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. Committee the shome committee to reconsider the rules and submit recommendations to the government. The shome committee report on retrospective legislation is under examination and we. This report was electronically submitted to finance minister p.
Constitution of the expert committee with terms of reference 12 2. The expert committee was asked by the government to study retrospective amendments relating to indirect transfer. 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. Sincerely, keith lawson senior counsel tax law investment company institute and ici global. Disclosure under indirect transfer tax provisions cbcr. Recommends prospective application of amendments to sec 9 on indirect transfers. 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. Parthasarthy shome committee report favoured prospective application of tax laws in its report on retrospective amendments relating to taxation of indirect transfers. 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. Presumably, a party will elect not to report only if it is confident that there will be no taxes payable under public notice 7. The tax administration reforms commission tarc chairperson. The indirect transfer provisions monster business news. 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.
Section 2 14 of the act has been amended to clarify the meaning of the term property used in the definition of capital asset. The shome committee has proposed to do away with shortterm capital gains tax by increasing the transaction tax. The tax treatment of offshore indirect transfers oitsin essence, the sale of an entity. 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. 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. 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. The committees draft report on retrospective amendments relating to indirect transfers of assets situated in india was released for public comments in october 2012. Act, the expansion of the direct benefits transfer system, and initiation of infrastructure projects. Dr parthasarathi shome submitted its first report on may 30, observations. Report on general antiavoidance rules gaar index s. Summary of draft report on retrospective amendments relating.
Report of the task force on goods and services tax thirteenth finance commission executive summary page i executive summary 1. Indian finance minister announces decisions on indian gaar. Response to the draft report of the parthasarathi shome committee. Amendments relating to taxation of indirect transfer of assets made in. Shome committee report on indirect transfer recommends. Retrospective application of tax law should occur in exceptional or rarest of rare cases. The committee was mandated to submit its report in two months time.
Major recommendations of shome committee on gaar accepted. 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. Introduce measures to avoid litigation and improve the dispute resolution process. 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. Shome committee report on indirect transfer recommends prospective application, no sec 201 liability. Tax evasion, tax mitigation and tax avoidance 19 3. 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 most important task of the finance minister in the 201718 budget is to tame the indirect transfer provisions monster born out of. Uk tax treaty and retrospectivity judicial developments on retrospectivity.
Improving an instrument for stemming tax and legal base erosion wei cui numerous countries e. Shome committees draft report on retrospective amendments relating to indirect transfer expressed in the attached letter and urge that those recommendations be followed. The report outlines two main approaches to the taxation of oits by the. Vodafone, hydra and hercules second labour revisted. Final report on general anti avoidance rules gaar in income.
Indias delhi high court clarifies tax consequences of. Legislative retrospectivity and rule of law statute law. O unlocking development may 2017 womens update potential. In doing so, he has tried to address the concerns of foreign investors by making significant changes to the indirect transfer tax provisions under the. 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. Summary of draft report on retrospective amendments. Draft report of the expert committee on retrospective amendments relating to indirect transfer index s. The business and industry advisory committee at oecd.
Response to the draft report of the parthasarathi shome committee on retrospective amendments relating to indirect transfer october 2012 by. We should move whatever changes have to be brought about in parliament as. Expert committee s report on indias gaar regime is welcome news for foreign investors dated september 4, 2012. India and switzerland agree for aeoi, india to get swiss bank account data from september, 2018 onwards. But if govt decides to proceed with retro amendments, no. Response to the draft report of the parthasarathi shome. The paper seeks to discuss some of the key recommendations below.
Under public notice 7, reporting is voluntary rather than mandatory. Capital markets tax committee of asia 14f hutchison house. Mar 08, 20 the shome committee has proposed to do away with shortterm capital gains tax by increasing the transaction tax. Shome panel submits final report on indirect transfers. Implement the recommendations of the shome committee on gaar and the rangachary committee on it and related issues. Mehta introduction who said only two things in life are certain. 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. The action 2015 final report, transfer pricing documentation and.
Expert committees report on indias gaar regime is welcome news for foreign investors dated september 4, 2012. Urmila chatterjee, soumya kapoor, rinku murgai and sutirtha sinha roy poverty and equity. The shome committee has submitted its final report on retrospective amendments relating to indirect transfers. Once we take a view, i see no reason why we should wait for the budget session. Shome hereinafter referred to as the shome committee to analyse the. 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. Shome panel submits final report on indirect transfers the hindu. The shome committee submitted its draft report to the indian government in september 2012 see asia pacific tax newsalert. Designing a legal regime to capture capital gains tax on indirect. Shome hereinafter referred to as the shome committee to analyse the amendments introduced vide the finance act 2012 and provide its recommendations. Indeed, the government appears to have gone out of its way to disprove this proposition in relation to taxes. 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. It is therefore respectfully submitted that the shome committees recommendation that the provisions. At the onset, it is respectfully submitted that the tax on indirect transfers is a new levy and should therefore have prospective application.
The shome committee suggested that the gaar implementation should. This is a case concerning an indirect transfer of shares wherein vodafone b. 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. Parthasarathi shome committee, this report follows close on the. Centre for budget and governance accountability new delhi. Vodafone, hydra and hercules second labour revisited nikhil v. Expert committee constituted by the government under the chairmanship of dr. 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. Parthasarathi shome committee on retrospective amendments relating to indirect transfer. 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. Prepared by an expert committee appointed by the prime minister of india and chaired by dr. 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.
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. The taxation of offshore indirect transfers a toolkit oecd. Parthasarathi shome to examine the applicability of amendments on indirect transfers in the context of nonresident taxpayers draft report released on 9 october 2012. Draft report of dr shome committee on retrospective. Indian finance minister announces decisions on indian gaar regime. On 1 september 2012 the expert committee published its draft report which contains various recommendations for amendment of gaar provisions, for the. Section 2 14 of the act has been amended to clarify the meaning of the term property used in the definition of.
Committee therefore recommended that definition of transfer need not to be looked at on standalone basis for indirect transfer. Taxing indirect transfers allard research commons university of. 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. Final report on general anti avoidance rules gaar in. 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. Grant pending refund claims of all taxes and duties. Cbdt may waive off interest, penalty on retrospective tax. Saurabh shome macroeconomics and fiscal management. Expert committee 2012 india hereinafter shome report, available at.
Chattisgarh, haryana, tamil nadu, rajasthan and madhya pradesh expressed their. The shome committee, in its report, stated that the taxation of indirect transfer as. Delhi high courts landmark ruling on indirect transfer. If indirect transfer provisions are made applicable to these fpis, then there is a possibility of double taxation of the same income i. New rules governing taxation of offshore indirect transfers. Page 4 ca pinakin desai recent developments in international taxation july 2015 reporting requirement under the amended s. The expert committee submitted a draft report to the government in 2012 hereinafter the shome report. Luxembourg renegotiation of tax treaties information exchange under crs and other eu directives information exchange under fatca. It asked the government should abolish the tax on gains arising from transfer of listed securities, whether in the nature of capital gains or business income, to both residents as well as nonresidents. Shome committee s draft report on retrospective amendments relating to indirect transfer expressed in the attached letter and urge that those recommendations be followed. Expert committee report on gaar 2012 points out that the international practice when. Capital markets tax committee of asia 14f hutchison. In the draft report, the shome panel had recommended that any taxation involving indirect transfer of assets located in india should be.
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