Budget Highlights‐International Taxation

  1. Increase in Surcharge: Surcharge is increased from 12% to 15% in case of non‐resident individuals.

2. Exemption in respect of certain activity related to diamond trading in “Special Notified.

3. Exemption u/s 10(48A) in respect of income of Foreign company from storage and sale of crude oil stored as part of strategic reserves.‐ Income accruing or arising to a foreign company on account of storage of crude oil in a facility in India and sale of crude oil there from to any person resident in India shall not be included in the total income on fulfilment of certain conditions

4. Implementation of POEM based residence rule deferred for 1 year and applicable from AY 2017‐18‐ It is proposed to defer the applicability of POEM based residence test by one year It is also proposed to provide a transition mechanism for a company which is incorporated outside India and has not earlier been assessed to tax in India.Reasons for such deferment.

5. Amendment in section 206AA ‐ Exemption from requirement of furnishing PAN to certain non‐resident‐ No higher withholding tax if non‐resident does not have PAN but furnishes an alternative document.

6. Non‐Applicability of Minimum Alternate Tax (MAT) on foreign companies for the period prior to 01.04.2015 subject to conditions.

7. Clarification regarding the definition of the term ‘unlisted securities’ for the purpose of Section 112 (1) (c)‐ In case of non‐resident long‐term capital gains arising from the transfer of a shares of private company, shall be chargeable to tax @ 10 per cent.

8. Proposed Amendment in section 92CA(3) ‐Extension of time limit to Transfer Pricing Officer (TPO) in certain cases to 60 days if the time available to the TPO for making an order is less than 60 days.

9. Insertion of new section 194 LBC‐ TDS will be deducted on any Income to non‐resident individual or foreign company in respect of investment in securitisation trust.

10. Amendment in section 194LBB‐ Tax is required to be deducted at the rates in force, where the payee is a non‐resident (not being a company) or a foreign company at the rates in force

11. Insertion of Chapter VIII ‐ EQUALISATION LEVY‐ Equalisation levy at the rate of 6% of the amount for any specific service received by a non‐resident from a resident person and non‐resident having PE in India the Central Government.

12. Amendment in Section 271AA If any person fails to furnish the information and the document as required under 92D(4)the prescribed income‐tax authority referred to in the said sub‐section may direct that such person shall pay, by way of penalty, a sum of 5 lakh rupees.

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