Latest Blogs from SBS and Company LLP

    A Discussion on New Overseas Investment Regulations

    Under the pre-amended/old regulations, overseas investment, in respect of investment in foreign securities, is governed by Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 and, overseas investment, in respect of investment in immovable property, is governed the Foreign Exchange management (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015.

    Government of India, in order to improve its standards in ease of doing business by way of relaxations, simplifications or exemptions, is making many changes to various laws and regulations which inter alia includes changes to taxation laws, Foreign Exchange Management Regulations, Corporate and other laws etc.

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    Management Support Services vis-à-vis Arm’s Length Price - An Analysis under Transfer Pricing – Part IV

    Introduction:

    In first two parts of Article (Part I[1] and Part II[2]), the concept of taxability of management support services (‘MSS’) under treaty and Income Tax Act (‘IT Act’) has been analysed in detail.

    Further, through the third part, consequences of such transaction under transfer pricing provisions have been discussed.

    In part III[3], it is concluded that payment to non-resident associate enterprise in relation to management support services as intra group services. Now, in this part, let us proceed to analyse determination of remuneration for those services under Arm’s Length Principle.

    Let us proceed to continue with the same example considered in the previous Parts.

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    No Service Tax Only on Reason Updates are Provided – Supreme Court in Quick Heal Technologies Limited

    The Supreme Court in the recent matter of Quick Heal Technologies Limited[1] has rejected the tax authorities claim of service tax on the amounts that are collected towards sale of anti-virus software. The Supreme Court followed its previous decision of Tata Consultancy Services[2] in reaching the above conclusion. In this article, we deal with the approach adopted by Supreme Court in arriving at the conclusion.

    Issue:

    The assessee (Quick Heal Technologies Limited) was engaged in development of anti-virus software under the brand of ‘Quick Heal’. The same is supplied along with the license code/product code either online or on the replicated CDs/DVDs to the end-customers in India. The tax authorities has demanded service tax on such sale of anti-virus software for the period 01.03.2011 to 31.03.2014 (covering both the positive and negative list regime). The main contention of the tax authorities to demand the service tax is that the assessee, apart from the sale of the above software in canned form, also provides periodical electronic updates and such provision of periodical electronic updates to the software already sold is subjected to service tax.

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    SBS Wiki E Journal September 2022

    In this 98h edition, we bring you articles covering the recent supreme court judgment under the service tax law, wherein it was held that only provisions of updates to already sold subjected to VAT software is not again subjected to service tax.

    The next article is part of the series of various facets of taxability of management support services. In this part, we have analysed the impact of arm’s length principle qua the management support services vis-à-vis low value adding intra group services.

    The next article is on the recent release of change in ODI Regulations. The readers may recall that draft ODI regulations for public comments have released a year ago. Now, the final version of regulations has been released. We tried to compare the old vs. draft vs. new regulations and its implications. 

    I hope that you will have good time reading this edition and please do share your feedback. I will also urge clients to mail us topics or issues on which you want us to deliberate in our future editions, so that we can contribute to the same.

    Key Topics:

    GST

    DIRECT TAX

    FEMA

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    Remittance of Assets Regulations vs Liberalised Remittance Scheme   - A Comparison under FEMA and Income Tax

    A person in India may remit amount to outside India under various situations. In order to regulate such remittances, various regulations have been inserted under Foreign Exchange Management Act, 1999 (‘FEMA’) and Income Tax Act, 1961 (‘ITA’). In this article, the concept of remittance of amount to outside India by Individual has been discussed in detail.

    An Individual may remit amount to outside India for various purposes viz. foreign trip, foreign education, medical facilities, investment in abroad, sale proceeds of investments in India, income earned in India etc.,

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