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CBDT clarifies the safe harbour regime for foreign companies selling raw diamonds in Special Notified Zones. 'Raw diamonds' must satisfy all rule 99(f) conditions simultaneously; sorted diamonds are excluded, and a Kimberley Process Certificate alone is insufficient. A foreign company declaring at least 4% profit under the regime is accepted at foreign-company tax rates with surcharge, but cannot claim deductions. Treaty-based tax credit, if any, depends on the applicable DTAA and domestic law of the home jurisdiction. The option is invalid if availed on incorrect or concealed facts. The assessee need not be incorporated in India, must itself carry on the business, TDS applies, and non-opted assessees remain taxable under the ordinary law and DTAA.
CBDT clarifies the safe harbour regime for foreign companies selling raw diamonds in Special Notified Zones. 'Raw diamonds' must satisfy all rule 99(f) conditions simultaneously; sorted diamonds are excluded, and a Kimberley Process Certificate alone is insufficient. A foreign company declaring at least 4% profit under the regime is accepted at foreign-company tax rates with surcharge, but cannot claim deductions. Treaty-based tax credit, if any, depends on the applicable DTAA and domestic law of the home jurisdiction. The option is invalid if availed on incorrect or concealed facts. The assessee need not be incorporated in India, must itself carry on the business, TDS applies, and non-opted assessees remain taxable under the ordinary law and DTAA.
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