Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: form 3cd :: TDS :: cpt :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: VAT Audit :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment
General »
 Number of companies paying tax over Rs 100 crore declines in 2013-14
 Tax and the dilemma of the self-employed
 Banks warn share tax hike threatens Paris' post-Brexit appeal
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA

Experts urge clarity on software payment tax
November, 02nd 2015

The justice R V Easwar committee on the Income Tax Act set up last week would do well to clarify whether payments for software should attract income tax or service tax, and make safe harbour profit margins more realistic, tax experts said. Tax demands based on ‘excessive’ advertising and promotional spending were also a cause for concern for the industry and the committee could address this issue as well, they added.

Addressing specific issues being fought in courts for decades without resolution, as well as the trust deficit between tax payers and the administration, would help in avoiding far-fetched tax claims that eventually fail the test of judicial scrutiny, tax experts who FE spoke to said.

At present, about 77,000 tax disputes are pending in various courts involving a total demand of Rs 1,87,000 crore.

Making the systemic changes would also help in improving the current situation of direct tax arrears having surpassed the annual revenue collection target for the department. Arrears have now crossed Rs 8.3 lakh crore, way above the Rs 7.9-lakh crore direct tax collection target set for this fiscal. Besides disputes in courts, the total tax arrears would also include, cases that are pending before the commissioner (appeals), dispute resolution panels and cases where demands are not recoverable or have been raised against future tax liability.

The Easwar panel, appointed by finance minister Arun Jaitley, is set to suggest changes in the Income Tax Act that would improve the quality of the assessment work by field officers, curtail litigation and help officers to focus on demands that are actually recoverable.

“Taxation of MNCs, which has a bearing on the country’s stature as an investment destination, the appeal process within the tax department, a simpler tax regime for individuals and partnerships that would reduce their compliance burden and regaining taxpayers’ trust in the large taxpayer unit scheme deserve to be addressed on priority,” said Mukesh Butani, managing partner, BMR Legal.

According to Sanjay Sanghvi, partner, Khaitan & Company, there is a need for clarity on whether conversion of preference shares to equity as part of an M&A deal would lead to capital gains. Also, the declaration on payments made to non-residents could be limited to only payments above a specified threshold so that businesses are not unnecessarily burdened with inconsequential paperwork.

“Setting up of the justice Easwar panel is a positive step towards ensuring a non-adversarial tax regime. If taken to a logical conclusion, it can make a huge positive difference to the ease of doing business,” said Sanghvi.

At present, the income tax department levies tax on payments made for the use of software treating it as royalty, while the indirect tax administration treats it as a taxable provision of service, leading to levy of both and disputes in many cases.

Industry players also want the safe harbour profit margins to be made more realistic for MNCs so that their Indian units can sign up for the scheme and avoid rigorous transfer pricing documentation. Availing of this scheme would also give certainty to the Indian and overseas units about the tax outgo in their respective countries and help them avoid possible double taxation in the normal assessment process.

Taxation of expenses incurred on marketing intangibles is also a big area of concern for foreign companies. Many tax demands made to companies for ‘excessive’ advertising and marketing promotion spending are now being heard in the Supreme Court. Companies like Canon India, Daikin India, Haier Appliances, Reebok India, Casio India and Discovery Communications have disputed tax demands on this count.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Experience

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions