Latest Blogs from SBS and Company LLP

    The thin line of difference between the intermediary and marketing support services is fading as time progresses in the goods & services taxes era. In this write up, we analyse the line of difference between the intermediary and marketing support services (MSS) and conclude the safe way to proceed further and also give an heads up about the impact under income tax laws.

    Before proceeding further, let us step back and understand the concept of ‘intermediary’ under the goods & services tax laws (GST laws) and then compare with MSS and decide upon the taxability of both the said items.

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    Introduction:     

    Transactions involving acquisition and transfer of immovable properties in India by non-residents are governed by Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018, which were issued vide Notification No. 21(R)/2019-RB, dated March 26, 2018 (“Immovable Property in India Regulations”).   

    Similarly, transactions involving acquisition and transfer of immovable properties outside India by persons resident in India are governed by Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015 which were issued vide Notification No. 7(R) / 2015-RB, dated January 21, 2016. 

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    An Analysis of Section 2(22)(e)

    In this piece of write-up, we aim to analyse the concept of ‘deemed dividend’, under the income tax laws right from the Income Tax Act, 1922 to current provisions. The said analysis is done with the support of various judgments at various forums on the said aspect. After a detailed deliberation, we wish to conclude with our views on the said concept.

    Before understanding the said aspect in detail, a few basic concepts about taxability of dividend under the income tax laws would garner interest for the reader. The tax on any amounts which are declared, distributed or paid whether out of current or accumulated profits are to be paid by the company as per Section 115 O of Income Tax Act, 1961 (for brevity ‘Act’). This is normally known as Dividend Distribution Tax (DDT). This is in addition to the normal income tax payable by the company and not a substitute for the normal tax.

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    In this edition, we bring to you certain important articles on various aspects.

    The article on ‘Immovable Properties vis-à-vis FEMA Regulations’ is a need of hour where many were being questioned by Enforcement Directorate regarding the purchase of immovable properties in the name of non-resident by residents. This article will help the reader to understand who is eligible to purchase or inherit the immovable properties in India.

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    Reporting of Foreign Investment under FEMA, 1999

    An Indian Entity (Company or LLP) receiving foreign investment has to report the same to Reserve Bank of India (RBI) through Authorised Dealer (AD) Category-I Banks. Reporting of Foreign Investment under FEMA, 1999 is governed Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations (“FEMA FDI Regulations, 2017”) dated November 07, 2017 and Part-IV of Master Direction No-18/2015-16 dated 1st January 2016, as amended from time to time. Non-compliance with the reporting of foreign investment provisions shall be reckoned as contraventions under FEMA, 1999 and could attract penal provisions.

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