India’s Union Budget for the fiscal 2020-21 was announced in February 2020 and the tax proposals, after undergoing some important changes, were approved by the Indian Parliament and received Presidential assent on March 27, 2020.
There is no denial that the Government of India is taking all efforts to improve the ‘Ease of Doing Business’ in the country, especially for MNCs. In this regard, it has rolled out a direct tax dispute resolution scheme titled ‘Vivad se Vishwas’ scheme (“VSV Scheme”) for taxpayers who have pending tax disputes at any appellate forum in India. The biggest benefit of this scheme is that if the taxpayer pays the disputed tax amount before the prescribed date, then, there is complete waiver from penal interest / penalty and potential prosecution.
The COVID-19 pandemic has forced governments to take exceptional measures such as implementing mandatory lockdowns and restricting travel. This unprecedented situation is raising significant tax issues, especially where there are cross-border elements in the equation. Individuals have been forced to stay for long in a country where they do not ordinarily reside, thereby triggering residency rules in that country. Many cross-border workers are unable to physically perform their duties in their country of employment and may have to stay at home and telework.
As the situation in view of COVID-19 is evolving, the Government of India has been announcing quite a few relaxations with respect to various income tax related provisions and compliances. In furtherance to the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (please see our ERGO dated 03 April 2020), some of the key relief measures provided for income taxes include:
In a recent ruling in New Delhi Television Limited v DCIT (Civil Appeal No. 1008 Of 2020) (Ruling), the Hon’ble Supreme Court (Supreme Court) has quashed the reassessment proceedings initiated on New Delhi Television Limited (Taxpayer). The reopening was initiated beyond 4 years for alleged INR 405.09 crore ‘unaccounted money’ case introduced to the Taxpayer’s subsidiary based in United Kingdom (UK) named NDTV Network Plc.
Indian infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) have drawn investments from some of the largest global institutional investors, sovereign wealth funds and pension funds. According to sources, since their introduction in India, InvITs and REITs have together raised more than $3.6 billion of capital.
On 24 March 2020, the Hon’ble Finance Minister announced several compliance related relaxations to ease the compliance burden on business community which was followed by a press release (Press Release). To give effect to the Press Release, the Government on 31 March 2020 passed the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (“Ordinance”). Key takeaways of income-tax related provisions in the Ordinance are as follows.
The Income tax Appellate Tribunal, Mumbai in its recent judgment in the case of Volkswagen Finance Pvt Ltd (Taxpayer), ITA No. 2915/2017, ruled that payment made to a non-resident celebrity for an appearance made by him at a product launch event in Dubai was taxable in India as the same was made in connection with Taxpayer’s India business, resulting into an intangible business connection.
The magnitude of this pandemic warrants setting-up quarantine centres in India. The Government may consider announcing some tax sops for taxpayers who (i) set up, operate and maintain such quarantine centres or (ii) are desirous of contributing their CSR funds to help the community at large to come out of this pandemic.
The Finance Bill 2020 was presented in the Indian Parliament on 1 February 2020 (Finance Bill) as part of the Budget proposals (see our Ergo on direct tax related budget proposals here). On 23 March 2020, it was passed by the Indian Parliament with certain amendments – some of which are significant including widening the scope of equalisation levy (popularly referred to as Google tax). After receiving the Presidential assent earlier today, it is now in force (Finance Act).
