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India: Security transfer tax on equity shares; service tax liability of banks

India: Security transfer tax on equity shares

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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  • Security transfer tax, and long-term capital loss on sale: The Delhi Bench of Income-tax Appellate Tribunal held that a long-term capital loss on the sale of equity shares/equity-oriented mutual funds on which security transfer tax has been paid is not allowed to be set-off and carried forward. The case is: Nikhil Sawhney v. ACIT. Read an August 2020 report [PDF 283 KB]

  • Banks not liable for payment of service tax under reverse charge on correspondent bank charges: The Customs, Excise, and Service Tax Tribunal, Delhi, noted that as facilitators to an Indian exporter, Indian banks act as a mediator between the exporter and the foreign bank representing the foreign importer. As such, the Indian banks are not the recipient of the services provided by the foreign bank. Thus, regarding the charges that are recovered or collected by the foreign bank, the Indian bank is not liable to pay services tax under the reverse-charge mechanism. Read an August 2020 report [PDF 319 KB]

  • Reimbursement of salary cost of seconded employees to foreign company not taxable as “fees for technical services” in India: The Delhi Bench of the Income-tax Appellate Tribunal held that the reimbursement made to foreign entities by an Indian company, for salary and other costs of seconded employees working in India, does not constitute fees for technical services under the applicable income tax treaties; and thus, there was no requirement to withhold tax. The case is: Boeing India Pvt. Ltd. v. ACIT. Read an August 2020 report [PDF 252 KB] 

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