1. Background 

In keeping with India’s commitment to implement the recommendations of Action Plan 13 of Base Erosion and Profit Shifting (BEPS), the Finance Act, 2016 introduced Section 286 of Income-tax Act, 1961 (the Act) providing for furnishing of Country-by-Country Report (CbCR) in respect of an International Group. 

Section 92D of the Act which contained provisions for preparing TP documentation was also amended to provide for keeping and maintaining of Master File. 

In continuation with the amendment, the Central Board of Direct Taxes (CBDT) on 6 October 2017, released the draft rules and forms in relation to manner of preparation and furnishing of Master File and CbCR. It is commendable, on part of CBDT, to consistently follow an inclusive approach and seeking public comments when introducing a new and important regulation. 

Read more: MF Complications and Transfer Pricing Updates

Key Topics Covered:

• AUDIT
• DT & MSME
• GST

Updates

• FEMA
• COMPANIES ACT, 2013

This article is contributed by Partners of SBS and Company LLP - Chartered Accountant Company. You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

Key Topics Covered:

• INCOME TAX
• COMPANIES ACT, 2013
• GST
• AUDIT

This article is contributed by Partners of SBS and Company LLP - Chartered Accountant Company. You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

Over past few decades India has witnessed rapid growth in international business transactions and thanks to Modi Government as the international trade flow has increased dramatically post 2014. Even in the recent DAVOS conference, many CEO’s of international MNC’s have promised to do business in India. Accordingly, the stupendous growth in international business has steered to increase in tax issues as well. Therefore, the topic of Permanent Establishment (‘PE’) has become even more important as many MNC’s establish their subsidiaries, offices, distribution networks, etc in jurisdictions such as BRIC nations. 

International tax rules have used physical presence to allocate taxing rights. However, by virtue of digital technologies, businesses are able to have a significant economic presence without necessarily having a substantial physical presence. Accordingly, to bring such transactions into Tax bracket, Budget 2018 proposes to expand the scope of the ‘business connection’ test (the equivalent of permanent establishment) by including a ‘significant economic presence test’ (“SEP Test”). Under the SEP Test, download of data or software, or solicitation of business activities through digital means in India could lead to non-residents coming within the tax net. The basic intent behind this SEP test is to expand the Tax bracket without having a fixed place of business or a dependent agent thereto. Hence, the question of existing definition of PE being inconsistent with the underlying tax principles is avoided. Interestingly enough, OECD in the BEPS Action Plan is still evaluating various options to tax the digital economy transactions. 

Read more: Amendment in Business Connection