India: Tax treatment of items under income tax treaties with Singapore and the Netherlands

The KPMG member firm in India has prepared reports about recent tax developments

The KPMG member firm in India has prepared reports about recent tax developments

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

  • Capital loss carryforward treatment allowed Singapore entity on sale of shares: The Mumbai Bench of the Income-tax Appellate Tribunal held that a taxpayer was to be allowed a carryforward of a short-term capital loss on the sale of shares pursuant to a provision of the India-Singapore income tax treaty. The tribunal found that the capital losses incurred from transactions in the Indian capital markets were to be construed as income accruing or arising in India and thus within the scope of Section 5 of the Income-tax Act, 1961. Therefore, such short-term capital losses would be eligible to be carried forward to subsequent years. The tribunal observed that on determining the tax treatment of the taxpayer’s income, if provisions of the tax law are more beneficial than those under the tax treaty, then the beneficial provisions of the tax law will apply in determining the taxability of such income. The tribunal rejected the tax department’s argument that since the capital gains earned by the taxpayer were exempt under the provisions of the tax treaty, capital losses were to be ignored. The case is: Goldman Sachs India Investments (Singapore) Pte Ltd. Read an April 2021 report [PDF 533 KB]
  • Tax withholding on dividends at 5% rate under “most favoured nation” clause of India-Netherlands income tax treaty: The Delhi High Court held that pursuant to the “most favoured nation” clause as contained in the Protocol to the India-Netherlands income tax treaty, a lower withholding tax rate of 5% on dividends under India’s tax treaties with Slovenia, Colombia, and Lithuania applied in the present matters involving Dutch entities. The cases are: Concentrix Services Netherlands BV and Optum Global Solutions International BV. Read an April 2021 report [PDF 392 KB]

 

 

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