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: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: VAT Audit :: TDS :: cpt :: articles on VAT and GST in India :: empanelment :: VAT RATES :: ACCOUNTING STANDARDS :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4%
 
 
« Direct Tax »
 Can we measure demonetisation’s impact on income tax collections?
 CBDT signs 2 more advance pricing pacts
 Income tax returns: How to calculate income from house property
 CBDT proposes new accounting standards for real estate firms
 1 lakh entities face I-T action as ‘clean money’ drive gains pace
 Here are 4 things to know about how CBDT improves ease of doing business by issuing PAN and TAN within 1 day
 Online platforms make tax filing easy, help fill details automatically
 Delhi HC refuses to stay tax case against Young Indian
 CBDT issues draft ICDS on real estate
 CBDT chairman Sushil Chandra gets one-year extensiona
 Income-tax (9th Amendment) Rules, 2017? - Amendment of Income-tax Rules, 1962 - Prescribing form & manner of exercise of option by the domestic company for the purposes of section 115BA of the Income-tax Act, 1961-reg

DTC may have overlooked the rationale
February, 22nd 2012

Corporation tax rate for foreign companies has been reduced from 40 per cent (plus surcharge & cess) to flat 30 per cent. If you thought draftsmen to the Direct Taxes Bill, 2010, (the code) had rationalised the tax rates for foreign companies, you should, maybe, continue reading this article.

While the basic corporate tax rates for Indian and foreign companies have been aligned, a new genre of tax, known as branch profit tax, is proposed to be imposed upon the latter. If the new legislation could see the dawn of day, foreign companies operating in India would be subjected to a 15 per cent tax, on their income attributable to Indian operations. And, this tax would be levied on profits, residual after payment of basic corporation tax rate of 30 per cent, taking the effective tax rate to 40.5 per cent.

The Working Group for Study of Non-Resident Taxation, which first proposed this tax in 2003, had aimed to remove discrimination between domestic and foreign companies. They proposed equalising the burden of dividend distribution tax (levied on Indian firms at the time of declaring dividends to shareholders) with branch profit taxes.
However, the legislators to the Code have implemented their recommendation, overlooking its basic rationale. In its present form, all branches of foreign companies are liable to branch profit tax, irrespective of whether or not profits are repatriated to home jurisdiction. And, discrimination continues to exist, as the base for computing this tax is to be computed, considering even indirectly attributed profits.

Stakeholders have repeatedly made representations before the finance ministry to clarify their stand on the anomaly and there is an urgent need for the ministry to dispel qualms of perplexed foreign investors. It also needs to clarify whether withholding tax provisions shall apply to this new tax and whether its credit shall be available to foreign companies in their home countries.

Kamal Abrol
Associate Director (Direct Tax), PwC India


 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Web Application Development Web based Software Solution Web Application Deployment Web Application Solutions Web Application Software Development Web Application Deployment Web Application Programming Web Application Design and Development

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