Tag Archives: Government of India

ILN Today Post

Sigh of Relief on Tax Front

In an attempt to provide some respite to the investors and ensure a taxpayer-friendly approach in revenue collection, the Finance Minister of India has recently assured that the Income-Tax Authorities (“ITA”) will not recklessly implement the retrospective tax rules. The Government of India (“GoI”) has introduced retrospective amendments in the Income Tax Act, 1961 which empowers the ITA to tax the indirect transfer of shares when the underlying assets are located in India.

The GoI has now referred the issue of retrospective tax rules to the committee headed by Mr. Parthasarathi Shome, (the “Shome Committee”). Earlier, the Shome Committee had recommended that the General Anti Avoidance Rules (“GAAR”) be deferred for three years. GAAR, giving ITA powers to scrutinize any transaction that they feel was structured to evade taxes, was introduced in the Finance Act, 2012 to come into effect from April 1, 2013.

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ILN Today Post

Welcome to Investments from Pakistan

The GoI has permitted investments into India by citizens of and entities incorporated in Pakistan. The decision follows the proposal sent by the Ministry of Commerce and Industry to the Ministry of Finance on February 16, 2012.

In terms of the FDI Policy, investments from Pakistan were the only ones expressly prohibited in India, owing to concerns of the GoI over national security.

The policy revision effected on August 1, 2012 now permits citizens of Pakistan and entities incorporated in Pakistan to invest in all sectors/activities other than defense, space and atomic energy. All investments would however be subject to prior approval of the GoI, as was expected and reported in our newsletter of February 21, 2012.

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ILN Today Post

INDIA’S BATTLE UNDER BILATERAL INVESTMENT TREATIES

The events during the past few months have resulted in various arbitrations knocking at the doors of the Government of India (“GoI”) in terms of the Bilateral Investment Treaties (“BITs”) executed by GoI with various countries around the world. In most of these arbitrations, one is likely to see the GoI defending claims for damages arising from its failure to protect investments in India of the investors from other contracting countries as well as its failure to resolve issues related to erosion of investments.

Experts and businesses around the globe feel that, irrespective of the outcome, arbitration under BITs is an experience any country doesn’t need, as it implies wide publicity of disputes with the very investors such country would be attempting to attract.

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