India is the largest democracy and 4th largest economy in the world. With its consistent growth performance and abundant high skilled man power, India provides enormous opportunities for investment, both domestic and foreign. Since the beginning of reforms in 1991, major reform initiative has been taken in the field of investment, trade, financial sector, exchange control simplification of procedure. India provides liberal, attractive and investor friendly investor. The world is looking at India as an attractive destination with strategic incentives and lucrative commercial advantages. As compared to other developed markets, the India is largely under penetrated with a huge potential for growth keeping in consideration government thrust on liberalization on one side and rising income, increasing awareness of financial products, strong equity market growth on the other.
As more and more investment is coming in India the clarity on regulatory and taxation front is much expected. In India taxation system is under the Department of Revenue, Ministry of Finance. Taxability of income is determined by Indian Income Tax Act, 1961. With the countries with which Indian Government have signed Double taxation avoidance agreement in that cases the taxability shall be determined by Indian Income Tax Act, 1961 read with DTAA. As per section 90(2) of the Act an assesse has an option to choose from ACT or DTAA whichever is more beneficial to him.
Foreign companies engaged in business activities in India become liable to Indian Income Tax. According to Sect. 5 (2) Indian Income Tax Act, 1961 (“ITA”) non resident companies are taxable in respect of the income received or deemed to be received, accrued or deemed to have been accrued or arisen in India. This definition covers income accruing or arising or and also deemed to have accrued or arisen to a non-resident whether directly or indirectly, through or from any business connection in India, Sect. 9 ITA. The term “Business Connection” involves a relationship between the business of the assessee and some activity in India which contributes directly or indirectly to the earning of profits and gains by the assessee from his business. This is a very broad definition rendering almost any activity of a non resident company subject to tax in India. It is however required to be read the with Double Taxation Avoidance Agreements (DTAAs) entered into by India with respective countries. The DTAAs aim at restricting the right of a state to levy tax on income received by a non resident company from business activities pursued in that state. According to national Indian tax law, the provisions of a DTAA apply if they are beneficial for the foreign company (“assessee”), Sect. 90 (2) ITA.
We provide following services:
- Tax Structuring
- Transfer pricing audit and Issuance of Form 3CEB
- Transfer Pricing study and documentation as required under Indian Income Tax Act, 1961
- Accessing the Commercial Viability of business keeping in consideration the Indirect taxes
- Evaluation of Double Taxation avoidance Agreements
- Comprehensives evaluation and position structuring with respect to Direct Taxes
- Determination of Exposure of Formation of Permanent establishment in India.
- Evaluation of treaties to examine taxability and availability of tax treaty relief.
- Drafting of foreign collaboration / joint venture / technology transfer agreement.
- Due diligence of prospective business /Joint venture partner in India.
- Identifying and enhancing tax and fiscal incentives including obtaining any tax rulings
- Advisory/compliances associated with all modes of inbound investments.
- Advisory/compliances associated with all modes of outbound investments.
- Due Diligence exercise w.r.t Tax
- Business Valuation
- Structuring of unified Funds /Offshore Funds, Compliance relating to FVCI/VCF/VCU Fund raising through various vehicles; Development of Exit Strategy, Regulatory compliance pertaining to quarterly reporting by FVCI
- Drafting of agreements (Cost reimbursement, service agreement, Royalty, Cost recharge agreements etc.),
- Helping in studying the prospective investment company
- NRI Taxation
- Representation against tax authorities