India: Minimum alternative tax; franchise fees | KPMG | GLOBAL

India: Minimum alternative tax; franchise fees as revenue expenditure

India: Minimum alternative tax; franchise fees

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


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  • “Relaxed” minimum alternative tax provisions for companies undergoing corporate insolvency: The Central Board of Direct Taxes issued a press release stating that with effect from assessment year 2018-2019, in instances when a company is subject to a corporate insolvency resolution process, the amount of total loss brought forward (including unabsorbed depreciation) may be used to reduce the book profit for minimum alternate tax purposes. Read a January 2018 report [PDF 496 KB]
  • Annual franchise fees are deductible revenue expenditures: The Mumbai Bench of the Income-tax Appellate Tribunal held that the annual payment of franchise fees, paid to the Board of Control for Cricket in India to operate and participate in the Indian Premier League, is deductible as a revenue expenditure. The case is: Knight Riders Sports Private Limited. Read a January 2018 report [PDF 434 KB]
  • Foreign direct investment policy: Another set of amendments to the foreign direct investment policy has been announced in key sectors including single-brand retail trading, civil aviation, and construction development. The aim is to simplify the foreign direct investment norms and to encourage foreign direct investment into India. Read a January 2018 report [PDF 585 KB]
  • Ex-gratia for settling industrial dispute: The Ahmedabad Bench of the Income-tax Appellate Tribunal held that the taxpayer is entitled to an exemption under section 10(10B) of the Income-tax Act, 1961, with respect to the ex-gratia amount received by the taxpayer under an “out-of court” settlement for termination of service. The exemption is available to individual taxpayers in situations when the compensation received at the time of retrenchment as calculated under the Industrial Disputes Act, 1947. The case is: Vishnu Mohan T. Nair. Read a January 2018 report [PDF 620 KB]
  • Omitted section deemed omitted from inception: The Bangalore Bench of the Income-tax Appellate Tribunal held that once a particular provision of a section is omitted from the statute, it is deemed to be omitted from its inception unless and until there is some “saving clause or provision” to clarify that action taken or proceeding initiated under that provision or section would continue and would not be left on account of omission. The case is: Texport Overseas Private Limited. Read a January 2018 report [PDF 675 KB]

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