India: Equity share valuations; “tax holiday” determinations

Equity share valuations; “tax holiday” determinations

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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  • Amended rules for valuation of unquoted equity shares: The Central Board of Direct Taxes issued a release along with a draft notification proposing to amend the rules used to determine the method of valuation of unquoted equity shares for the purpose of applying section 56(2)(x) and section 50CA of the Income-tax Act, 1961. Read a May 2017 report [PDF 278 KB]

  • Resolution of “debatable” issues: The Supreme Court of India addressed when an Assessing Officer can make an adjustment when the issue is “debatable.” If the issue is settled by a High Court having jurisdiction, then the issue is “not debatable.” The case is: Raghuvir Synthetics Ltd. Read a May 2017 report [PDF 475 KB]

  • Definition of “payable” under section 40(a)(ia): The Supreme Court of India addressed the term “payable” when there is a requirement to withhold (deduct) tax at source and remit the withheld tax to the government. Section 40(a)(ia) applies not only to situations when the amount is “payable” but also when it is “paid”. The case is: Palam Gas Service. Read a May 2017 report [PDF 500 KB]

  • Profit-linked “tax holiday” benefit: The Delhi High Court upheld the constitutional validity of relevant provisions of the Income-tax Act, 1961 mandating the timely filing of income tax returns for the purpose of claiming profit-linked “tax holiday” benefit for exports and other qualifying activities. The case is: Nath Brothers Exim International Ltd. Read a May 2017 report [PDF 338 KB]

  • Tax reform bill advances: The Lok Sabha passed the Taxation Laws (Amendment) Bill, 2017, that advances certain reforms and repeals certain cesses. Passage of the bill may provide a smooth transformation of current indirect taxes into a goods and services tax (GST) and on imports of goods. Read a May 2017 report [PDF 298 KB]

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