India: Income tax computation guidance

India: Income tax computation guidance

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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  • Revised income computation and disclosure standards (ICDS): The Ministry of Finance issued a revised ICDS, as a new framework for computation of taxable income in relation to income under the headings “Profit and gains of business or profession” and “Income from other sources.” Application of the new ICDS has been deferred by one year, and will be effective by 1 April 2016 (for AY 2017-18). Read an October 2016 report [PDF 293 KB]
  • Treatment of interest paid on partner’s capital: The Pune Bench of the Income-tax Appellate Tribunal held that interest paid with respect to a partner’s capital is not an “expenditure” but is an amount in the nature of a deduction under section 40(b) of the Income-tax Act, 1961. The case also involved an investment in mutual funds generating tax-free income and the treatment of the related interest paid to partners. The case is: Quality Industries. Read an October 2016 report [PDF 338 KB]
  • Share issue expenditure and bonus eventually paid to employees: The Supreme Court allowed a company a share issue expenditure under section 35D, and also allowed a bonus expenditure, even though the bonus amount was deposited in a trust and, at the end of a dispute with employees, was paid over to them. The case is: Shasun Chemicals and Drugs Ltd. Read an October 2016 report [PDF 337 KB]

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