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India: Deductible expenses if non-withholding; effects of discounts on GST

India: Deductible expenses if non-withholding

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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  • Year-end provisions for expenses; no disallowance for non-withholding at source: The Gujarat High Court held that year-end provisions for expenses are not to be disallowed under section 40(a)(ia) of the Income-tax Act, 1961 in situations where there was non-withholding (non-deduction) of tax at source because the provisions are contingent in nature. The case is: Sanghi Infrastructure Ltd. Read an August 2018 report [PDF 728 KB]
  • Deemed dividends and buy-back of shares (prior to enactment of buy-back provisions): The Karnataka High Court referred a case back to the Assessing Office concerning a situation when the buy-back of shares was at an abnormally high price and was claimed by the taxpayer not to be subject to the dividend distribution tax or to the specific buy-back provisions under the Income-tax Act, 1961. The high court concluded the lower tribunal was justified in directing the Assessing Officer to look into the aspects of fair market value of shares bought back by the taxpayer from its holding company and the applicability of deemed dividend provisions of the Income-tax Act, 1961. The case is: Fidelity Business Services India Pvt Ltd. Read an August 2018 report [PDF 741 KB]
  • Discounts offered after goods are sold for GST purposes: The Authority for Advance Ruling Maharashtra (AAR) held that, for purposes of determining the goods and services tax (GST), discounts offered after goods are sold must be established based the terms of the agreement entered into or before the supply is made. The discount must be based on certain criteria agreed to by the supplier and the customer and must be set forth in the agreement. Read an August 2018 report [PDF 666 KB]

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