26 June 2017
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Direct Tax Misc. Direct Tax 001999

  • CBDT notifies secondary adjustment rule in transfer pricing
    Jun 20, 2017
    The Income Tax Department has come out with rules for operationalising the provisions of secondary adjustment in books of accounts to reflect actual allocation of profits between a company and its arm.The Finance Act 2017 has inserted Section 92CE in the I-T Act to give effect to the secondary adjustment norms, which are based on OECD's transfer pricing guidelines for multinational enterprises and tax administrations.It is also provided that where the excess money available with the associated enterprise on primary adjustment is not repatriated to India within the prescribed time, it shall be deemed to be an advance made by the assessee to such associated enterprise.
  • SC ruling on Aadhaar-PAN linking & CBDT clarification: Here’s all you need to know
    Jun 19, 2017
    Soon after the Supreme Court of India’s recent ruling on the constitutional validity of Aadhaar-PAN link provision, the Central Board of Direct Taxes (CBDT) clarified that every taxpayer eligible to obtain Aadhaar number will have to quote his/her Aadhaar number / Enrolment ID in the application form for allotment of PAN as also while filing income tax return from July 1, 2017, onwards.
  • India, 67 nations sign pact to check tax evasion by MNCs
    Jun 09, 2017
    India and 67 countries have put in place an agreement to plug loopholes in existing laws that allowed companies to evade taxes by artificially shifting their place of business.Finance Minister Arun Jaitley signed the multilateral convention, an outcome of the OECD/G20 Project to tackle base erosion and profit shifting. BEPS is resorted to by MNCs through tax planning strategies by exploiting gaps and mismatches in tax rules.
  • Central Board of Direct Taxes cuts profit margin for safe harbour rules
    Jun 09, 2017
    Given the lukewarm response to the safe harbour mechanism for transfer pricing, Central Board of Direct Taxes (CBDT) on Thursday cut the operating profit margin for information technology-enabled services, knowledge process outsourcing services (KPOs) and research and development (R&D) related to software and generic pharmaceutical drugs companies. The new rules will apply to transactions of up to Rs 200 crore. Safe harbour rules, a dispute-avoidance mechanism, are defined as circumstances under which the income-tax authorities accept the transfer pricing declared by the assessee. The rule provides the minimum operating profit margin in relation to operating expenses that a taxpayer is expected to earn for certain categories of international transactions.
  • Genuine transactions won't get caught in tax tangle
    Jun 07, 2017
    Foreign direct investments into India, employee stock options, and transfer of shares through gifts and offmarket transactions recognised by the central bank, the market regulator, top courts or tribunals will not attract the capital gains tax even if no securities transaction tax (STT) had been paid, putting at rest the lingering concerns over the likely tax incidence on genuine deals.
  • CBDT signs two more Unilateral APA's with Indian taxpayers
    May 23, 2017
    The Central Board of Direct Taxes (CBDT) on Monday announced entering into two Unilateral Advance Pricing Agreements (APA) with Indian taxpayers on May 4 and 11 respectively, out of which one agreement holds a rollback provision.The APA Scheme endeavors to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arm's length price of international transactions in advance for the maximum of five future years.
  • CBDT issues draft ICDS on real estate
    May 12, 2017
    The Central Board of Direct Taxes (CBDT) on Thursday released the draft Income Computation and Disclosure Standard (ICDS) on real estate transactions for public consultation. The proposed ICDS will be applicable for determination of income from all forms of transactions in real estate, including land and buildings. The draft ICDS doesn’t mandate obtaining all critical approvals for revenue recognition after the Real Estate (Regulation and Development) Act, 2016, (RERA), came into effect. It also proposes recognition of transferable development rights (TDR) at the fair value against fair market value or net book value as per the guidance note prepared by the Institute of Chartered Accountants of India (ICAI).
  • CBDT online facility to link Aadhaar with PAN
    May 12, 2017
    The Income-Tax Department has launched an online facility to link Permanent Account Numbers with Aadhaar. Under the facility, the taxpayer will have to provide the PAN and Aadhaar number, which then will be verified from the Unique Identification Authority of India, and then the two will be linked.“In case of any minor mismatch in Aadhaar name provided, Aadhaar one time password (OTP) will be required,” said the Central Board of Direct Taxes (CBDT) on Thursday, adding that taxpayers must ensure that the date of birth and gender in PAN and Aadhaar are exactly same for the facility to work.In case the Aadhaar name is different from the name in PAN, then the linking will fail. The taxpayer will then be prompted to change the name in either the Aadhaar or in the PAN database.
  • Central Board of Direct Taxes releases rules to compute fair market valuation of unlisted shares
    May 06, 2017
    The Central Board of Direct Taxes (CBDT) on Friday released draft methodology for arriving at the fair market valuation (FMV) of the unquoted shares (shares of unlisted entities) involved in a transaction for the purpose of taxation. This will bring the rules in line with the amendment made in the Finance Act, 2017.Under the extant rules, if a person receives jewellery, artistic work, shares and securities for inadequate consideration, FMV of the same is taken into account for computing taxable income. Similarly, for immovable property, the stamp duty value is taken into consideration for determining taxability. However when these assets are received as underlying assets of unquoted equity shares of company, the book value (and not the FMV / stamp duty value) is taken into consideration for determining the value of such shares.
  • HSBC foreign accounts case: Govt raises Rs 5,419 crore tax demand
    May 04, 2017
    The government has raised tax demand of Rs 5,419 crore on individuals who had undisclosed offshore accounts with HSBC of which around Rs 337 crore has been recovered. Providing an update on the action taken in the HSBC list matter, the revenue department has informed the Public Accounts Committee (PAC) of Parliament that 190 prosecution complaints have been filed against various entities.The revenue department recently submitted a status report on HSBC foreign accounts to the PAC following queries by its member and BJP MP Nishikant Dubey, who has been vocal in flagging concern about illicit fund flows.
  • CBDT clears the air on rental incomes from industrial parks, SEZs
    Apr 27, 2017
    The Central Board of Direct Taxes (CBDT) has made it clear that income from letting out buildings /developed space along with other amenities in an industrial park/special economic zones (SEZs) would only be treated as “business income” and not as “income from house property”.This stance would come as relief for taxpayers as such rental/lease income can now be counted for computation of tax breaks by such industrial parks or SEZs, say tax experts.Hitherto, assessees were claiming the letting out as business activity, the income arising from which to be charged to tax under the head ‘profits and gains of business’.
  • CBDT to waive interest if tax demand paid in retro cases
    Mar 27, 2017
    The tax department will waive interest liability if the principal demand of capital gains tax is paid by companies like Cairn India and Vodafone plc.The Central Board of Direct Taxes (CBDT) on March 24 issued a circular for waiver of interest in disputed tax demand in different scenarios.In cases where tax liability arose because of retrospective amendment to the law or a court ruling, the interest payable on the demand will be waived, it said.
  • ICDS provisions to prevail over judicial precedents: CBDT
    Mar 24, 2017
    The tax department today said provisions of ICDS, the new accounting standards for computation of business income, will prevail over judicial precedents.ICDS, Income Computation and Disclosure Standards, are applicable for computation of income chargeable under the head profits and gains of business or profession or income from other sources and not for the purpose of maintenance of books of accounts.The accounting standards came into effect from April 2016 (assessment year 2017-18). It aims to ensure consistency and help minimise tax-related disputes.
  • Shell companies under our radar: CBDT chief
    Mar 04, 2017
    The Central Board of Direct Taxes (CBDT) is examining several dubious companies and they would be removed from the website of Ministry of Corporate Affairs (MCA) if found to be shell firms. "We will not allow any company to be operated as a shell firm. We will take action against such firms," CBDT chairman Sushil Chandra said yesterday. He said several such companies were under the scanner of the statutory authority, working under Department of Revenue in the Ministry of Finance.
  • CBDT to taxman: Step up TDS survey operations to boost collections
    Feb 11, 2017
    With the current financial year inching towards closure, CBDT has directed the taxman to step up survey operations to check non-deduction of TDS by firms and employers, especially in cases where such payments have dropped by more than 15 per cent as compared to last time.
  • CAs, merchant bankers face fine if assessees file wrong tax info
    Feb 08, 2017
    From April 1, chartered accountants (CAs), merchant bankers and valuers can't escape responsibility for filing of incorrect information in certificates or reports attached with income tax returns of assessees.They will be fined Rs 10,000 for each such certificates or reports, according to a provision in the Budget for 2017-18.
  • CBDT signs four ‘Advance Pricing Agreements’ today
    Feb 08, 2017
    The Central Board of Direct Taxes (CBDT) on Tuesday announced signing of four more unilateral Advance Pricing Agreements (APAs) on 6th February, 2017. The four APAs signed pertain to the manufacturing, financial and Information Technology sectors of the economy.
  • SMEs to pay 25% tax even if Rs 50-crore limit crossed in FY17: CBDT
    Feb 07, 2017
    While companies that had up to Rs 50 crore of turnover in 2015-16 will be taxed at the reduced rate of 25% in 2017-18, even if they crossed the threshold in subsequent years, the yardstick for reduced corporation tax rate after FY18 will be decided by the Finance Bills of those years. “If Finance Bills after 2017 retain this provision, the reduced rate of 25% will continue for companies with turnover of up to Rs 50 crore in 2015-16.
  • Govt allays GAAR fears but grey areas remain
    Jan 28, 2017
    The finance ministry sent positive signals to foreign portfolio investors (FPIs) on Friday by clarifying that the general anti-avoidance rules (GAAR, on taxes) will not override tax treaties with suitable limitation of benefit (LoB) clauses, but which had certain grey areas to interpret. Experts said it would have been better if these clarifications could have come earlier, as it takes time to wind up some commercial arrangements.
  • CBDT sweetens tax relief for VC and PE funds investing in start-ups
    Jan 27, 2017
    Call this the CBDT’s Republic Day gift to the venture capital (VC) and private equity (PE) industry that is betting big on Indian start-ups.The Central Board of Direct Taxes (CBDT) has sweetened the deal for certain VC and PE funds investing in start-ups, encouraging such funds to invest more with a promised beneficial tax treatment of their future gains from transfer of shares.It has now ruled that profits made by SEBI registered Category I and II Alternate Investment Funds (AIFs) from stake-sales in start-ups will be treated as “capital gains” for income-tax purposes, even if such sales were to result in transfer of control and management of the underlying business.
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