seller may file an application for an exemption (non-application) from the rules for collection of tax at source. The Gujarat High Court held that a minor delay in filing the declaration for non-applicability of the rules for tax collected at source was merely a procedural lapse, and that the seller generally was in compliance with the non-applicability declaration. Therefore, the seller was under no obligation to collect tax at source. The case is: Siyaram Metal Udyog (P) Ltd. Read a July 2016 report [PDF 328 KB]
  • Intangible assets: The Delhi High Court observed that there is no specific provision in India’s tax law for determining the situs (location) of an intangible asset. Therefore, following the international principle, the situs of the intangible was attached to its owner. The High Court held that because the situs of trademarks and intellectual property rights was not in India, income accruing from the transfer of title and interest in such intangible property was not taxable in India. The case is: CUB Pty Limited. Read a July 2016 report [PDF 340 KB] 

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