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India: New issuance of shares, guidance reversed; back-office support services

India: New issuance of shares, guidance reversed

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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  • Tax authority reverses position, fresh issuance of shares: The Central Board of Direct Taxes (CBDT) reversed prior guidance (Circular No. 10/2018) concerning application of section 56(2)(viia) of the Income-tax Act, 1961 with respect to a fresh issuance of shares, and effectively withdrew Circular No. 10/2018.  Future guidance is expected. Read a January 2019 report [PDF 776 KB] 
  • Back-office support services for foreign group companies: The Authority for Advance Ruling, Maharashtra concluded that an Indian taxpayer’s back-office support services performed for its foreign group member companies were not “intermediary services” and thus were exports. The case is: Asahi Kasei India Pvt. Ltd. Read a January 2019 report [PDF 872 KB] 
  • Guidance on cross-border borrowing and lending: The Reserve Bank of India issued new guidance concerning borrowing and lending between residents of India and residents outside India. Read a January 2019 report [PDF 664 KB]
  • Merger of promoter holding companies into listed companies: The Delhi Bench of National Company Law Tribunal (NCLT) approved two “schemes of arrangement” involving the merger of promoter holding companies into listed companies, and rejected the tax authority’s claim that the purpose of the schemes was tax avoidance. Read a January 2019 report [PDF 887 KB]

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