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Deloitte India Tax Thoughtwares

Delve into industry-specific updates, explore the interplay of tax-technology in business, learn about the global tax landscape, and much more.

2020

July

India Global Trade Advisory Newsletter Delivering Clarity

The COVID-19 outbreak posed unprecedented challenges for every country, and has adversely affected global trade and business. It has brought global business to a halt and the times ahead will be challenging for every nation. The pandemic has presented fresh challenges for the Indian economy too. To deal with the impact of COVID-19, the central government took a slew of trade facilitation measures to minimise its impact on business and overcome disruption in international supply chain. Some major measures taken by the government are mentioned in the Thoughtware.

Three years of GST: Journey so far and the way forward

It has been three years since the introduction of Goods and Services Tax (GST), India’s biggest tax reform, on 1 July 2017. It has been a roller coaster ride for the government, industries, and consumers due to the amount of changes and reforms introduced in the past three years. These changes were primarily focused on rationalising rates, simplifying procedures, and curbing tax evasion. Stabilising one of the world’s biggest online tax systems, GSTN, was also a key focus area for the government.

May

India as a manufacturing hub – Tax and regulatory incentives

At present, India is one of the world’s fastest-growing economies in the world.Make in India is a flagship programme of the Government of India designed to facilitate investment, foster innovation, enhance skill development, protect intellectualproperty, and build best-in-class manufacturing infrastructure in the country. This initiative’s primary objective is to attract investments from across the globe andstrengthen India’s manufacturing sector, while generating widespread employment opportunities.

Could you leverage your Indian buyout?

India has emerged as one of the strongest markets for Mergers and Acquisitions (M&A). In 2018 and 2019, thevalue of M&A activity was US$ 129 billion and US$ 64 billion, respectively 1 . During 2019, Private Equity (PE)investments witnessed an increase of 13.8 percent in terms of value 2 . Across the globe, the trend of using debtto fund acquisitions has increased.

Buying a business? What to buy?

Buying an existing business, which is already generating cash flows and profits, is often a more prudent decision than starting from scratch. An existing business has an established client base, reputation, and employees who are familiar with different aspects of the business. There is no need to reinvent the wheel with respect to setting up new procedures, systems, and policies as a successful formula for running the business has already been put in place.

April

COVID-19 – Global mobility considerations

Travel-related restrictions triggered by COVID-19 pose significant challenges to businesses. While the decisions are being driven keeping in mind the emotional and physical well-being of employees, unplanned travel could trigger a series of compliance obligations and issues from an individual as well as corporate tax perspective. It is important for companies to look at cost optimisation opportunities keeping in mind the existing tax and social security treaties amongst countries. Companies need to track employee locations, assess compliance requirements, review mobility-related compensation, revisit related policies for agility, and strategise for the future.

Equalisation levy on e-commerce operators

Taking a cue from the G20 / OECD Base Erosion and Profit Shifting (BEPS) Action 1 dealing with digital economy, India introduced an Equalisation Levy (‘ EL’) in 2016 at the rate of 6 percent on non-resident companies engaged in online advertisement and related activities.

The scope of the said provision has now been expanded to include EL of 2 percent on consideration received or receivable by an ‘e-commerce operator’ from ‘e  commerce supply or services’, and is effective from 1 April 2020.

March

The Direct Tax Vivad Se Vishwas Rules, 2020 – Procedure and Forms

The Direct Tax Vivad se Vishwas Act, 2020 introduced a dispute resolution scheme, which was applicable to all appeals/petitions filed by the taxpayers or the income tax department, which were pending until 31 January 2020, before any appellate forum. In essence, it offered complete waiver of interest and penalty if the taxpayer agreed to pay the disputed tax amount by 31 March 2020.

In connection with this scheme, the much awaited Rules laying out the forms and procedures for the Direct Tax Vivad se Vishwas Act, 2020 (the VsV Act) were released by the Central Government vide notification dated 18 March 2020. These Rules are titled as “The Direct Tax Vivad se Vishwas Rules, 2020” (the VsV
Rules). The Rules have laid out five forms in numerical order for declaration, undertaking, granting of certificate, intimation of payment alongwith proof
of withdrawal and issuance of order. As expected, the forms must be filed online under digital signature or through electronic verification code and therefore,
taxpayers may still be able to achieve resolution of their tax disputes within the first window, which ends by 31 March 2020 per the VsV Act.

The second window starts from 1 April 2020 until a date to be specified per the VsV Act, (likely to be 30 June 2020 per the finance minister’s Union Budget
2020 speech) In this window, the taxpayer may still be able to settle his disputes and get complete waiver of interest and penalty, subject to paying an additional amount as specified in the VsV Act which in most cases, will be 10 percent of the disputed tax.

India Global Trade Advisory Newsletter

The focus of Union Budget 2020 was, amongst other things, on increasing ease of doing business and ensuring level playing field for domestic industry. With a focus to boost domestic manufacturing and entice large investments in mobile phones, electronic equipment, and semiconductor packaging, a detailed scheme will be announced.

Further, Finance Minister also mentioned that customs duty exemptions will be comprehensively reviewed by the government by September 2020. Customs law and procedures will also be reviewed for their alignment with needs of changing times and ease-of-doing business.

Free Trade Agreement (FTA) utilisation – need for a robust ”origin management system”

Government vide Finance Act 2020, has introduced a new chapter under the Customs Act 1962 with respect to Administration of Rules of Origin (ROO). This can have multi-fold impact on the companies availing benefit under the Free Trade Agreements (FTA) and hence, companies need to be fully prepared to handle the forthcoming changes.

India has signed more than eighteen trade agreements, including Generalised System of Preferences (GSP) benefits offered by developed countries. India has signed up key trade agreements with ASEAN countries, Japan, Korea, Singapore, SAARC countries, SAPTA and is eligible for benefits under GSP offered by developed countries.

The Government has witnessed that there is growth in the benefits being claimed by the importer under various FTAs and there are instances where undue claims of FTA pose threat to domestic industry, thus such imports require stringent checks. Hence, with this backdrop, Hon’ble Finance Minister has proposed to introduce governing provisions for administration of Rules of Origin (ROO) by customs authorities.

The Direct Tax Vivad se Vishwas Bill, 2020: Decoding the amended bill and circular

“The Direct Tax Vivad se Vishwas bill, 2020” was tabled on 5 February 2020, in the Lok Sabha, to provide a resolution for pending income-tax disputes. Thereafter, official amendments to the bill were proposed for accommodating the representation received from key stakeholders. However, several aspects of the scheme required clarifications, which the government provided in the form of an amended bill, passed by the Lok Sabha on 4 March, and by way of a circular issued by the Central Board of Direct Taxes (CBDT). The amended
bill was passed by the Rajya Sabha on 13 March 2020. The President of India provided his assent to the bill on 17 March 2020, thus enacting the "Direct Tax Vivad se Vishwas Act, 2020" (Act or VsV scheme).

February

The Direct Tax Vivad se Vishwas Bill, 2020

The Direct Tax Vivad se Vishwas Bill, 2020 (VsV Bill) has been introduced by the Government of India to settle pending direct tax litigations for litigants, and enable the government to collect revenues locked up in litigation.

Landscape of e-invoicing in India

Electronic invoicing or e-invoicing is the next big phase in the goods and services tax (GST) ecosystem. The GST council has introduced e-invoicing in phases to enhance and make the GST structure effective. This staggered approach is intended to provide an opportunity to both the goods and services tax network (GSTN) and the businesses to prepare for a major transformation in GST compliance construct. E-invoicing is running successfully in many countries across the globe already. India will also be following contemporary international best practices for e-invoicing of business transactions with the introduction of this measure.

January

Infrastructure: Build the new, save the old, find the funds

Building India’s infrastructure assets remains an important area for the government. Road and rail networks in the country need to be built or upgraded. Moreover, power production still relies on coal, telecom companies are in distress, networks are patchy, airports are congested, and airlines are in trouble. To address these issues, the Indian government has set out a plan to spend US$ 1.4 trillion on infrastructure in the next five years and achieve its ambitious target of making the country a US$ 5 trillion economy.

2019

December

Real Estate Investment Trusts

Over the past few years, India’s commercial real estate sector has seen a sequential growth, largely driven by the continued demand traction from the country’s technology sector and with new demand coming in from the rapid strides in the start up ecosystem. Currently, the estimated size of commercial office space that can be transitioned to Real Estate Investment Trusts (REITs) is nearly 300 million square feet, translating to a potential market size of over US$ 35 billion.

November

India: Economy treading on thin ice

Multinational companies looking for alternate manufacturing destinations to diversify their supply chain and reduce costs present India an opportunity to be the next emerging manufacturing hub. Not to mention India’s reputation in services exports is an advantage that is likely too difficult for global investors to ignore.

Digital DNA

Disruptions in the digital environment are constant and varied. Some are simply noise while others are disintermediating. There are cultural dimensions resident in the organization that either support or detract from the  organization’s ability to work in an environment of constant disruption. 

Digital Tax Transformation

Transforming a tax function relies on technology as an integral component of any transformation strategy in an organisation. Any investment in digitisation of tax technology solutions should assess the feasibility and utility of such solutions. Upon adoption of tax technology, the organisation might face challenges of integrity of data being fed. However, the joined efforts of various teams related to IT technology, tax function, and analytics can overcome such limitations.

Accurate automation

Automating data processing to reduce manual intervention and errors, and increase efficiencies and accuracies, is important. To adopt RPA, an organisation must collaborate across functions to evaluate solutions and develop a roadmap for cross-functional working.

September

Q&A with Fiona Craig

The transfer pricing practice in the Asia Pacific has witnessed significant development in the past few years. Read what our expert has to say about these changes and their impact on businesses. 

Supreme Court ruling on PF wages

The Supreme court on 28 February 2019 ruled that all allowance in questions are to be treated as wages for the purpose of PF, effectively widening the definition of pay for the purpose of PF. Download the thoughtware to know more.

August

Multilateral Instrument (MLI) Ratification

Overview
  • Under the OECD*/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), more than 125 countries are collaborating to put an end to tax avoidance strategies that exploit gaps and mismatches in tax rules to avoid paying tax
  • MLI is an outcome of BEPS Action Plan (AP) 15 of the OECD/G20 Inclusive Framework, which offers solutions for governments to plugs loopholes in international tax treaties by transposing results from the BEPS project into bilateral tax treaties worldwide
  • MLI allows governments to modify application of its network of bilateral tax treaties in a synchronised manner without renegotiating each of these treaties bilaterally
  • In November 2016, MLI was agreed upon by more than 100 participating jurisdictions**
  • MLI came into force on 1 July 2018***
  • More than 1,500 tax treaties are expected to be modified
  • Till now 89 jurisdictions**** have signed the MLI (30 of these have deposited their instruments of ratification, acceptance or approval [‘ratification instrument’] along with the OECD Secretariat along with its list of reservations and notifications [‘MLI positions’])

June

2019 BEPS global survey

This is the sixth year that Deloitte has conducted the "OECD Base Erosion and Profit Shifting (BEPS) survey." The objective of this annual survey has been to gauge the views of multinational companies regarding the Global Tax Reset and the OECD's Base Erosion and Profit Shifting (BEPS) initiative, and the expected resulting impact on their organisations. The 2019 survey focused on respondents’ views on the topics that were high on the agenda in 2018, such as the Multilateral Instrument, the US Tax Reform and the ‘digital taxation’ debate, in addition to their views on the progress of BEPS related measures. 

April

Settlement of Indirect Tax Disputes – Seize the opportunity

GST regime has replaced the plethora of indirect taxes levied by States and the Central Government. However, there is a huge backlog of appeals pending across various levels and under different statutes, both at State and Central level. This has a dual negative impact, on one hand there is a working capital blockage as well as increasing cost of litigation in the hands of the assesse/dealer/taxpayer and on the other hand, thousands of crores of revenue in taxes are blocked for the State and Centre.

Different types of schemes are being announced by various States with the basic objective of  mobilizing collection of revenue, mitigating existing litigation and reducing the workload on the departmental staff so as to concentrate on stabilizing GST mechanism.

March

Building the tax function of tomorrow—today

The tax function is no longer all about compliance. Cognitive technologies and new digital models are driving changes in how tax leaders are looking to the future, aiming to add both value and transparency.

Exploring the new investment world of REIT

Real Estate Investment Trusts (REITs) are companies that own or finance income-producing real estate in a range of property sectors. They provide all investors the chance to own valuable real estate, present the opportunity to access dividend-based income and total returns, and help communities grow, thrive and revitalise.

February

Technology, Media, and Telecommunications: Tax Landscape

We are delighted to introduce you to our special tax publication for the Indian Telecommunication, Media, and Technology (TMT) industry.

Income-tax Controversies: A Thought Paper

This thought paper deals with the following subjects:

  1. Intangibles and Disallowance of Advertisement Marketing Promotion (AMP) Spends.
  2. India Inbound Secondment of Employees: Is it a Case of Rendering Services?
  3. Digitalised Businesses: Tax Characterisation Issues
  4. Intra Group Charges: Transfer Pricing Considerations
  5. Restricting the transfer pricing adjustment only to the value of “international transactions”.
  6. Situations in which Income Tax Appellate Tribunal (ITAT) can remand back (Sony and Kodak decisions).
  7. Section 14A disallowances
  8. Using MAP/APA for non-covered years
  9. Profit split method – transfer pricing considerations

Each subject briefly describes the issue, the contrary views, challenges, and our thoughts on the same.

Insolvency and Bankruptcy Code

While the Goods and Service Tax (GST) has been widely described as independent India’s biggest tax reform after the economic liberalisation of 1991, the Insolvency and Bankruptcy Code (Code), yet another landmark contemporary law, is just beginning to be assessed for efficacy. Rightly hailed as an important legislative reform, the Code is expected to resolve the prevailing nonperforming assets (NPA) crisis, the resultant logjam in availability of credit, and the consequential impact on growth.

Ind AS 115 - Revenue from contracts with customers

The Ministry of Corporate Affairs (MCA) notified 39 Indian accounting standards (Ind AS) on 16 February 2015. These standards include Ind AS 115, which was converged with the International Financial Reporting Standards (IFRS) 15. Following the deferral of IFRS 15 to 1 January 2018, the MCA also deferred the application of Ind AS 115 on 30 March 2016, and issued Ind AS 11 (construction contract) and Ind AS 18 (revenue recognition).

Glimpses of the Interim Budget 2019

Catch up on important updates and highlights from the India Interim Budget 2019 presented by the government on 1 February 2019. The government has set out a comprehensive ten-dimensional vision to create a modern, technology driven, high growth, equitable and transparent India by 2030. The proposed amendments have been positively received by the industry and the common man. Enhancement of standard deduction for the salaried class and tax exemption for all taxpayers deriving income upto INR 5 lakhs a year will provide some relief to the middle class. The budget also has a range of provisions that factor economic support for the small farmers/marginalised sections. The budget proposal is touted to boost economic growth and demand buoyancy in the economy.

January

Global Powers of Retailing 2019

Welcome to the 22nd edition of Global Powers of Retailing. The report identifies the 250 largest retailers around the world based on publicly available data for FY2017 (fiscal years ended through June 2018), and analyzes their performance across geographies and product sectors. It also provides a global economic outlook, looks at the 50 fastest-growing retailers, and highlights new entrants to the Top 250.

Our digital future - A perspective for tax professionals

The next five years will be a period of significant technological advancement for professional services including the tax arena. It is hard to predict precisely what new developments will emerge but we can look to current and recent trends to guide our predictions for the future digital landscape and the ways in which it will impact the profession.

Issues surrounding business travellers

Global business travellers potentially trigger compliance and withholding obligations. These can be multiple obligations (income tax, social security, immigration, and corporation tax), which can impact at either, or both the individual and the corporate level. Different tests apply to different taxes and places, but broadly all traveling employees making more than just an occasional annual visit increase these exposures.

Deloitte Business Travel Advantage

Deloitte has a dedicated global team working on analytics research and development for our client base across the mobility, talent and rewards subject matter area. We provide a range of services from consultancy to clients who wish to build and maintain their own solutions, through to the deployment of bespoke analytics dashboards and other technology solutions which are designed, built and also maintained by Deloitte. We are able to host secure technology solutions on behalf of our clients, managing the entire process from acquisition of data through to creation of insight support for your stakeholders.

Global payroll management

Over the past decade, international employee movement has significantly grown. With economies, knowledge, capital, trade and technology being highly interconnected, no business can survive without a global connection. Hence, there is a greater need for talent movement to ensure that the right people are available for the required jobs at the right places and at the right time.

Global Tax Reset - Transfer Pricing Documentation Summary

Deloitte's Transfer Pricing practice has prepared the Global Tax Reset - Transfer Pricing Documentation Summary, which compiles essential country-by-country reporting and documentation information (including master file/local file information, if applicable) for 79 jurisdictions around the world.

2018

November

Decoding National Digital Communications Policy (NDCP) 2018

The policy focuses on creating a roadmap for emerging technologies such as 5G, Artificial Intelligence, Robotics, Internet of Things, Cloud Computing and M2M by simplifying licensing and regulatory frameworks and ensuring appropriate security frameworks. Experiments with new technologies are unable to gain momentum because of the regulatory hurdles for operating in India. The policy seeks to remove regulatory challenges and create attractive investment opportunities in new technology segments and stimulate the deployment of new technologies in India.

The policy supports the growth of telecom sector in India which has constantly been in financial crisis. The implementation of the policy will unleash multiple opportunities for telecom service providers, internet service providers, infrastructure providers, handset and equipment manufacturers, satellite communication providers, academic community, the innovators and start-ups.

October

Financial Transfer Pricing Services - Changing Landscape

Consumer businesses are witnessing evolutionary changes in India. Frequent disruptions in the retail, FMCG and e-commerce sectors have become a norm. These evolutions, driven by technology and changing consumer shopping behavior, present lucrative opportunities in the consumer markets not only for traditional players but also for multi-national brands and modern & upcoming consumer companies. The retail, FMCG and e-commerce sectors in India provide a vast scope of improvement throughout their value chains – from sourcing, manufacturing, packaging and distribution to logistics and delivery. The time is thus ripe for witnessing the true potential of growth in this sector.

Consumer LEADS

Consumer businesses are witnessing evolutionary changes in India. Frequent disruptions in the retail, FMCG and e-commerce sectors have become a norm. These evolutions, driven by technology and changing consumer shopping behavior, present lucrative opportunities in the consumer markets not only for traditional players but also for multi-national brands and modern & upcoming consumer companies. The retail, FMCG and e-commerce sectors in India provide a vast scope of improvement throughout their value chains – from sourcing, manufacturing, packaging and distribution to logistics and delivery. The time is thus ripe for witnessing the true potential of growth in this sector.

Emerging trends in BEPS arena

Indian tax landscape has seen radical changes with renegotiation of its tax treaties, introduction of buyback tax, introduction of equalisation levy, limiting interest deduction, phasing-out of tax holidays, introduction of GAAR and, more recently, revision of agency PE definition and introduction of Significant Economic Presence. Follow emerging trends in BEPS arena.

August

Trends in Transfer Pricing - Global Research Bulletin

This global research bulletin provides an updated snapshot of the current state of Transfer Pricing as well as anticipated future trends.

July

Next-generation family businesses

From 8 January to 28 February, 2018, the Deloitte Family Business Center polled 575 next-generation family business leaders in 52 countries through an online survey.

June

Operational Transfer Pricing

While many companies maintain a firm focus on the "plan," "manage," and "resolve" phases, less emphasis is often placed on the "streamline" phase of the lifecycle, commonly referred to as Operational Transfer Pricing (OTP). Incorrectly recorded outcomes are increasingly a target of tax authorities and the main cause of adjustments in most tax audits. Aligning all elements of the Transfer Pricing lifecycle—policy, documentation, and tax authority interaction—with OTP is essential.

Future of the Deal

After four consecutive years of crossing the $3 trillion annual mark, the M&A market continues to surpass expectations, it crossed the $1 trillion mark within the first three months of 2018, the fastest ever pace.

April

International Tax India Highlights

With rapid changes in the global tax landscape, it is important to be on top of latest developments affecting cross-border business. 

Taxation and Investment in India

2018 Taxation and Investment guide discusses investment climate, ease of setting up business, corporate taxation, withholding taxes, indirect taxes, personal taxation, and other key developments, across countries.

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.

Febraury

Know Your Budget 2018 - Detailed analysis

The Government’s agenda of ‘Transform, Reform and Perform’ in the budget focuses on implementation of the recent reforms. Hence there are no big bang announcements. The budget addresses needs of agricultural sector and MSMEs, through which agenda of inclusive growth, formalization of economy and boost employment generation is targeted to be realized. The FM’s promise of reducing corporate tax rate from 30 percent to 25 percent for companies remains limited to the MSMES leaving the large tax payers to wait for another year. However, 99% of MSME’s with turnover of upto Rs 250 crores would benefit from the rate reduction. Unfortunately, the large corporates will now carry a slightly higher tax burden from an increase cess of 1 percent. Rationalization of Long term capital gain taxation may be inopportune in terms of timing as their ability to raise funds through IPOs and FPOs may be impacted due to market sentiments changing.

Union Budget 2018 | Glimpses

The Government’s agenda of ‘Transform, Reform and Perform’ in the budget focuses on implementation of the recent reforms. Hence there are no big bang announcements. The budget addresses needs of agricultural sector and MSMEs, through which agenda of inclusive growth, formalization of economy and boost employment generation is targeted to be realized. The FM’s promise of reducing corporate tax rate from 30 percent to 25 percent for companies remains limited to the MSMES leaving the large tax payers to wait for another year. However, 99% of MSME’s with turnover of upto Rs 250 crores would benefit from the rate reduction. Unfortunately, the large corporates will now carry a slightly higher tax burden from an increase cess of 1 percent. Rationalization of Long term capital gain taxation may be inopportune in terms of timing as their ability to raise funds through IPOs and FPOs may be impacted due to market sentiments changing.

Union Budget 2018 | Understanding the impact on Foreign Portfolio Investors

The Indian Finance Minister presented the Union Budget 2018. The budget was presented against the backdrop of slower economic growth, rising crude oil prices and growing protectionist tendencies in some countries. The GDP growth for the current fiscal year (April 2017 to March 2018) is estimated to be around 6.5% as compared to the growth rate of over 7% registered in last 3 financial years. The slower economic growth is generally attributed to the recent bold reforms undertaken by the government including implementation of Goods and Services Tax (GST) regime to replace the multiple indirect taxes and demonetization of higher currency notes aimed at removing black money from the economy.

Union Budget 2018 - Base Erosion and Profit Shifting

For past few years, the Organisation for Economic Cooperation and Development [OECD] and G20 countries have actively worked on the base erosion and profit shifting [BEPS] project. 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. In light of several such instances resulting in BEPS, the G20 and OECD released their recommendation on 15 BEPS action plans (15 action plans) on 5 October 2015.

International Tax Review - Intangibles Guide

Welcome to International Tax Review’s guide to intangible assets, published in association with Deloitte. Intangible assets are as central to the business function as steam-powered machines were during Industrial Revolution. Despite the evolution of businesses since the 18th century, modern business is still governed by historic tax laws.

Tax governance in the world of Industry 4.0

Industry 4.0 has rapidly become a global priority for enterprises and governments alike due to multiple benefits.

2018 BEPS global survey

This is the fifth year that Deloitte has conducted the "OECD Base Erosion and Profit Shifting (BEPS) survey." The objective of this annual survey has been to gauge the views of multinational companies regarding the Global Tax Reset and the OECD's Base Erosion and Profit Shifting (BEPS) initiative, and the expected impact on their organizations. The 2018 survey focused on understanding how multinationals' perspectives on BEPS and the tax landscape have evolved. The final 2018 survey results are below.

Full and summary survey results are available for download

Full 2018 BEPS survey results

Summary 2018 BEPS survey results

2018 BEPS survey results white paper

Infographic

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.

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