Latest Blogs from SBS and Company LLP

    • INTRODUCTION

    “Equalise" is to make something equal or distribute evenly and “Levy” is to impose or charge, thus Equalisation Levy creates a level playing field.

    Under the existing rules of International Taxation, the Country of Source (“COS”) can tax a non-resident, carrying Business through electronic means, without any physical presence, only if the non-resident has a permanent establishment (“PE”) in the COS. E-commerce companies do not need PE in any COS. They can set up the companies in tax havens and avoid tax in Country of Residence (“COR”) hereby avoiding payment of taxes in both the countries.

    E.g. Indian Company is receiving advertisement services from US Company. Here, COS is the Indian Company and COR is the US Company.

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    1. Introduction to MSME: 
    • The Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. It contributes significantly in the economic and social development of the country by fostering entrepreneurship and generating largest employment opportunities at comparatively lower capital cost, next only to agriculture. MSMEs are complementary to large industries as ancillary units and this sector contributes significantly in the inclusive industrial development of the country. The MSMEs are widening their domain across sectors of the economy, producing diverse range of products and services to meet demands of domestic as well as global markets. 

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    The Honourable High Court of Delhi recently in the case of Smt Sunita Gupta v Union of India has an occasion to examine the validity of re-initiation of proceedings by Initiating Officer (IO) under the Prohibition of Benami Property Transactions Act, 1988 (Benami Act). The Honourable High Court after considering the facts of the case has held that there is nothing in law to stop the IO from re-initiating the proceedings if the procedural defects were made correct and the issue of notice is not barred by limitation.

    The facts of the case before the Honourable High Court are as follows. On 25.01.2017, the IO has passed an Order of Provisional Assessment in terms of Section 24(3) of Benami Act restraining Smt Sunita Gupta from transferring or charging the property amounting to Rs 2,99,000/- deposited in the savings bank account stating that beneficial owner of such property (amount) is Mr Nitin Jain.

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    Section 122 of Transfer of Property Act, 1882 defines the phrase ‘Gift’. Vide such section, ‘gift’ is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.

    The taxation of ‘gift’ was one interesting journey. In order to deal with taxation of gifts, the legislature has introduced, the Gift Tax Act, 1958 with effect from 01.04.1958. The said act was in effect till 30.09.1998 and been rescinded later. The important aspect of Gift-Tax Act was the tax was on the donor. In 2004, the legislature has re-introduced the taxation of gifts in specified circumstances by insertion of Section 56(2)(vii) in the Income Tax Act, 1961 (Act/Income Tax Act). Vide Section 56(2)(vii), the tax on gifts received was to be paid by donee in specified circumstances.

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