Tag Archives: LexCounsel Law Offices

ILN Today Post

Income from transfer of a foreign owned intellectual property – is it taxable in India?

Taxability of income arising out of sale and purchase transactions undertaken internationally has been a matter of debate for long in India. Foreign collaborators and investors have been strongly campaigning for clarity on their tax liabilities under Indian tax regulations for transactions undertaken outside the taxable territories of India.

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ILN Today Post

DECLARATION OF ASSETS UNDER THE LOKPAL ACT – APPLICABILITY TO NGOS’ AND RECENT AMENDMENTS

  1. Introduction:
    • The Lokpal and Lokayuktas Act, 2013 (“Act”) was enacted essentially to provide for the establishment of Lokpal for the Union and Lokayuktas for states, to inquire into allegations of corruption against certain public functionaries and for matters connected therewith or incidental thereto.
    • The Act also requires ‘public servants’ (which includes government employee and office bearers/management of not for profit entities receiving government finance/foreign donations to make certain disclosures of their assets and liabilities as well as that of their spouse and dependent children.
    • The past few months saw the Government receiving numerous representations from various stakeholders raising concerns over the challenges being faced by not for profit entities with respect to the requirement of disclosure of assets and liabilities of officers as well as their spouse/dependent children under the Act.
    • Consequently, the Government amended the Act to substitute the erstwhile provision Section 44 (which had laid down various compliances relating to disclosures of assets/liabilities) to merely specifying that the form and manner of disclosure would be as prescribed by the Government. The deadline for the disclosures was also deferred to December 31,2016.
    • Our discussion below aims at bringing out the various nuances of this much debated requirement of disclosure of assets and liabilities in light of the recent amendments brought in, and the implications thereof particularly on the not-for-profit entities being covered under the Act.
  2. Applicability to NGOs:
    • The erstwhile Section 44 of the Act required a ‘public servant’ to furnish information/declaration/annual returns of assets and liabilities of himself and of his spouse and dependent children in the manner and format prescribed under the Act (and rules notified thereunder). ‘Public servants’ are defined under the Act to inter alia include any person who is or has been a:
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MCA Clarification on Applicability of Provisions of Companies Act, 2013 on Rupee Bonds

Reserve Bank of India (“RBI”) vide its notification dated September 29, 2015 – “External Commercial Borrowings (ECB) Policy – Issuance of Rupee denominated bonds overseas”, (“the Notification”) eased the options of raising debt from the external sectors, by permitting Indian corporates to issue rupee denominated bonds (“Rupee Bonds”) to non-resident investors. This relaxation granted by RBI helped Indian corporates mitigate the risk of currency fluctuations. As per the Notification, the Rupee Bonds are to be issued under the extant external commercial borrowing (“ECB”) policy. RBI through its circular Issuance of Rupee denominated bonds overseasdated April 13, 2016, made an effort to promote the Rupee Bonds by reducing the minimum maturity period for Rupee Bonds issued overseas from five years to three years.

However, confusion prevailed amongst the Indian corporates, concerning compliance with the provisions in respect of private placement prescribed under the Companies Act, 2013 (“Companies Act”) and Companies (Share Capital and Debenture) Rules, 2014 (“Debenture Rules”) at the time of issue of such Rupee Bonds.

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Liberalization of deferred payments under FEMA

  1. Introduction 

1.1.          Deferment of payments in share purchase transactions between non-resident buyers and resident sellers till recently required prior approval of the Reserve Bank of India (“RBI”) under Regulation 10 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (“FEMA Transfer Regulations”).

1.2.          Further, authorized dealer banks in India were allowed to open escrow accounts towards payment of share purchase consideration (subject to various terms and conditions specified by RBI), but the escrow account could only be operational for a limited period of 6 months.1 In all other cases of opening/maintaining of escrow accounts for FDI related transactions, prior approval from the RBI was necessary.

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Liberalizations in the FDI Policy – Unshackling the Manufacturing Sector

  1. Introduction

1.1.         The Foreign Direct Investment (“FDI”) policy has been in a state of flux since last year, with sweeping changes being brought in with respect to FDI vis-à-vis various sectors. One such sector has been the ‘manufacturing sector’ which was defined and elaborated upon in the FDI policy, vide Press Note No. 12 of 2015 (dated November 24, 2015), last year (“Press Note 2015”).  

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Ban on Sharapova

One of the most shocking news during the recent times for sports fans and legal fraternity, around the globe, has been Maria Sharapova’s admittance towards using the banned endurance-enhancing drug known as ‘Meldonium’ [added to the World Anti-Doping Agency (“WADA”) Prohibited List with effect from January 1, 2016]. The Independent Tribunal (“Tribunal”) appointed by the International Tennis Federation (“ITF”) [constituted under the rules of the Tennis Anti-Doping Programme 2016 (“TADP”)], has imposed a ban on Sharapova for a period of 2 years for committing an anti-doping rule violation under article 2.1 of the TADP, vide its decision dated June 6, 2016.

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Roles and Responsibilities of a Director Under Companies Act, 2013 – Pitfalls and Safeguards

1. Duties and Responsibilities of Directors.

1.1. The erstwhile Companies Act, 1956 (‘CA 1956’) contained no statement
of statutory duties of directors, and acts of directors were usually
reviewed in the context of their powers in terms of section 291 of the CA
1956 (which dealt with general powers of the board) and other applicable
laws, and their established roles under common law as laid down in several
judicial precedents1.

1.2. The Companies Act, 2013 (‘CA 2013’) for the first time has laid down
the duties of directors in unequivocal terms in section 166. In summary, the
general duties of directors under the CA 2013 are as follows:
* to act in accordance with the articles of the company, in other
words, to act within powers; 

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LexUpdate: Changes in FDI Policy

In steps to further liberalise and simplify the foreign direct investment (“FDI”) regime in India and with the objective of providing major impetus to employment and job creation in India, the Government of India has announced sweeping changes to the FDI policy. It is stated that most of the sectors would now be under the automatic approval route except for a small negative list. The last 2 years have witnessed major FDI policy reforms in a number of sectors including in defence, insurance, broadcasting, single brand retail trading, manufacturing, civil aviation and asset reconstruction companies. Changes now introduced include increase in sectoral caps, bringing more activities under automatic route and easing of conditionalities for foreign investment. Brief details of the changes are as follows:

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Overseas E-Commerce Companies to be Subject to Tax Deductions

  1. The Equalisation Levy:

Overseas E-Commerce Companies (“OECs”) such as Facebook, Google and Amazon generate substantial revenues from Indian online advertisers through digital advertising. Since these OECs do not have a Permanent Establishment (“PE”)1 in India, the revenue they generate is not taxable in India.

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From dreams to reality

  1. NCDRC to the Rescue of Beleaguered Buyers

The National Consumer Disputes Redressal Commission (the “NCDRC”) has recently passed stringent directions1 against a builder taking strong objection to delays in construction, coupled with failure of the builder to share the EMI of the flat buyers (“Complainants”) in agreed proportion.

The Complainants booked a flat with the builder in 2007. The builder assured to share 3/4th portion of the EMI to be paid to the bank, if the Complainants paid 95% of the basic sale price of the flat to the builder upfront, and availed a bank loan in such regard.

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