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India: Payments for telecommunication system; foreign investments in LLPs

India: Payments for telecommunication system

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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  • Payments for global telecommunication facility not “fees for technical services”: The Supreme Court of India held that payments received by a Danish shipping company for its global telecommunication system (payments from Indian agents) were reimbursements in nature. Because no profit element was embedded in these payments and also because the foreign company had not provided any technical services to the Indian agents, the payments were not taxable as fees for technical services. Read a March 2017 report [PDF 333 KB]

  • Foreign direct investments in limited liability partnerships: The Reserve Bank of India has issued guidance concerning foreign direct investments and specifically foreign direct investment in limited liability partnerships. Read a March 2017 report [PDF 336 KB]

  • Update on GST legislation: The Goods and Service Tax (GST) Council approved a draft “central goods and services tax” (CGST) and integrated goods and services tax (IGST) legislation, and plans to take up the draft “state goods and services tax” (SGST) and the union territory goods and services tax bill for approval in its next meeting scheduled on 16 March 2017. The government aims to table the bills before the Parliament for approval during the second part of the budget session starting 9 March 2017. Read a March 2017 report [PDF 282 KB]

  • Capital surplus on account of waiver of loan: The Mumbai Bench of the Income-tax Appellate Tribunal held that a capital surplus in respect of the waiver of loan amount cannot be regarded as amount available for distribution through the profit and loss account. A mere disclosure of an extraordinary item in the profit and loss account does not mean that the item represents the “working result” of the company. Accordingly, the waiver of the loan as a capital receipt cannot be taxed as “book profit.” The case is: JSW Steel Limited. Read a March 2017 report [PDF 352 KB]

  • Social security agreement (SSA) with Portugal: The SSA between India and Portugal, signed in March 2013, has entered into force and is effective from 8 May 2017. Read a March 2017 report [PDF 325 KB]

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