India: Capital gain tax involving treaties | KPMG | GLOBAL
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India: Capital gain tax involving treaties; foreign shipping company guidance

India: Capital gain tax involving treaties

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


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  • Capital gain tax treatment: The Authority for Advance Rulings (AAR) determined that a capital gain tax exemption provided under section 47(vi) of the Income-tax Act, 1961 is available for a non-resident taxpayer involved in an amalgamation of foreign companies by virtue of the non-discrimination clause under Article 25 of the India-Italy income tax treaty. The AAR observed that if the amalgamation results in some special benefits to a domestic company and its shareholders, there is no reason to deny the same treatment to a foreign company and its shareholders in similar cases of amalgamation. The case is: Banca Sella S.p.A. Read a September 2016 report [PDF 346 KB]
  • Taxability of capital gains, Mauritius investment company: The AAR determined that the capital gains arising from the transfer of shares is not taxable in India pursuant to Article 13(4) of the India-Mauritius income tax treaty. The case is: Shinsei Investment I Limited. Read a September 2016 report [PDF 349 KB]
  • Port clearance certificate, voyage return, voyage assessment and issuance of NOC in the case of foreign shipping companies: India’s tax authorities (CBDT) issued a circular setting forth guidelines for streamlining the process with respect to the issue of voyage “no objection certificate” (NOC), the filing of voyage return, and voyage assessment for foreign shipping companies. Read a September 2016 report [PDF 285 KB]
  • Disallowance due to non-withholding of tax at source: The Calcutta High Court held that a legislative change that received presidential assent on 10 September 2004, was effective 1 April 2005.  Because the taxpayer could not have foreseen prior to 10 September 2004 that any amount paid to a contractor without withholding (deducting) tax at source was likely to become not deductible under section 40(a)(ia) of the Income-tax Act, 1961. But payments made during the previous year (ended 31 March 2005) were not subject to disallowance under section 40(a)(ia) of the Act for non-withholding (non-deduction) of tax at source. The case is: Piu Ghosh. Read an August 2016 report [PDF 355 KB]

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