(The following post is contributed by V. Niranjan) There is some doubt on the course of action that companies should take, as far as TDS on professional fees is concerned. The question, essentially, is this – should TDS be deducted on the amount of the professional fee paid, exclusive of service tax, or should TDS be deducted on the amount of the service tax as well? This issue has several legal...
Supreme Court on Fringe Benefit Taxes
(In the following post Shantanu Naravane, a 4th Year B.A., LL.B (Hons.) student at the National Law School of India University, Bangalore, examines one of the first Supreme Court decisions on fringe benefit taxes) Ever since its introduction by the 2005 Finance Act, the concept of Fringe Benefit Taxes [“FBT”] has spawned several controversies. However, the first judicial consideration of its...
The Efficacy of Windfall Profits Tax
In an earlier post, we had discussed how the recent spike in oil prices has raised important issues relating to corporate governance in listed public sector companies. Now, this steep oil price rise has rekindled the debate on the need to impose a windfall profits tax on private oil companies. The matter has even acquired political overtones in the US presidential elections, with one of the...
Vodafone Income Tax Case
The acquisition of shares in Hutch Essar by Vodafone from Hutchison in a multi-billion dollar M&A deal last year has resulted in a dispute on the taxability of capital gains on the transaction. This dispute is currently pending before the Bombay High Court, with a decision being awaited. The court’s verdict is expected to have serious implications on costs involved in implementing M&A...
Taxation on Sale of Shares in a Foreign Holding Company
Often, divestments by foreign owners of Indian companies are effected through a sale of the stake outside India. More specifically, where foreign companies hold shares in Indian companies through intermediate offshore investment companies, they can effect a divestment by merely selling off shares of the offshore holding companies. This does not in any way result in a transfer of shares of the...
Taxation on Slump Sales
A ‘slump sale’ is one of the methods available to give effect to a transfer of a division or undertaking of a company to another company. Under this method, all the assets and liabilities of (or relatable to) the undertaking are transferred for a ‘lump sum’ consideration without assigning values to the individual assets and liabilities of that undertaking. Unlike certain other types of merger and...
Taxing Sovereign Wealth Funds
Just as hearings are being conducted before two subcommittees of the U.S. House of Representatives in relation to sovereign wealth funds (SWFs), and as the International Monetary Fund is stepping up efforts to formulate a code of conduct to regulate SWFs, a new story has emerged regarding the possible tax position of SWFs in the US. Victor Fleischer, who is now an Associate Professor at the...
Foreign Investments into India: Tax Structuring
Foreign investors invest funds into Indian companies in anticipation of financial returns. These returns usually take the form of dividend payment by the Indian companies, interest payment (in case of debt securities that are yet to be converted into equity) and capital gains on sale of investment. Although all three types of returns are liable to tax in India, foreign investors are presented...
FCEB Taxation
In an earlier post on this blog, we analysed foreign currency convertible bonds (FCEBs). Although there was nothing on this count in the Finance Minister’s budget speech, the Finance Bill contains provisions clarifying the taxation position on FCEBs and the shares that arise out of conversion.
Today’s Hindu Business Line carries an article describing the Finance Bill provisions on FCEBs.
Budget Impact
This year’s budget, termed by the media as a populist one, has received mixed reactions from the corporate sector. At the same time, it has not gone well with the stock markets, which fell following the budget announcements. The entire set of budget materials is available here. Now, we look at some of the key implications of the budget on the corporate sector as well as financial markets:...
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