India: In-house R&D guidelines; claiming depreciation | KPMG | GLOBAL

India: In-house R&D guidelines; rules for claiming depreciation

India: In-house R&D guidelines; claiming depreciation

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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  • “Solar days” used to determine service permanent establishment: The Bangalore Bench of the Income-tax Appellate Tribunal held that only “solar days” are to be considered (and not “man days”) in determining a service permanent establishment under the India-Saudi Arabia income tax treaty. The case is: Electrical Material Center Co. Ltd. Read an October 2017 report [PDF 696 KB]
  • Provident fund FAQs and guidelines: The Employees’ Provident Fund Organisation has issued: (1) frequently asked questions (FAQs) on its inspection policy to simplify business regulations; and (2) guidelines with regard to monitoring the management of employees’ provident fund trusts of exempted establishments. Read October 2017 reports on the FAQs [PDF 525 KB] and guidelines [PDF 526 KB]
  • Guidelines for in-house R&D centres: The Department of Scientific and Industrial Research amended the guidelines for approval of in-house research and development (R&D) centres and the submission of a prescribed report. It is not clear whether the guidelines will apply to assessment year 2017-2018. Read an October 2017 report [PDF 570 KB]
  • Depreciation mandatory under section 32: The Supreme Court of India held that in computing a deduction under chapter VI-A, it is mandatory for the taxpayer to claim depreciation under section 32 of the Income-tax Act, 1961. The taxpayer cannot claim a 100% deduction under section 80-IA of the Income-tax Act, 1961 without taking into consideration depreciation. Further, the taxpayer cannot use the depreciation claim in subsequent years. The case is: Plastiblends India Ltd. Read an October 2017 report [PDF 420 KB]
  • Exemption allowed taxpayer investments in residential property: The Ahmedabad Bench of the Income Tax Appellate Tribunal held that an exemption under section 54 of the Income-tax Act, 1961 is allowed to taxpayers for their investments made in new residential property up to the date of filing the income tax return. Read an October 2017 report [PDF 577 KB]

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