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India: Income tax notices issued to multinational companies

India: Income tax notices issued

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 department issues income tax notices to multinational companies: The income tax department has been issuing notices to certain multinational companies for allegedly having escaped tax assessment over previous years. The notices are being issued under Section 147 of the Income-tax Act, 1961 which provides that a notice may be issued when the Assessing Officer has reason to believe that income has escaped assessment. Also, such notices may be issued when the Assessing Officer wants to examine whether appropriate taxes have been withheld or whether the foreign entity has treated the income as exempt. The notices were issued following the introduction in India of several measures intended to tax multinational companies that do not have a permanent establishment in India. Read an April 2019 report [PDF 726 KB]

  • Income tax returns for Assessment Year 2019-20: The Central Board of Direct Taxes issued a notification amending the income tax return forms for Assessment Year 2019-20. Read an April 2019 report [PDF 640 KB]

  • Amounts paid to property buyers for surrender of rights held a business expenditure: The Delhi High Court held that amounts paid to property buyers for surrendering their rights to complete the purchase of the property were a business expense. A building developer (the taxpayer) contracted to sell apartments in a building to customers. However, because of disputes about whether the ground floor would be zoned for commercial use or storage, some of the purchasers refused to complete the apartment purchases. The taxpayer decided to return advance money paid by these customers as well as an additional amount, and the court determined that these amounts were not simply repurchases of the apartments but were revenue in nature and not simply capital expenditures. The case is: Gopal Das Estates & Housing Pvt Ltd. Read a March 2019 report [PDF 735 KB]

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