India: Tax treaty with Korea; withholding on promotion payments

India: Tax treaty with Korea; promotion payments

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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  • Review of India-South Korea income tax treaty: An income tax treaty between India and South Korea (signed in May 2015) is pending ratification and notification procedures for the treaty’s provisions to enter into force. Read a September 2016 report [PDF 285 KB] that describes the provisions in the treaty.
  • Foreign travel expenses as business expenditure: The Mumbai Bench of the Income-tax Appellate Tribunal held that foreign travel expenditures incurred to reward medical doctors for “patient-referrals” are not allowable as a deduction. The case is: Liva Healthcare Limited. Read a September 2016 report [PDF 345 KB]
  • Service fees paid to subsidiary for product promotion under treaty with Russia: The Authority for Advance Ruling (AAR) determined that payments of service fees for product promotion services cannot be categorized as “fees for technical services” under the India-Russia income tax treaty or under the provisions India’s tax law. Accordingly, the payments are not subject to tax withholding. The case is: Dr. Reddy Laboratories Limited. Read a September 2016 report [PDF 343 KB]
  • Transfer of shares of an Indian company under treaty with Mauritius: The AAR determined that capital gains realized on the transfer of shares are not taxable in India under provisions of the India-Mauritius income tax treaty. The AAR found that the control and management of the company was not wholly in India. The case is: Mahindra-BT Investment Company (Mauritius) Limited. Read a September 2016 report [PDF 384 KB]

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