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NRIs: Scope of taxability up
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Hyderabad
March 1
Finance Bill 2007 has proposed certain amendments in the field of corporate taxation and international taxation. It is proposed to widen the scope of taxability of interest, royalty and fees for technical services earned by a non-resident in respect of services rendered outside India.
It is intended to be taxed in India irrespective of territorial nexus between income deemed to accrue or arise to non-resident and the territory of India. This is specifically done to neutralise judicial opinion rendered in favour of assessee in the recent past, according to Mr P.V.S.S. Prasad, Chairman, International Fiscal Association, Hyderabad Sub-chapter.
TRANSFER PRICING
Transfer pricing audits by Transfer Pricing Officer (TPO) and determination of arms' length price (ALP) would happen at the reference by Assessing Officer (AO). It is proposed to make it mandatory for the AO to adopt the ALP decided by the TPO.
This amendment is targeted to neutralise the Delhi High Court judgement wherein it was held that AO is not bound by the ALP decided by TPO. Time limits for completion of assessments have been extended by one year in cases where reference is made to TPO.
Minimum Alternate Tax (MAT) provisions are made applicable even to tax holiday companies governed by Sec.10A/10B which are 100% EOUs or STPI companies. Small companies income less than Rs 1 crore are spared from levy of surcharge.
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