India: Direct selling guidelines; tax dispute resolution; call option taxation

India: Direct selling guidelines

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

Related content

  • Model framework for guidelines on direct selling: The Direct Selling Guidelines 2016 offer guiding principles for state governments to consider regulating the businesses of direct selling and multi-level marketing. The guidelines aim to strengthen the existing regulatory rules. Read a September 2016 report [PDF 297 KB]
  • FAQs on tax dispute resolution: India’s tax authorities (CBDT) issued a set of “frequently asked questions” (FAQs) aimed at clarifying certain direct tax dispute resolution measures. Read a September 2016 report [PDF 268]
  • Capital gain tax treatment, 150-year call option: The Mumbai Bench of the Income-tax Appellate issued a decision in a case involving a transaction involving a Singapore resident that entered into a “call option” agreement with a Mauritian company. The call option was granted for a period of 150 years to the Mauritian company, allowing it to sell the entire shareholding in an Indian company. The tribunal held that there was no alienation of shares under the call option agreement, but that a valuable and substantive right in the shares of the Indian company was given to a non-resident company and that this valuable right (or interest) in the shares constituted a capital asset. Thus, this transfer would be considered to be the transfer of an asset and assessable as “capital gain.” However¸ the capital gain was not taxable in India under provisions of the India-Singapore income tax treaty because the taxing right was assigned to the resident state (here, Singapore). The case is: Praful Chandaria. Read a September 2016 report [PDF 340 KB]
  • AAR application: The Delhi High Court held that the Authority for Advance Rulings (AAR) cannot reject an AAR application notice because the “scrutiny notice” issued by the Assessing Officer did not address any specific question and did not disclose items identified on the income tax return. The case is: Sage Publications Ltd U.K. Read a September 2016 report [PDF 331 KB]

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