Latest Blogs from SBS and Company LLP

    Introduction:

     

    Section 66B provides for levy of service tax on services provided or agreed to be provided. On the other hand, we have Rule 5 of the Point of Taxation Rules, 2011(POT Rules) which can extend its arms to tax even those services which are provided prior to effective date of levy but the amount is received afterwards. Swacch Bharat Cess (SBC) and Krishi Kalyan Cess(KKC) are two levies that are newly introduced in recent past. A lot of confusion is prevailing in the trade whether Rule 5 can extend its arms to tax services already provided. Recently a notification is issued to exempt KKC for all services provided and invoices issued on or before 31st May, 2016.Is it required to really exempt these services by Notification? What is the rationale in extending this exemption only for KKC and not so when SBC is introduced? In this backdrop, an attempt is made to really under the nature of levy under section 66B and validity of Rule 5 in light the said section.

     

    Rule 5 of the POT Rules and its ramifications on literal interpretation:

     

    Rule 5 of the POT Rules is reproduced as under;

     

    “Where a service is taxed for the first time, then,-

     

    • no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable;

     

    • no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within fourteen days of the date when the service is taxed for the first time.

     

    Explanation 1.- This rule shall apply mutatis mutandis in case of new levy on services.

     

    Explanation 2.- New levy or tax shall be payable on all the cases other than specified above (inserted recently with effect from 01.03.2016)”

     

    In terms of the above rule read with newly inserted explanation 2, new levy is applicable except in the two circumstances stated therein i.e.

     

    1. invoice issued and payment received before the effective date of new levy and

     

    1. Payment is received before the effective date of new levy and invoice is issued within 15 days after the levy became effective.

     

     

    Let us consider the impact of this rule assuming a new levy is effective from 01st June, 2016 with the following examples;

     

    1. The service is completed by May 15th, 2016 and invoice is issued on June 01st 2016. Payment for the service is received on June 20th, 2016. In terms of Rule 5,new levy is applicable as payment and invoice are after the effective date of new levy.

     

    1. Advance received in the month of May 15th and invoice raised immediately on the same date. But service provision is started on 15th of June, 2016 and completed by 30th of June 2016. As first condition is satisfied, new levy is not applicable though the service is provided after the levy coming into force.

     

    • Service is provided in December 2015 and invoice is raised in the same month. Payment is received on 16th June 2016. The service is provided and invoice issued at the time when the levy of service tax is never contemplated. On plain reading of Rule 5, as payment is not yet received, it can be interpreted that new levy is applicable on all outstanding debtors as on 31st May, 2016 which gets realized on or after 01.06.2016.

     

    It is because of this reason, notification 35/2016-ST dated 23.06.2016 is issued to exempt from KKC all the services which are provided on or before 31.05.2016 and invoice is issued to that extent. But the whole issue raises the following questions;

     

    1. What would be the position for cases, where invoices are not yet issued but services are provided before 31.05.2016?

     

    1. Is it really required to exempt KKC by a notification on services provided upto 31.05.2016 i.e. services provided before the effective date of levy?

     

    1. How logical/prudent it is in not demanding anytax on services provided after the effective date of levy just because payment is received in advance before the effective date of levy?

     

    1. What would be the position in case of SBC which is introduced with effect from 15.11.2015?

     

    In order to find solutions to the above posers, it is pertinent to understand the moot question i.e. what is the taxable event under Finance Act, 1994 to attract service tax?

     

    Understanding Taxable Event under Finance Act, 1994:

     

    Every taxing statute contains a section which provides for event upon satisfaction of which the respective tax becomes payable by authority of law. This is popularly called charging section and the event is said to be taxable event. The taxable event for excise duty is manufacture of goods and for VAT, it is sale of goods.

     

    Thus in a case where taxable event is not satisfied or the charging section (Law) is not in force at the time when the taxable event occurred, then no tax is leviable as per the said taxing statute. In this regard, let us now examine the charging section under Finance Act, 1994. Under erstwhile positive based taxation, the charging section is section 65(105) of the Finance Act, 1994 and under the present negative list based taxation regime, it is section 66B. The same are reproduced as under;

     

     

     

     

    Section 66B effective from 01.07.2012

     

    Section 65(105) upto 30.06.2012

     

     

     

     

     

     

     

    There shall be levied a tax (hereinafter referred to as the

     

    "taxable  service"  means  any  service

    service tax) at the rate of fourteen per cent on the value of

    provided or to be provided….

    all services, other than those services specified in the

     

     

     

     

    negative list, provided or agreed to be provided in the

     

     

     

     

     

     

     

     

     

     

     

    taxable territory by one person to another and collected

     

     

     

     

    in such manner as may be prescribed

     

     

     

     

     

     

     

     

     

     

     

     

    On plain reading of the above two charging sections under Finance Act, 1994, both the sections are using more or less similar phrase ‘provided or agreed to be provided’ and ‘provided or to be provided’. Even upon strict interpretation of provisions, there is no difference between the two. Thus the judicial precedents on new levy of service tax under erstwhile regime can also be considered for determining the chargeable event under the current regime.

     

    Coming to interpretation of charging section, there are two phrases in the charging section. One is ‘provided’ and the other one is ‘to be provided’ or ‘agreed to be provided’. The first phrase ‘service is provided’ which means that provision of service is completed. The second phrase ‘to be provided’ is added in levy section after the words ‘provided’ during the Finance Budget, 2005. It has been then clarified that the objective of the amendment is to collect service tax on the advances received for the services to be provided in future.

     

    Though the charging section is amended to tax the advances received immediately without waiting for the services to be completed, it is just a conditional collection of tax amount and in case where service provider failed to provide the service, the same is required to be returned. Without the service being provided, question of collection of service tax do not arise. This legislative intent is clearly evident from provisions of Rule 6(3) of the Service Tax Rules, 2004 as reproduced below;

     

    “Where an assessee has issued an invoice, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason, or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract, the assessee may take the credit of such excess service tax paid by him, if the assessee.-

     

    • has refunded the payment or part thereof, so received for the service provided to the person from whom it was received; or

     

    • has issued a credit note for the value of the service not so provided to the person to whom such an invoice had been issued”

     

    In view of the above rule, assesse is entitled to take credit of service tax amount paid on advances received if the service is not provided either wholly or partly. In case where it is not practicable for him to take credit of service tax and adjust against future liabilities, he can claim refund also. The principle that when no service is provided eventually, Government is not entitled to retain service tax paid on advance receipts has been upheld by Mumbai tribunal in the case of Datamatics Software P Ltd vs. CST, 2014-35-CESTAT-Mum.

     

     

    Thus upon plain reading of charging section and other provisions of Finance Act, 1994 and the rules made thereunder, it is very clear that the taxable event is the provision of service. Though service tax is collected by Government immediately upon receipt of advance, it is only a conditional collection. Only upon completion of service, the levy gets crystalised thereby Government gets the right to unconditionally retain such service tax. The question of taxable event and the issue relating to liability to pay service tax in case of new levy are considered in various judicial forums. Some of them are reproduced hereunder;

     

    1. In the case of Association of Leasing & Financial Service Companies vs. UOI, 2010(20)S.T.R417(SC) wherein it was held by Supreme Court that the taxable event for service tax is the rendition of service.

     

    1. In the case of CCE vs. Krishna Coaching Institute, 2009(014)STR0018(Tri-Del) wherein payments were received in advance for the services yet to be rendered. Service tax levy was in force at the time when service is rendered. it was held “The respondent has no vested right to collect in advance the fees for conducting the training programme to be conducted after 1-7-2003. The main obligation to pay tax arises out of Finance Act, 2003 and the service has been brought into tax nets by Notification No. 7/2003-S.T. dated 20-6-03 with effect from 1-7-03. This main obligation cannot be altered by subsidiary obligation like taking registration as an assessee, issuing invoices, filing returns etc. Even if the amount is collected in advance, it is not impracticable to raise an invoice indicating the service charges (noting that the amount already stands paid) and indicating service tax payable.”

     

    1. In the case of British Airways PLC vs. CST, 2013(29)STR177(Tri-Del) wherein the appellant contended that as levy was not in force at the time when tickets are sold, service tax payment do not arise though services are provided after the levy i.e. 01.05.2016. It was held that—“the levy of Service Tax has no connection with the receipt of payment and the service tax is required to be paid when the service is provided. Since all tickets though sold prior to 1-5-2006 journey was undertaken on and after 1-5-2006 and at the time of journey undertaken the levy of service tax on the amount of taxable service was in force and, therefore, the appellant is liable to pay the service tax on the air tickets sold by them prior to 1-5-2006 also.”

     

    In view of the above analysis, in the opinion of paper writer the taxable event under Section 66B or Section 65(105) is the rendition of service. At the time when service is provided, if the levy is in force, service tax gets attracted. It is not relevant whether or not money is received before or after the levy is in force. The said principle is in complete contrast to Rule 5 of POT Rules which provides that levy is applicable and tax is payable in all cases except in cases where amounts for the services are received prior to the effective date of levy. No importance is given to rendition of service.

     

    Is Rule 5 a case of excess utilisation of delegation power?

     

    Point of Taxation Rules, 2011 is introduced with effect from 01.04.2011 with two fold purpose i.e. to determine the time when service tax is required to be paid as provided under Rule 6(1) of the Service Tax Rules, 1994 and also to provide for the rate at which such service tax is to be paid as provided under sub-section 2 of section 67A of Finance Act, 1994.

     

     

    Thus the power extended to Central Government to frame the rules is to achieve the above stated objectives and not to make the levy applicable to services provided much before the charging section is introduced or to exempt services for which payment is made before levy but services are provided after the levy. Further no such express power is conferred in terms of section 94 of Finance Act, 1994 which provides the rule making power to Central Government. Thus in the opinion of paper writer Rule 5 of the POT Rules is clearly traversing the charging section and is excess utilisation of its delegated power under the guising prescribing the time when service tax is to be paid.

     

    Conclusion:

     

    Before parting, it is very clear from the fact of issuance of notification to exempt KKC that the rule is having a direct conflict with the charging section. Otherwise there is no reason to exempt them from KKC. Similar exemption is not provided with SBC is introduced. It seems that Government has identified the flaw but wanted to give just a temporary solution to the problem without thinking of amending or withdrawing the Rule 5. Further certain assesses who receives advances before the levy is introduced but services are provided subsequently would get unjust advantage as they need not have to pay service tax by virtue of Rule 5. Thus arbitrary and indifferent treatment prevails amongst the service providers and continues every time when a new levy is introduced. Let us hope that sooner or later the age-old canon(taxable event is rendition of service) is endured clearing the paradox on applicability of service tax in case of new levy.

    Tags:

    Legal History:

     

    Section 90 of the Income Tax Act, 1961(Act) empowers the Central Government to enter into agreement (Tax Treaties-aka DTAA) with Government of any country outside India or specified territory outside India for

     

    1. granting relief in respect of doubly taxed income or income tax chargeable under this Act and under the corresponding law in force in that country or specified territory, to promote mutual economic relations, trade and investment or

     

    1. for avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory or

     

    • for exchange of information for prevention of evasion or avoidance of income tax chargeable under this Act or under the corresponding law in force in that country or specified territory or

     

    1. for recovery of income tax under this Act and under the corresponding law in force in that country or specified territory as the case may be

     

    There are two modes of granting relief under DTAA. They are:

     

    • Exemption Method and
    • Tax Credit Method.

     

    Exemption Method:

     

    Under exemption method, a particular income is taxed in one of the two countries.

     

    Tax Credit Method:

     

    Under tax credit method, an income is taxable in both the countries in accordance with their respective tax laws read with the DTAA. However, the country of residence of the taxpayer allows him credit for the tax charged thereon in the country of source against the tax charged on such income in the country of residence.

     

    Agreement vs DTAA:

     

    In case of difference between the provisions of the Act and of the agreement, the provisions of the agreement prevail over the provisions of the Act and can be enforced by the appellate authorities and the court.

     

     

     

     

    14 | P a g e


     

    SBS Wiki                                                                                                                                                       www.sbsandco.com/wiki

     

    Issue 1:

     

    Whether income be exempted from tax in India if tax was paid outside India at a higher rate?

     

    This issue was answered in case of ITO vs BESCO Engineering & Services (P) Ltd - ITAT KOLKATA.

     

    Facts:

     

    The Assessee is an Indian Company made equity investment in a Brazilian Company (Foreign Company). The Indian Company received dividend from the Foreign Company. Assessing Officer taxed the dividend on the contention that dividend received from foreign company is not exempt under section 10(34) of the Act.

     

    Assessee has contended that the foreign company has already paid tax @34% on its profits which is in excess of the rate prescribed in paragraph 2 of Article 10 of DTAA with Brazil (i.e.,15%). However, Assessing Officer has taxed the dividend without referring to provisions of DTAA.

     

    Assessee filed an appeal against the order of Assessing Officer before CIT(A). Order of the Assessing Officer was set aside by CIT (A). Revenue filed an appeal against the order of CIT(A).

     

    Ruling by ITAT:

     

    As per paragraph 3 of Article 23 of DTAA between India and Brazil where a company which is resident of a contracting state derives dividend in accordance with the provisions of paragraph 21 of Article 10 may be taxed in other contracting state, the first mentioned State shall exempt such dividends from tax.

     

    Withholding tax rates for dividends is 0% as per Brazilian Tax Law and also as per DTAA if dividend is paid to non-residents. Hence the appeal of the revenue dismissed.

     

    Issue 2:

     

    Is Tax credit available in respect of deemed tax foregone?

     

    This issue was answered in KrishakBharati Cooperative Ltd vs Asst. CIT - ITAT DELHI

     

    Facts:

     

    The Assessee held 25% shares in a foreign company registered in Oman. Assessee has received dividend income from the foreign company which was exempt from tax in Oman by virtue of Article 8(bis) of Omanian Tax Laws. The said dividend income was brought to tax in India as per the Act. The Assessing Officer allowed tax credit with respect to dividend income.

     

     

     

    Subsequently Principal CIT revised the order of the Assessing Officer and disallowed the tax credit so claimed by the assessee. The CIT was of the view that as the assessee did not pay any tax in Oman owning to exemption, no foreign tax credit was available to it.

     

    The aggrieved assessee filed an appeal against the order of the CIT passed u/s 263.

     

    Ruling by ITAT:

     

    Article 25(4) of DTAA between India and Oman lays down that tax payable shall deemed to include the tax which would have been payable but for tax incentive granted under the tax laws of the contracting state and which are designed to promote economic developments.

     

    The exemption for dividend income was granted in accordance with the article 8(bis) and such exemption was granted with the objective of promoting economic developments within Oman by attracting investments.

     

    The Order of CIT quashed and appeal of the assessee allowed.

     

    Note: Such credit was allowed by the Assessing Officer in the past also. When there is no change in facts and the relevant provisions of the law the principle of consistency of approach should be followed.

     

    Take away

     

    One just has to read DTAA with different countries separately. Each DTAA has similarities and dissimilarities. We have to go through each DTAA and analyze the issue before drawing conclusions.

    Tags:

    Today majority of the Indians are reaping the benefit of Industrial Liberalization and Globalization of the Indian economy. The then Prime Minister Mr. P V Narasimha Rao with the guidance and support of the then Finance Minister Mr. Manmohan Singh, has made paradigm shift in Industrial Licensing policy, Public Sector Policy, Foreign Investment & Foreign Technology agreement Regulations and Competition Laws (erstwhile MRTP Act) vide new Industrial Policy which was made effective from July 25, 1991.

     

    The author, in commemoration of Silver Jubilee Anniversary of Industrial Liberalization in 1991, has made an attempt to bring the fine details of FDI Inflows and its impact in India post announcement of New Industrial Policy, 1991 (NIP) and also the details of recent FDI regime liberalization.

     

    Government of India has introduced key reforms to the FDI policy, to help attract further investments. To achieve this goal, some measures such as the introduction of the composite cap that does away with the distinction between FDI and Foreign Portfolio Investment (FPI) and liberalizing FDI norms in 15 major sectors have been taken. Higher FDI limits would encourage more investment.

     

    FDI in India has started picking up, which stood at USD16.63 billion in FY2015-16, about 13 per cent higher than 14.69 billion in FY2014-15.

     

    Trends in India’s FDI Inflows, 1996 - 2016

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Recent key changes of FDI Regulations

     

    I .      Press Note No. 5/2016, dated 24th June, 2016

     

    The Union government on 20th June, 2016 has announced radical changes in FDI Regulations and the said changes have been made effective by virtue of Press Note No. 5/2016, by which the following major changes have been made in FDI regulations to give impetus for employment and job creation and also for enhancing the FDI flows into India

     

     

     

    3 | P a g e


     

    SBS Wiki                                                                                                                                                      www.sbsandco.com/wiki

     

    1. Permission of 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.

     

    1. Foreign investment beyond 49% has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with.

     

    1. FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.

     

    1. 100% FDI under automatic route is permitted for Broadcasting Carriage Services (Mobile TV, DTH, Teleports, Cable Networks and HITS)

     

    1. In case of Pharmaceutical Sector, 74% FDI in Brownfield Projects is made under automatic route. FDI beyond 74% for Brownfield Projects is under government route. The Greenfield Investment is permitted upto 100% under automatic route

     

    1. Civil Aviation Sector is also permitted upto 100% FDI in both Brownfield Projects and the Greenfield projects

     

    1. In case of Private Security Agencies, the FDI is permitted upto 49% under automatic route and under government approval beyond 49% and upto 74%. However Section 6 of the Private Security Agencies (Regulation) Act, 2005 need to be amended to accommodate the above FDI changes.

     

    1. In case of Animal Husbandry, the condition related to “Controlled Conditions” has been done away

     

    1. In case of Single Brand Retail Trading (SBRT), the condition related to 30% local sourcing of goods is relaxed for 3 years of establishment and may relax upto 5 years of establishment with the government approval. FDI into SBRT upto 49% is permitted under automatic route and under government route for FDI beyond 49%

     

    1. Press Note No. 12/2015, dated 24-11-2015

     

    1. The Government has permitted the 100% FDI into Manufacturing Companies (Subject to the sectoral caps and conditions stated for selective list of industries) under automatic route.

     

    1. FDI into LLP is almost made at par with Companies thereby paving the way to use LLP structure of business for most of the business activities.

     

    1. For swapping of shares (i.e., Exchange of Shares of the Indian Company between the Resident Investors and the Foreign Investors with Shares of Foreign Entity), no approval of Government is required, if the transaction otherwise falls under automatic route.

     

    1. Incorporated Foreign entities (viz., Companies, Partnership firms and Trusts) controlled by the NRIs is equated with the NRIs and can avail all the benefits of NRIs.

     

    1. The Limits for approval of FIPB has been enhanced from Rs. 2,000 Crores to Rs. 5,000 Crores, thereby the cases to be referred to Cabinet Committee on Economic Affairs (CCEA) will be reduced.

     

    1. Many plantation activities (coffee, rubber, cardamom, palm oil, olive oil) have been brought under automatic route, over and above the tea plantation activities.

     

    1. Defence production has been opened for FDI upto 49%, subject to the conditions stated therein.

     

    1. In case of Construction and Development Activities, the condition relating to minimum project size and minimum investment size has been done away and necessary changes have been brought in other related conditions.

     

    1. Many changes have been introduced in Single Brand Retail Trading

     

     

    4| P a g e


    FDI Inflows - India's Trajectory

     

     

    SBS Wiki                                                                                                                                                      www.sbsandco.com/wiki

     

    Conclusion:

     

    Post the above key changes, now very few sectors/industries have been left over for approval from the Government for FDI investments.

     

    The NIP followed with the above key recent changes are further bolstered with the key reforms of the Government viz., “Make in India” and “Ease of doing Business”

     

    Post the Britain Exit Referendum (Brexit) for exit from EU, India is poised to play key role in the World Economy and is becoming silver line in the dark clouds of economic turmoil across the global economies and many countries will select India as a favorable FDI destination.

     

     

    Tags:

    On 23 May 2016, the OECD Council approved the amendments to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations ("Transfer Pricing Guidelines"), as set out in the 2015 BEPS Report on Actions 8-10 "Aligning Transfer Pricing Outcomes with Value Creation" and the 2015 BEPS Report on Action 13 "Transfer Pricing Documentation and Country-by-Country Reporting". These amendments provide further clarity and legal certainty about the status of the BEPS changes to the Transfer Pricing Guidelines, which were endorsed by the Council on 1 October 2015, by the G20 Finance Ministers on 8 October 2015, and by the G20 Leaders on 15-16 November 2015.

     

    The amendments approved by the Council translate these BEPS transfer pricing measures into the Transfer Pricing Guidelines, as well as into the Recommendation of the Council on the Determination of Transfer Pricing Between Associated Enterprises, which now contains a reference in the Preamble to these BEPS Reports. Given the way in which the Transfer Pricing Guidelines are integrated into the domestic law of certain countries, including by direct reference to the Guidelines themselves, this update process further clarifies the status of the BEPS changes to the Transfer Pricing Guidelines.

     

    Actions 8-10 – Transfer pricing aspects:

     

    The OECD has included its updated transfer pricing guidance in one report under Actions 8-10, covering: amended guidance on applying the arm’s length principle (revisions to section D of chapter I of the OECD Transfer Pricing Guidelines), notably providing guidance on the identification of the actual transaction undertaken, on what is meant by control of a risk, and on the circumstances in which the actual transaction undertaken may be disregarded for transfer pricing purposes.

     

    Guidance on comparability factors in transfer pricing, including location savings, assembled workforce, and MNE group synergies (additions to chapter I of the OECD Transfer Pricing Guidelines). This guidance remains unchanged from the guidance issued as part of the 2014 report on transfer pricing for intangibles.

     

    New guidance on transfer pricing for commodity transactions (additions to chapter II of the OECD Transfer Pricing Guidelines). A new version of chapter VI of the OECD Transfer Pricing Guidelines addressing intangibles, including new guidance on the return to funding activities and on hard-to -value intangibles. New guidance on low-value adding intragroup services (revisions to chapter VII of the OECD Transfer Pricing Guidelines).

     

    An entirely new version of chapter VIII of the OECD Transfer Pricing Guidelines, covering cost contribution arrangements In addition, the Actions 8-10 package describes additional work to be conducted by the OECD to produce new guidance on the application of the transactional profit split method.

     

     

     

     

     

     

     

     

    1 | P a g e


     

    SBS Wiki                                                                                                                                                      www.sbsandco.com/wiki

     

    The specific changes introduced in the OECD Transfer Pricing Guidelines by these Reports are as follows:

     

    • The current provisions of Chapter I, Section D of the Transfer Pricing Guidelines are deleted in their entirety and replaced by new guidance.

     

    • Paragraphs are added to Chapter II of the Transfer Pricing Guidelines, immediately following paragraph 2.16.

     

    • A new paragraph is inserted following paragraph 2.9.

     

    • The current provisions of Chapter V (Documentation) of the Transfer Pricing Guidelines are deleted in their entirety and replaced by new guidance and annexes.

     

    • The current provisions of Chapter VI (Intangible Property) of the Transfer Pricing Guidelines and the annex to this Chapter are deleted in their entirety and replaced by new guidance and annex.

     

    • The current provisions of Chapter VII (special considerations for Intra group services) of the Transfer Pricing Guidelines are deleted in their entirety and replaced by new guidance.

     

    • The current provisions of Chapter VIII (Cost contribution arrangements) of the Transfer Pricing Guidelines are deleted in their entirety and replaced by new guidance.

     

    Although the countries participating in the OECD/G20 BEPS Project had already agreed to the final reports under BEPS Actions 8-10 and 13, the OECD Council Transfer Pricing Recommendation formally adopts the amendments to the TPG as of 23 May 2016. As noted, these changes could have implications for both the OECD member countries and non-member countries.

     

    Individual countries take different approaches with respect to whether and how they incorporate the TPG into their domestic tax systems. For example, in some countries, the domestic rules explicitly refer to the approved OECD TPG. Other countries may not have such an explicit reference. In addition, some countries require some form of administrative or other action to incorporate a new version of the TPG into the domestic law. Some countries may take the view that the amendments to the TPG merely clarify pre-existing transfer pricing principles, and in practice, consequently could have retroactive effect.

     

    Multinational enterprises (MNEs) should understand and analyse the implications of this development for each jurisdiction in which they operate. For example, MNEs should review the amendments to the TPG with respect to their global operations and their current transfer pricing policies and approaches. There will likely be increased scrutiny by tax authorities from OECD member countries and non-OECD member countries applying the concepts of the amendments to cross-border intercompany transactions.

     

    Further work is being undertaken to make conforming amendments to the remainder of the Transfer Pricing Guidelines, in particular to Chapter IX "Transfer Pricing Aspects of Business Restructurings." This work is well advanced and it is expected that Committee on Fiscal Affairs will soon invite interested parties to review the conforming changes to Chapter IX to establish that real or perceived inconsistencies with the revised parts of the Guidelines have been appropriately addressed, and duplication appropriately removed.

    Tags:

    INTRODUCTION: 

    An investor having appetite to leverage his investment capacity, may indulge in borrowing funds to invest in Securities and can plan to earn profits out of the investment activity. Normally an investor has to provide security to the lender for funds being borrowed. The borrowings made with an intent to invest in Securities is normally called as Margin Trading. 

    To overcome the difficulties of maintaining the leverage at the time of investing in various securities In order to provide such facility SEBI has come up with a concept named MARGIN TRADING.f ramed a Scheme called Securities Lending Scheme, 1997. Also it has framed legal framework for Margin Funding by various intermediaries of the Securities Market. All the above concepts are cumulatively called as “Margin Trading”

    Tags:

    Subscribe SBS AND COMPANY LLP updates via Email!