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CBDT issues clarifications on computation of book profit for the purpose of MAT for Ind AS compliant companies

July 2017: The CBDT has cleared the air on the treatment of various Ind AS adjustments for the purposes of computing book profit under MAT and taxpayers would certainly welcome them. However, certain issues still remain unclear such as change in accounting policy for recognition of ESOP expenditure from intrinsic value to fair value, leading to recognition of additional liability through retained earnings upon transition, adjustment for prior period items etc.

CBDT issues modified circular clarifying no TDS with respect to component of GST on services

July 2017: The CBDT clarification through the above circular is timely and welcome. In line with the introduction of a new tax regime for indirect taxes on services, the CBDT has extended its rationale for excluding taxes from the purview of tax deduction at source for payments to residents.

CBDT issues final notification amending Rule 11UA in respect of valuation of unquoted equity shares

July 2017: The final notification is broadly in line to the draft notification issued on 5 May 2017. While the CBDT has now aligned the valuation of preference shares for the purposes of section 50CA, as per existing valuation rules under Rule 11UA(1)(c)(c), difficulties may arise with respect to valuation of unquoted equity shares in certain cases. For instance, practical difficulties may arise for valuation of equity shares in cases of cross holding, valuing investment in unquoted equity shares of investee companies, which in turn hold immovable property/jewelry, etc.

Alienation of shares of Indian company by Dutch company covered under Article 13(5) of India-Netherlands DTAA, thus, not taxable in India: High Court

July 2017: The ruling of the Andhra Pradesh and Telangana High Court in upholding the legal distinction between the concept of ‘share sale’ as opposed to an ‘asset sale’ is in line with the law laid down by the Hon’ble Supreme Court in the case of Vodafone International Holdings B.V.

India signs multilateral instrument and submits provisional list of reservations and notifications

July 2017: 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.


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