Parthasarathi shome to examine the applicability of amendments on indirect transfers in the context of nonresident taxpayers draft report released on 9 october 2012. The action 2015 final report, transfer pricing documentation and. Capital markets tax committee of asia 14f hutchison house. Recommends prospective application of amendments to sec 9 on indirect transfers.
This report was electronically submitted to finance minister p. Shome hereinafter referred to as the shome committee to analyse the amendments introduced vide the finance act 2012 and provide its recommendations. Sincerely, keith lawson senior counsel tax law investment company institute and ici global. The committees draft report on retrospective amendments relating to indirect transfers of assets situated in india was released for public comments in october 2012. Shome committee report on indirect transfer recommends. Urmila chatterjee, soumya kapoor, rinku murgai and sutirtha sinha roy poverty and equity. Committee therefore recommended that definition of transfer need not to be looked at on standalone basis for indirect transfer. Presumably, a party will elect not to report only if it is confident that there will be no taxes payable under public notice 7.
As per the draft report on retrospective amendments relating to indirect transfer by the expert committee shome committee report issued in august 2012, the committee has recommended that the word substantially used in explanation 5 should. The shome committee submitted its draft report to the indian government in september 2012 see asia pacific tax newsalert. The business and industry advisory committee at oecd. Major recommendations of shome committee on gaar accepted 0 0 raj kumari monday, january 14, 20 edit this post the central government has carefully considered the report of the expert committee on general anti avoidance rules gaar and accepted the major recommendations of the expert committee with some modifications. Copal research limited, mauritius, the delhi high court examined the meaning of the term substantially in the amended version of the provisions of the income. The tax administration reforms commission tarc chairperson. The shome committee suggested that the gaar implementation should. Summary of draft report on retrospective amendments relating. Section 2 14 of the act has been amended to clarify the meaning of the term property used in the definition of. Taxing indirect transfers allard research commons university of. Expert committee 2012 india hereinafter shome report, available at. Shome committee report on indirect transfer recommends prospective application, no sec 201 liability. Uk tax treaty and retrospectivity judicial developments on retrospectivity. Delhi high courts landmark ruling on indirect transfer.
Expert committee s report on indias gaar regime is welcome news for foreign investors dated september 4, 2012. Mpc monetary policy committee mz mizoram nabard national bank for agriculture and rural development nach national automated clearing house neft national electronic funds transfer nhai national highway authority of india nipfp national institute of public finance and policy npas nonperforming assets nsso national sample survey office. The indirect transfer provisions monster business news. The committee was mandated to submit its report in two months time. It is understood that the expert committee has submitted its final report to the government of india which is largely similar to the draft report. We should move whatever changes have to be brought about in parliament as. Chattisgarh, haryana, tamil nadu, rajasthan and madhya pradesh expressed their. Shome panel submits final report on indirect transfers.
O unlocking development may 2017 womens update potential. But if govt decides to proceed with retro amendments, no. Legislative retrospectivity and rule of law statute law. Draft report of the expert committee on retrospective amendments relating to indirect transfer index s. It is therefore respectfully submitted that the shome committees recommendation that the provisions. Last week, the ministry of finance released the much awaited report on retroactive amendments relating to taxation of indirect transfer of shares assets in india report. Expert committees report on indias gaar regime is welcome news for foreign investors dated september 4, 2012. Dr parthasarathi shome submitted its first report on may 30, observations. The article thoroughly and illustratively examines the various.
Amendments relating to taxation of indirect transfer of assets made in. The taxation of offshore indirect transfers a toolkit oecd. The most important task of the finance minister in the 201718 budget is to tame the indirect transfer provisions monster born out of. Relief for vodafone, safe harbors for pe and foreign listed cos et al last week, the ministry of finance released the much awaited report on retroactive amendments relating to taxation of indirect transfer of shares assets in india report. Shome hereinafter referred to as the shome committee to analyse the. Final report on general anti avoidance rules gaar in income.
Oct 15, 2012 the committee has noted that the amendments potentially cover indirect transfers in two ways first, by relocating the situs of the offshore asset to india under section 91i, and second, by the amendment to the definition of transfer and capital asset, which includes indirect transfer of an interest in a capital asset. The taxation of goods and services in india has, hitherto, been characterised as a cascading and distortionary tax on production resulting in misallocation of resources and lower productivity and economic growth. Jan 14, 20 major recommendations of shome committee on gaar accepted 0 0 raj kumari monday, january 14, 20 edit this post the central government has carefully considered the report of the expert committee on general anti avoidance rules gaar and accepted the major recommendations of the expert committee with some modifications. The paper seeks to discuss some of the key recommendations below. Saurabh shome macroeconomics and fiscal management. Report on general antiavoidance rules gaar index s. Response to the draft report of the parthasarathi shome committee on retrospective amendments relating to indirect transfer october 2012 by. Draft report of dr shome committee on retrospective. The report has made many taxpayerfriendly suggestions, with the important ones being no retrospective tax withholding and keeping fiis and participatory note holders out of the indirect transfer tax net. Luxembourg renegotiation of tax treaties information exchange under crs and other eu directives information exchange under fatca. Prepared by an expert committee appointed by the prime minister of india and chaired by dr.
Mar 08, 20 the shome committee has proposed to do away with shortterm capital gains tax by increasing the transaction tax. Centre for budget and governance accountability new delhi. Act, the expansion of the direct benefits transfer system, and initiation of infrastructure projects. Shome panel submits final report on indirect transfers the hindu. Indias delhi high court clarifies tax consequences of indirect share transfers in a decision issued on 14 august 2014 director of income tax international tax v. Shome committees draft report on retrospective amendments relating to indirect transfer expressed in the attached letter and urge that those recommendations be followed. Improving an instrument for stemming tax and legal base erosion wei cui numerous countries e. Once we take a view, i see no reason why we should wait for the budget session. At the onset, it is respectfully submitted that the tax on indirect transfers is a new levy and should therefore have prospective application. Capital markets tax committee of asia 14f hutchison. Expert committee report on gaar 2012 points out that the international practice when.
Key recommendations of the shome committee following is the gist of key recommendations made by the shome committee vide its report1 relating to indirect transfers. The shome committee, in its report, stated that the taxation of indirect transfer as. Oct 09, 2012 download shome committee draft report on vodafone retrospective law posted on october 9, 2012 by editor posted in all information, others no comments v report of the expert committee on retrospective amendments made by the finance act, 2012 to incometax act, 1961 relating to taxation of non residents on indirect transfer. Expert committee constituted by the government under the chairmanship of dr. Indian finance minister announces decisions on indian gaar regime. Taxation of indirect transfer the honorable finance minister, during his budget speech, spoke about moving towards a non adversarial tax regime which would be in consonance with global policy. Report of the task force on goods and services tax thirteenth finance commission executive summary page i executive summary 1. Parthasarthy shome committee report favoured prospective application of tax laws in its report on retrospective amendments relating to taxation of indirect transfers.
The report outlines two main approaches to the taxation of oits by the. Shome committee s draft report on retrospective amendments relating to indirect transfer expressed in the attached letter and urge that those recommendations be followed. Implement the recommendations of the shome committee on gaar and the rangachary committee on it and related issues. Cbdt may waive off interest, penalty on retrospective tax. New rules governing taxation of offshore indirect transfers. Indian finance minister announces decisions on indian gaar. Section 2 14 of the act has been amended to clarify the meaning of the term property used in the definition of capital asset. Parthasarathi shome committee, this report follows close on the. Committee for releasing the draft report on the recommendations to the government on the retrospective amendments to the indirect transfer rules as introduced in the incometax act, 1961 it act vide the finance act, 2012 the draft report. Tax evasion, tax mitigation and tax avoidance 19 3. If indirect transfer provisions are made applicable to these fpis, then there is a possibility of double taxation of the same income i.
The shome committee has submitted its final report on retrospective amendments relating to indirect transfers. Parthasarathi shome to examine the applicability of amendments on indirect transfers in the context of nonresident taxpayers draft report released on 9 october 2012 after detailed consultations with stakeholders. The shome committee has proposed to do away with shortterm capital gains tax by increasing the transaction tax. The expert committee submitted a draft report to the government in 2012 hereinafter the shome report. Grant pending refund claims of all taxes and duties. The expert committee was asked by the government to study retrospective amendments relating to indirect transfer. Feb 01, 2016 taxation of indirect transfer the honorable finance minister, during his budget speech, spoke about moving towards a non adversarial tax regime which would be in consonance with global policy. Download shome committee draft report on vodafone retrospective law posted on october 9, 2012 by editor posted in all information, others no comments v report of the expert committee on retrospective amendments made by the finance act, 2012 to incometax act, 1961 relating to taxation of non residents on indirect transfer. The shome committee report on retrospective legislation is under examination and we.
Vodafone, hydra and hercules second labour revisted. Disclosure under indirect transfer tax provisions cbcr. Reasonable commercial purpose under public notice 7, an indirect transfer is regarded as a direct transfer of taxable property and subject to tax if, among other things, the transfer lacks a reasonable com mercial purpose. Jan 18, 2017 the gains earned by fpls on sale or transfer of indian securities is liable to tax in india in accordance with provisions of the incometax act, 1961. As per the draft report on retrospective amendments relating to indirect transfer by the expert committee shome committee report issued in august 2012, the committee has recommended that the word substantially used in explanation 5 should be defined as a threshold of. This is a case concerning an indirect transfer of shares wherein vodafone b. Constitution of the expert committee with terms of reference 12 2. Final report on general anti avoidance rules gaar in. The tax treatment of offshore indirect transfers oitsin essence, the sale of an entity.
Jan 28, 20 25 key takeaways from final shome committee report on gaar brazil sets new interest rates for related party transactions the material on this site is for financial institutions, professional investors and their professional advisers. Retrospective application of tax law should occur in exceptional or rarest of rare cases. Mehta introduction who said only two things in life are certain. Under public notice 7, reporting is voluntary rather than mandatory. Summary of draft report on retrospective amendments. Committee the shome committee to reconsider the rules and submit recommendations to the government. Major recommendations of shome committee on gaar accepted. Parthasarathi shome committee on retrospective amendments relating to indirect transfer.
India and switzerland agree for aeoi, india to get swiss bank account data from september, 2018 onwards. Shome committee report on deferment of gaar the prime minister constituted expert panel on general anti avoidance rules gaar has recommended postponement of the controversial tax provision by three years and abolition of capital gains tax on transfer of securities thereby win back the confidence of foreign investors. Response to the draft report of the parthasarathi shome. Response to the draft report of the parthasarathi shome committee. Vodafone, hydra and hercules second labour revisited nikhil v. In the draft report, the shome panel had recommended that any taxation involving indirect transfer of assets located in india should be. Indias delhi high court clarifies tax consequences of. Designing a legal regime to capture capital gains tax on indirect. Introduce measures to avoid litigation and improve the dispute resolution process. On 1 september 2012 the expert committee published its draft report which contains various recommendations for amendment of gaar provisions, for the.
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