Rohit Gupta is a fellow member of Institute of Chartered Accountants of India and a Law graduate. He is a versatile professional with over 12 years of cross-cultural experience in Domestic Taxation—Direct and Indirect, International Taxation, Transfer Pricing, Audits, Due Diligence and Management Consultancy. His specialisation include advising on cross-border transactions, expatriate taxation, transfer pricing matters, representing clients before various tax authorities and appellate tribunals. Having worked with many large corporates like Taj Hotels, Pepsi, Wipro, Bridgestone, ITC,Anand Group, Mahindra Group etc.
Rohit Gupta
B.Com, FCA, LLB,
CIA(US), DISA, CertIFRS(UK)
Author: Principles of International Tax Planning published by taxmann
Linkedin: https://www.linkedin.com/pub/ca-rohit-gupta/3/a97/68b
9873832979, 9212124477
Email: ca.guptarohit @ gmail.com
Website: www.internationaltaxplanning.in
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Showing 1 to 12 of 12 Results
Aggregation of related transactions: bundling permitted for transfer pricing when transactions are closely linked, subject to comparability limits.
Aggregation for transfer pricing is permitted where multiple transactions are closely linked or arise from a common source, so that terms and pricing are determined on the totality rather than individually. Indian rules (including Rule 10A(d)) and OECD guidance allow bundling when separate evaluation is impracticable. Aggregation is limited by tests of package deal, dependency, similar functions, availability of comparables, and per-associated-enterprise boundaries; unrelated transactions or improperly convenience-aggregated packages must be benchmarked separately. (AI Summary)
Income Tax
Corporate guarantee as cross border service: treat as transfer pricing issue when it materially affects the guarantor or affiliate benefit.
Whether a corporate guarantee given to an associated enterprise is an international transaction depends on whether it has a real bearing on the guarantor's profits, income, losses or assets or constitutes a service conferring a benefit. One line of authority treats such guarantees as quasi capital or shareholder activity outside transfer pricing absent cost or invocation; the counter view treats guarantees as cross border services enhancing creditworthiness where costs, risk exposure or material financing benefit to the affiliate exist. Where adjustments are made, bank guarantee rates cannot be mechanically applied without a FAR analysis and appropriate adjustments. (AI Summary)
Income Tax
Extended credit period as international transaction affects ALP when clubbed with the sale of services.
The ITAT held that allowing an extended interest free credit period to an associated enterprise is an international transaction because it is capable of generating income, and directed AO/TPO to aggregate the credit period effect with the sale of services when determining the arm's length price rather than treating the credit as a separate loan transaction; the author notes conflicting authorities holding that non charging of interest does not always amount to an international transaction and that factual business norms may preclude notional interest adjustments. (AI Summary)
Income Tax
Capital gains taxation shifted to source-based rules, enabling domestic tax on gains from transfers of Indian shares under the revised treaty.
The revised India-Cyprus DTAA converts capital gains on transfer of shares from a residence-based to a source-based tax rule, permitting India to tax gains from dispositions of Indian shares and shares of companies owning immovable property in India; it also extends source-based taxation to permanent establishment profits, clarifies taxation of royalties, technical service fees and dividend treatment, strengthens exchange of information, includes a grandfathering rule for existing investments and contemplates retrospective withdrawal of the non-cooperative jurisdiction notification with consequential effects on withholding and transfer pricing measures. (AI Summary)
Income Tax
Foreign tax credit rules simplify FTC claims in India; credit limited to treaty-recognised tax and requires supporting proof.
Rules enable resident taxpayers to claim foreign tax credit where foreign tax has been paid and the corresponding income is offered to tax in India, covering treaty taxes and income-type taxes in non-treaty countries. FTC is allowed proportionately where foreign and Indian accounting periods differ; it is computed separately by source and country as the lesser of Indian tax on that income and foreign tax paid, converted at the TT buying rate on payment date. Disputed foreign taxes are excluded unless final settlement proof, discharge evidence, and a no-refund undertaking are furnished within six months. FTC is allowable against MAT subject to specified limits, and Form 67 plus prescribed certificates and payment proof must be filed by the return due date. (AI Summary)
Income Tax
Reimbursement of technical expenses: reimbursements not treated as fees for technical services, affecting TDS and DTAA taxation.
Payments from an Indian division to its foreign head office that reimburse technical and administrative expenses were not treated as fees for technical services where no specific services were "made available", allowing deduction by the Indian PE without TDS under section 40(a)(ia) and placing the head office receipts outside Indian taxation under the relevant DTAA; this contrast with domestic treatment of branch and head office as one entity creates potential non taxation gaps, partially addressed by limited legislative changes but not comprehensively resolved. (AI Summary)
Income Tax
TDS on royalty characterization: payments for copyrighted content may trigger withholding under treaty and domestic rules.
Characterisation of cross-border payments under section 195 hinges on whether receipts are royalty, business profits, or Fees for Technical Services. Critical determinants include copyright versus copyrighted article, severability of sale and services, treaty language, and the make available requirement for technology transfer. Installation may qualify as assembly and be excluded from FTS; training and retained proprietary rights can attract FTS. Reimbursements are non taxable only if genuine cost pass throughs without profit or transfer of proprietary rights. Contract drafting and documentary evidence govern withholding obligations and timing of taxability. (AI Summary)
Income Tax
TDS on foreign remittances: characterisation of payments dictates withholding obligations under tax law and treaties.
TDS exposure on payments to nonresidents depends on the legal characterisation of the payment and applicable treaty rules: interest, royalties, fees for technical services, subscription charges, and capital receipts have been variously held taxable or non taxable depending on whether income is chargeable to tax in India, place of performance, source of income, and recent statutory amendments; exclusion for services used in business outside India and attribution of profits to Indian operations require careful factual and FAR analysis. (AI Summary)
Income Tax
TDS on cross-border payments: broad withholding duty for royalties, interest and fees for technical services on foreign remittances.
TDS obligations under TDS u/s 195 cover a broad range of cross border payments where income is deemed to accrue in India or where payments compensate non residents for use of rights, services, or intangibles. Items treated as interest include prepayment discounts and usance charges, while access to databases, software downloads, licences, technology contributions and portal access have been characterized as royalty. Specialized or technical services, preventive maintenance, advisory, testing, inspection and data processing payments to non residents have been held to be fees for technical services, requiring withholding by the Indian payer. (AI Summary)
Income Tax
Interest taxation in India: source-based withholding and DTAA-limited rates govern taxability of foreign remittances and branch payments.
Taxation of interest from India hinges on whether payments qualify as interest under domestic law or a DTAA and on the allocation of taxing rights between source and residence. Indian law deems interest payable by Indian residents or the Government to accrue in India; domestic sections offer concessional withholding rates for specified categories. DTAAs generally allow residence taxation with a limited source taxing right at fixed gross rates and define interest and exceptions for permanent establishments and non-arm's-length payments. Recent amendment treats interest from an Indian banking permanent establishment to its head office as arising in India and subject to withholding. (AI Summary)
Income Tax
Place of Effective Management now determines corporate residence, risking worldwide taxation where effective control occurs in country.
The amendment replaces the "control and management wholly in India" test with a Place of Effective Management (POEM) criterion that makes a company an Indian tax resident if its POEM is in India at any time during the year. This diverges from international practice that generally requires predominance or continuity, increasing the risk of foreign entities being taxed on worldwide income. Practical safeguards recommended include an independent foreign board, offshore strategic decision making, clear charter powers, limited parent stewardship, foreign based key management, and contemporaneous documentation to substantiate the foreign POEM. (AI Summary)
Income Tax
Place of Effective Management changes corporate residency, subjecting companies to Indian tax where effective management is exercised.
Introduction of Place Of Effective Management (POEM) as the test for company residency means a company (including foreign incorporated entities) will be resident in India if its POEM is in India at any time during the year; POEM is where key management and commercial decisions for the entity as a whole are, in substance, made. Concurrently, the Budget lowers withholding on royalties and fees for technical services for non-residents (subject to PAN), expands TDS reporting on remittances to non-residents with penalties, treats interest paid by banking PEs to overseas head offices/branches as accruing in India requiring TDS by the PE, and introduces fund-manager and FII-specific tax clarifications and reliefs. (AI Summary)
Income Tax
TaxTMI 
TaxTMI 
07 Sep 2016 
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