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