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Deloitte India Tax Publications

Learn about Base Erosion and Profit Shifting (BEPS), Goods and Services Tax (GST), Insolvency and Bankruptcy code, 2016, Real Estate Regulatory Authority (RERA), Industry updates, and more

Petroleum Tax Guide

The Petroleum Tax Guide 2018 is a handbook of tax provisions and incentives for exploration and production of Petroleum.

The Evolving Energy Landscape in India

The report provides a detailed view of the Indian energy landscape (power, oil & gas, renewable energy), featuring economic overview, megatrends shaping the industry and the opportunity areas for investment across the value chain in the sector.

US Tax law reforms

US Tax Law Reform – An Overview

On December 22, 2017, the US President signed into law a massive tax reform package which lowers tax on companies, pass-through entities, individuals, and estates and move the US toward a participation exemption system for taxing foreign-source income of domestic multinational corporations.

Base Erosion and Profit Shifting

Multilateral Instrument: Analysis and India perspective

The MLI is a big step in the BEPS implementation process. The provisional list of reservations and notifications made by India and by other countries, has provided insights on how Indian tax treaties will shape up in the BEPS world. It needs to be seen if India makes any further changes in the provisional list of reservations and notifications.

BEPS Action 13 – Compilation of essential information

BEPS Action 13 – Compilation of essential information on Country by Country Report and Master File requirements for few key jurisdictions.

BEPS Action 13 – India implementation

The final rules on CbC reporting and Master File requirements in India are significantly aligned with BEPS Action 13 guidance, reflecting India’s commitment to global consistency. It is imperative to mention that there are various aspects of the rules that will have specific India implications and will also need clarifications and additional information. The final rules incorporate various clarificatory amendments to the draft rules and there are not many noteworthy modifications to the draft rules.

Base Erosion and Profit Shifting (Beps) Analysis and India Perspective

Launched in 2017, this report focuses on reinforcing substance requirements in international standards to ensure alignment of taxation with the location of economic activity and value creation: There are aspects to prevent tax treaty abuse (i.e. treaty shopping), strengthen rules relating to creation of a permanent establishment for taxation in the source country, ensuring transfer pricing outcomes are in line with value creation in relation to intangibles, etc. This publication analyses key issues around BEPS as well as outlines the Indian perspective in relation to these issues.

Base Erosion and Profit Shifting (BEPS) Analysis and India Outbound Perspective

Launched in 2017, this report focuses on reinforcing substance requirements in international standards to ensure alignment of taxation with the location of economic activity and value creation: There are aspects to prevent tax treaty abuse (i.e. treaty shopping), strengthen rules relating to creation of a permanent establishment for taxation in the source country, ensuring transfer pricing outcomes are in line with value creation in relation to intangibles, etc. This publication analyses key issues around BEPS as well as outlines the Indian perspective in relation to these issues from an outbound perspective.

BEPS Impact on Consumer Business

Launched in December 2016, this report pertains to the subject where in the backdrop of concerns raised by governments and revenue authorities about social organizations that multinational enterprises (MNEs) are not paying their ‘fair share’ of taxes and are shifting profits to low tax jurisdiction, the G20 nations requested the Organisation for Economic Co-operation and Development (OECD) to develop action plans to tackle Base Erosion and Profit Shifting (BEPS) in a comprehensive manner. The BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profit ‘disappear’ for tax purpose or to shift profits to locations where there is little or no real activity but taxes are low, resulting in little or no overall corporate tax being paid.

BEPS Impact on Manufacturing

Released in 2016, this paper seeks to capture some key potential impact of BEPS Actions for Indian MNEs in the manufacturing sector having global operations as well as to MNEs operating in India. India has emerged as the seventh largest economy. Favorable demographics, a burgeoning domestic market and an annual growth rate in excess of 7 percent in recent years has led several multinational enterprises (MNEs) to establish their manufacturing facilities in India. The Indian economy is now getting integrated with the global market and any change at a global level is increasing impacting entities operating in India. Cross border transactions including those between MNE groups have increased manifold inviting attention of tax authorities to safeguard the tax base.

BEPS Impact on Private Equity

In order to address the concerns created by BEPS, G20 countries and Organisation for Economic Cooperation and Development (OECD) BEPS impact on private equity space, an Indian perspective has introduced the BEPS project, for which the final plans were released on 5 October 2015. These plans have been designed to ensure that both developed and developing worlds levy and collect their ‘fair share’ of tax. In this age of increasing focus on bottom lines, it is indeed tempting for a global tax director of a multinational (MNC) to explore leveraging on arbitrage amongst tax rates of various countries and to park profits in low tax jurisdictions. Launched in December 2016, this report covers various topics like FPI investments, FDI investments, interest deduction on debt instruments, applicability of CbC reporting rules to PE, etc.

BEPS Impact on Infrastructure Sector

In October 2015, the Organization for Economic Co-operation and Development (OECD) released final reports on Base Erosion and Profit Shifting (BEPS) in the form of 15 Action Plans with the objective to reform international tax system and ways to tackle tax avoidance. Clearly the emphasis of BEPS project is to increase transparency, satisfaction of substance test and the need to revamp international tax treaties to avoid situations like treaty shopping, double non-taxation as well as non-taxation of taxable activities through aggressive tax planning by some multinational companies. BEPS Action Plan will not only impact the tax planning done by the groups across jurisdictions but also have a bearing on well settled organizational structures and business models. Like many sectors, even infrastructure industry is anticipating millions or billions of additional tax due to BEPS action items.

BEPS Impact on Technology, Media & Telecommunications

India, being a member of the G20 nations, has actively participated in the OECD BEPS project and is committed to its outcome. The BEPS project is extremely relevant for India especially Action 1 on the Digital economy as it has revolutionized traditional ways of conducting business around the world including India and a digital revolution is taking place. The digital economy is based on conventional production of goods and services such as software development, IT services, telecommunications, advertising, or content creation. The global companies serving millions of users are changing the rules of the game and bringing far-reaching changes in various sectors of the economy through - intense reliance on digital technologies and innovative business models. India is on the brink of internet revolution with the latest figures indicating that India has more internet users than the population of the US and has become the country with the second largest population of internet users after China. With new Government initiatives, like Digital India, there will be an increased usage of various services and so will be the complexity in business models that are likely to evolve over time.

BEPS Impact on Life Sciences and Health Care

This paper seeks to capture some of the key potential impacts of BEPS for companies operating in Life Sciences and Health Care (LSHC)—Indian multinational enterprises [MNEs] having global operations and MNEs operating in India.

Multilateral Instrument (MLI) – BEPS tax treaty measures implementation

MLI is a convention which will be signed by several countries and have the impact of changing the bilateral tax treaties signed by these countries. Address the practical difficulty of changing bilateral tax treaties in a time-bound manner and swiftly transpose results from the OECD/ G20 BEPS Action Plans into more than 2,000 tax treaties worldwide. A complex instrument divided into VII Parts and running into 39 articles, which once signed and effective, will modify the existing bilateral tax treaties of the countries signatory to the MLI. Certain articles of MLI will offer option of provisions for each country to select for adopting in its tax treaties. While changes to domestic tax laws and other administrative measures can be done by the respective countries on their own, changes in tax treaties involve detailed bilateral processes and negotiations between the countries. These bilateral processes are lengthy and could take over a decade if all prevalent bilateral tax treaties are to be amended. On this front and in line with Action Plan 15, more than 100 jurisdictions have concluded negotiations on a Multilateral Instrument (MLI) that will swiftly implement a series of measures developed in the course of the work on BEPS and enable amendments in bilateral tax treaties. The final version of the negotiated MLI as adopted by more than 100 jurisdictions has now been released. A signing ceremony for MLI is proposed to be held in June 2017 in Paris, pursuant to which the provisions of MLI would become operational.

Tax optimisation in the BEPS world

Released by Deloitte Tax and Regulatory practice in December 2016, this document talks about aspects such as tax-efficient repatriation, corporate structures, tax benefits, minimum alternate tax, as well as throws light on tax levied by overseas jurisdictions.

Transfer pricing documentation and CbC reporting - BEPS Action 13

Deloitte Tax and Regulatory practice released a document on Transfer pricing documentation and CbC reporting (in December 2016) which covers aspects such as proposed transfer pricing compliance documentation, India implementation – three tier transfer pricing documentation, impact and way forward.

General Anti-Avoidance Rules (GAAR)

General Anti-Avoidance Rules (GAAR)

Launched in March 2017, this report discusses about how India has sought to address the issues relating to tax avoidance and evasion by bringing in General Anti-Avoidance Rules (GAAR) in addition to various transaction-specific Special Anti-Avoidance provisions. 

Transfer Pricing 

TP Digital DoX – Technology-enabled transfer pricing compliance

Evolving implications of the OECD’s Action 13 guidance are challenging businesses to find more efficient, centralized, and integrated means to manage transfer pricing documentation processes.

Country-by-Country reporting – File with confidence

The Organization for Economic Co-operation and Development (OECD) has released guidance on the information companies need to include in the Country-by-Country (CbC) report. OECD guidance states that the reports must be filed in XML.

Indirect Tax 

FTA utilization – An opportunity in waiting for Indian industry!

Reports suggest that FTA utilization is as high as 70-80% in developed countries while in India - by Indian exporters and importers, FTA utilisation is less than three percent of the available opportunity.

Customs Investigation and Enforcement in India

Post Clearance Audit (‘PCA’) program was introduced in 2011 with the objective to undertake periodic administrative review, as a measure to check any revenue leakage arising out of the self-assessment regime.

Customs in GST context – Taxing global trade transactions

Customs duty has two components, i.e., basic customs duty (‘BCD’) and IGST; BCD is not creditable and hence becomes a cost, while IGST is creditable and therefore could be cash flow issue for business.

Authorised Economic Operator (AEO) – A trusted business partner

Globally, AEO certification is gradually evolving into an industry standard for claiming eligibility to any administrative and governmental discretions, priority and facilitation.

Industry Updates 

Technology, Media, and Telecommunication

Equalization Levy, PE, GAAR/POEM/ BEPS, ICDS/IND AS, Supply Chain and Mobility.

Real Estate Act : Need for change

Ministry of Law and Justice has notified the Real Estate (Regulation and Development) Act, 2016 (the Act) which has come into force effective 1 May 2017.

NCLT – a single window for corporate re-structuring

Corporate structuring like Capital Reduction, Compromise and Arrangement, Amalgamation, Demerger and similar matters including Cross-border amalgamation requires approval of NCLT under the Companies Act 2013.

Snapshot of policy initiatives & tax incentives to market India as an attractive manufacturing destination

The manufacturing industry in India is poised for rapid growth. “Make in India” initiative has led to a spur in the manufacturing activities. It is expected that India with its advantageous geographic location and huge pool of labour resources clubbed with the slew of measures rolled out by the Government would transform itself into a “Global manufacturing Hub”.

Insolvency and Bankruptcy Code 2016 (IBC)

There were multiple laws in India dealing with insolvency and bankruptcy which were not aiding lenders in effective and timely recovery of stressed assets, causing undue strain on the Indian credit system. Thus, the Government of India has come out with a consolidated legislation i.e. Insolvency and Bankruptcy Code 2016 (“Code”) effective May 2016 for speedy resolution of insolvency and bankruptcy of Companies, LLPs, Individuals and Partnership Firms.

Energy and Infrastructure

From 1 April 2017, the 100% profit linked incentive is not available to an undertaking engaged in the business of power generation and distribution; or power transmission or distribution.

Demonetization

Demystifying Demonetization

On 8 November 2016, the government announced demonetization of INR 500 and INR 1000 currency notes with the objective to cleanse the economic channels of the stock of black money. India had previously witnessed demonetization in the year 1946 and 1978; the difference being that on these two occasions, demonetization was undertaken for high denomination currency notes, such as INR 1000, INR 5000 and INR 10,000. This time, the currency notes demonetized were in wide circulation and commonly used. This time demonetization also aims to remove fake currency from the economy which is used in terror funding and anti-national activities. Having said that, it is also important to point out the continuing effort of the government to curb black money. These efforts have preceded demonetization, demonstrating the government’s commitment to eradicate a malaise of this economy and push the hitherto cash-based economy towards a near cashless economy.

Industry and Emerging Technologies

Are tax incentives necessary to boost Infrastructure and Energy Projects?

Considering the tax incentives are provided globally toward Infrastructure and Energy sectors, the tax incentives are still the need of the hour in India. More importantly, the profit-linked tax incentives are required as it improves the IRR of the project and thereby boosts private investments in this sector. Though in the Budget 2016, the Government has set the phase out date of profit-linked incentives at 31 March 2017, the industry could represent before the Government to continue it or further extend the timeline. Launched in December 2016, this report majorly covers topics like economic and global outlook on tax incentives, tax incentives as a means to enhance infrastructure sector and tax incentive scenarios in India.

e-Commerce in India: A Game Changer for the Economy

e-Commerce has transformed the way business is done in India. With attractive and convenient shopping options at the core of the consumer facing business, the e-Commerce industry offers the power to create innovative, sustainable, consistent and seamless shopping experience across all channels. In the last four years, while the e-Commerce B2C segment has grown significantly leading to creation of many Unicorns, the focus of the Investors going forward seems to have shifted to profitable growth to achieve a stabilization of the economic model. This seems to be resulting in collaborations and partnerships across the value chain with the aim to optimize the costs. The growth of the e-Commerce industry has been triggered by increasing internet and smartphone penetration in not only metro cities but also in tier two & three cities of India. Mobile devices are further expected to drive sales via e-Commerce platforms over the next five years. In line with the trend for increased e-Commerce uptake in tier two and tier three cities, e-Commerce and third party logistics service providers are partnering with players with existing infrastructure in tier two and tier three cities (e.g., India Post) to facilitate deliveries in those cities. However, the increasing logistics costs related to last-mile delivery, especially on account of return orders, requires innovative and analytical driven models that will enhance operational efficiencies in the logistics value chain. This will help e-Commerce companies in their drive towards profitability.

Finance in the Digital Age

It is almost clichéd these days to talk about a digital future—our daily life revolves inexorably around the trends and nuances of the digital world. The twin forces of “Digital” and “Millennial” are converging together—and the result is a socioeconomic disruption of the likes not seen since the original Industrial Revolution. However, the pace of change in the corporate world in embracing the digital economy has been slower—and in many cases hesitant. Deloitte, along with MIT Sloan Management, conducted a research recently, covering nearly 4,000 business executives across 131 countries. It states that 87 percent of the surveyed organizations agreed that the digital technologies will overwhelmingly disrupt their industries, but only 44 percent believed that they are adequately prepared for this disruption.

Goods and Services Tax

Post GST implementation review

Companies have implemented Goods and Services Tax from 1 July 2017 independently or with some support from outside. However, it is important to ensure that the envisaged plan has been implemented well.

Goods & Services Tax - Make GST Work for you

Goods and Services Tax (GST) is a broad based, comprehensive tax to be levied on goods and services, and is being seen as the solution to overcome some significant disadvantages in the current indirect tax regime in the country.

GST is proposed to subsume most Central and State indirect taxes such as Excise Duty (levied on manufacture or production), Service Tax (levied on provision of services), Value Added Tax (levied on intra-state sale transactions) etc., currently applicable on various business transactions. In India, a dual GST is being proposed to be implemented wherein a Central goods and services tax ('CGST') and a State goods and services tax ('SGST') would be levied on the taxable value of a transaction. Both the Central Government and the State Governments would legislate, levy, and administer CGST and SGST respectively.
 

Global Mobility Services

Immigration Services

A brief illustration of the significance of immigration services. As companies expand their global footprint and presence, workforce mobility becomes critical. Companies need to deploy talent into emerging markets with evolving Immigration regulations and to geographies where consequences for non-compliance may be severe. Immigration, being an integral part of employee mobility, needs to be addressed strategically by a policy and operationally by robust processes. Immigration compliance requirements and risks need to be effectively and efficiently managed. The trends and challenges associated with immigration policies need to be addressed effectively. Immigration services like Inbound Compliance Services, Consular Visa Residential, and Visa & RC/RP
Extension OCI card, Work Permit, Initial Visa are vital.

Deputation of Japanese nationals to India - Focus areas

Launched in December 2016, the document focuses on the Deputation of Japanese Nationals to India along with the process covering phases such as: One time planning, Arrival in India, Ongoing Assignment, Yearend compliances and at the time of Repatriation. This documents also provides information about the India Japan Social Security Agreement (SSA).

Outbound employee management

As organizations grow and become more global in nature, employment issues become more complex. Among the most serious challenges businesses face today, is compliance with multifaceted tax laws and labor regulations. With increased sharing of data amongst tax, immigration and social security authorities, employers need to focus on robust documentation and choose the right deployment model. To help organizations deal with these issues, Deloitte India’s Tax and Regulatory practice has released a point of view document (in December 2016) that throws light on important aspects pertaining outbound employee management such as outbound engagement life cycle, key outbound drivers, and global mobility.

Payments to Non–Residents and tax returns – to file or not to file?

Typically, MNC Groups regularly recharge software charges and other expenses and also provide management services, licences, brand name, and know-how to the Indian group entities. These transactions in most cases give rise to taxable income under the Income-Tax Act, 1961 [‘Act’] for the non-resident group entities in India. Keeping this in mind, Deloitte India’s Tax and Regulatory practice has released a document (in December 2016) that provides an overview of the taxation of Non-Resident Foreign Companies (NRFCs), withholding tax obligations of the Indian entity, tax filing obligation for the NRFCs, and consequences of non-compliance.

Social security for mobile employees

The Deloitte Tax and Regulatory practice released a new thought paper (in December 2016) that highlights aspects related to Social security such as concept of international worker, Data exchange between tax, social security, and immigration authorities, shifting mobility dynamics, etc. The thought paper also gives a list of countries with which India has an effective social security agreement.

Ind AS

Ind AS Adoption and Implementation

Launched in December 2016, the document covers the IND AS Adoption and Implementation policies. There are various areas which are impacted by IND AS such as, Related Party disclosure, Financial Instruments, Investments in JV, Leases, Intangibles, MAT and many other areas. It also outlines the aspects related to IND AS Implementation.

Limited Liability Partnerships

Time to move the needle - Limited Liability Partnerships

The Limited Liability Partnership Act notified in 2009 allowed a new hybrid entity, having the features of both a body corporate as well as traditional partnership, to be incorporated for the purposes of undertaking business in India. One may explore the option of setting up LLPs in India as it offers ease of administration and tax advantages. In this thought paper, released by Deloitte Tax and Regulatory practice (in December 2016), some of the key attributes of LLP are discussed.

Litigation

Key cases and highlights

Launched in December 2016, the document covers various cases and highlights of the cases from different courts like Mumbai, Delhi, Bangalore and other cities.

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