Tax treaty between India and Singapore revised

Global Tax Update:February 2017/India

The Central Board of Direct Taxes (CBDT), has issued a press release to notify amendments in the India-Singapore tax treaty. (Global Tax Update:February 2017/India)

1. Tax treaty between India and Singapore revised

(1) Mutual Agreement Procedure (MAP)

This amendment would enable taxpayers of both countries to get arm’s length price determined through MAP. This is in line with India’s commitments under Base Erosion and Profit Shifting (BEPS) Action Plan.

(2) Source-based taxation of capital gains on shares

From April 1, 2017 capital gains arising on transfer of shares in a company would be taxable in the source state. Earlier shares were taxable in country of residence.

2. India Cyprus Tax Treaty

On 1 November 2013, the Government of India had notified (“2013 notification”) Cyprus as a ‘notified jurisdictional area’ . Post the notification, there were onerous compliance requirements on the taxpayers dealing with residents of Cyprus like applicability of transfer pricing provisions on all transactions with Cyprus residents, withholding tax rate of 30% on all income chargeable to tax, etc.

3. PAN & TAN to be applied at the time of incorporation

In a major move to reduce the time required to start a company in India, the Ministry of Corporate Affairs (“MCA”), Government of India has implemented an integrated technology driven approach to company formation.

As per the revamped process, the tax Permanent Account Number (“PAN”) and Tax Deduction and Collection Account Number (“TAN”) for the new company is to be simultaneously applied for along with the application for company formation.

4. Clarifications on implementation of GAAR provisions under the Income Tax Act, 1961

Stakeholders and industry associations had requested for clarifications on implementation of GAAR provisions. CBDT has issued the clarifications on implementation of GAAR provisions on 27th January, 2017.

>> Click for Japanese [インド・シンガポール租税条約の改正 ほか]

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