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India: VAT on telecom towers, taxation of services outside India

India: VAT on telecom towers

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).

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  • Central VAT credit allowed on telecom towers, shelter, accessories: The High Court of Delhi held that denial of a central value added tax (CENVAT) credit on the premise where telecom towers were erected (that resulted in immovable property) was erroneous. Read a November 2018 report [PDF 710 KB]
  • Withholding tax on shares under employee stock option: The Hyderabad Bench of the Income-tax Appellate Tribunal held that an obligation for withholding tax at source was triggered only when the shares were allotted, and not on the date of exercise. Read a November 2018 report [PDF 724 KB] 
  • Value of goods supplied: The Authority for Advance Ruling, Karnataka held that the amortised cost of tools that were supplied “free of cost” must be added to the value of the components for determining the value of the supply.  The case is: Nash Industires (I) Pvt. Ltd. Read a November 2018 report [PDF 530 KB]
  • Liquidation of shares under employee stock option taxed as capital gains: The Chennai Bench of the Income-tax Appellate Tribunal held that gains arising from the sale of shares sold by a parent company on behalf of the taxpayer would be treated as capital gains, determined by considering the value of shares at allotment as the cost of acquisition. Further, when such shares were allotted to the taxpayer during years in which the taxpayer was a non-resident of India, perquisite taxation did not arise. The case is: Dr. Muthian Sivathanu. Read a November 2018 report [PDF 709 KB]
  • Salary received in India by non-resident for services outside India not taxable: The Bangalore Bench of the Income-tax Appellate Tribunal held that the salary received in India by a non-resident individual taxpayer for services rendered in the United States was not taxable in India under the Income-tax Act, 1961, despite the taxpayer's failure to furnish a tax residency certificate, as all evidence relating to the taxpayer’s stay and subject to taxation in the United States. Read a November 2018 report [PDF 728 KB]
  • Fees for technical services not taxable, income from source outside India: The Gujarat High Court addressed the taxability of fees for technical services vis-à-vis exclusion provided under section 9(1)(vii)(b) of the Income-tax Act, 1961. The court held that the fees for technical services were paid by the taxpayer into a foreign company for the purpose of making or earning income from a source outside India. The source of income—namely the taxpayer's customers—were foreign-based. Therefore, even though services were in the nature of technical services because they were covered within the exclusion under section 9(1)(vii)(b) of the Income-tax Act, 1961, tax was not required to be withheld. The case is: Motif India Infotech Pvt Ltd. Read a November 2018 report [PDF 632 KB] 

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