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PRESENTATION BY AGGARWAL RAMAN & ASSOCIATES (ARA) CHARTERED ACCOUNTANTS www.ramanaggarwal.com Registered office: SCO 35, Second Floor, Sector -26, Chandigarh.

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Presentation on theme: "PRESENTATION BY AGGARWAL RAMAN & ASSOCIATES (ARA) CHARTERED ACCOUNTANTS www.ramanaggarwal.com Registered office: SCO 35, Second Floor, Sector -26, Chandigarh."— Presentation transcript:

1 PRESENTATION BY AGGARWAL RAMAN & ASSOCIATES (ARA) CHARTERED ACCOUNTANTS Registered office: SCO 35, Second Floor, Sector -26, Chandigarh Tel , , Fax , Mobile

2 WELCOME

3 ABOUT ARA  ARA is a firm of chartered accountants.  ARA firm was formed in the 1988 (21 years).  ARA firm provide Services in the area of Audit, Tax (Direct, indirect) and Advisory.  ARA team is comprised of more than 25 multi displined professionals such as Chartered Accountants, Company Secretary, Lawyers, Cost Accountants and MBA’s.  ARA have state of the art facility in Chandigarh, New Delhi & Pune.  ARA have more then 100 Corporate Clients and leading MNC’s (for USA, UK, Japan, Middle East, Europe).  Mr. Raman Aggarwal, the CEO & Founder empanelled with the “Office of Official Liquidator” attached with the High Court of Punjab, Haryana and Chandigarh. An Auditor for conducting Special Audits approved by the Tax Authorities.  Nominated to the “Regional Direct Taxes Advisory Council”.  Member of “The Institute of Internal Auditors”, Inc., Florida, USA, “International Fiscal Association” Netherlands and “PHD Chambers of Commerce & Industry”, Confederation of Indian Industry.

4 SERVICES & SOLUTIONS  AUDIT AND ASSURANCE  TAX & REGULATORY SERVICES  SPECIALITY SERVICES  Setting up New Business  Incorporation of a Limited Company  Setting up of STPI Unit and Maintenance  Setting up of SEZ UNIT and Maintenance  Doing Business in India  Doing Business Outside India  Setting up Offshore Companies  International Executive Services  Business Registrations  Intellectual Property  Payroll Services  Corporate Secretarial Services  Virtual Office Services  KPO-Accounts and Tax Outsource Services  INTERNATINOL TAXATION  FINANCIAL ADVISORY SERVICES  LEGAL SERVICES  OUTSOURCING SERVICES

5 TEAM S.NONAMEQUALIFICATIONEXPERIENCE 1Mr. Raman AggarwalFellow Chartered Accountant 25 Years in Accounts, Finance, Tax, Legal, Management etc. 2Mrs. Simpy GuptaBachelor in Law. & Company Secretary 15 Years in Legal & Corporate affairs 3Mr. Sameer SawrupFellow Chartered Accountant 16 Years in Accounts, Finance, Tax, Legal, Management etc 4Mr. Unni KrishnanGraduate18 Years experience in Corporate Affairs 5Ms. ArtiPost Graduate9 years experience in Regulatory Compliances 6Mr. Sanjay AggarwalChartered Accountant18 Years Accounts, Finance & Tax 7Mr. SumanMaster in Commerce14 Years in Accounts, Finance, Tax, Legal, Management etc 8Mr. Lakhvinder Kamboj Bachelor in Law2 Years Legal 9Ms. Manmeet KaurMasters in Law2 Years Legal 10Mr. Nikhil VatsBachelor in Law2 Years Legal 11Mr. Gagandeep VohraBachelor in Law2 Years Legal 12Ms. DivyaBachelor in Law2 Years Legal  More than 15 other Professionally Qualified Support Staff

6 DOING BUSINESS IN INDIA

7 FOREIGN DIRECT INVESTMENT IN INDIA  AUTOMATIC ROUTE  APPROVAL ROUTE

8 ENTRY STRATEGY  JOINT VENTURE  WHOLLY OWNED SUBSIDIARY  BRANCH OFFICE  AGENCY

9 FORMS OF ENTERPRISES IN INDIA INCORPORATED ENTITY  Private Limited Company  Public Limited Company UNINCORPORATED ENTITIES  Branch Office  Liaison Office  Project Office  Partnership  Trust

10 TYPE OF SECURITIES  Equity Share  Preference Share  Debenture

11 LAWS GOVERNING BUSINESS IN INDIA  The Companies Act  Arbitration Reconciliation Act, 1996  The Competition Act, 2002  The Foreign Exchange Management Act, 1999  Income Tax Act, 1961  Central Sales Tax, 1956  Central Excise Act, 1944  Information Technology Act, 2000  Copyright Act, 1957  Geographical Indications of Goods Act, 1999  Indian Patents Act, 1970  Designs Act, 2000  Industrial Disputes Act, 1947  Workmen Compensation Act, 1956  Employees Provident Fund Miscellaneous Provisions Act, 1952  Consumer Protection Act, 1956

12 IMPORTANT REGULATORY AUTHORITIES FOR FOREIGN INVESTMENT  Secretariat for Industrial Assistance (SIA)  Foreign Investment Promotion Board (FIPB)  The Foreign Investment Implementation Authority (FIIA)  Reserve Bank of India (RBI)  Registrar of Companies (RoC)  Securities and Exchange Board of India (SEBI)  Central Board of Excise and Customs (CBEC)  Central Board of Direct Taxes (CBDT)  Authority for Advance Rulings (AAR)  Investment Commission

13 DIRECT TAXES  INCOME TAX  DIVIDEND DISTRIBUTION TAX

14 INDIRECT TAX  Customs duty  CENVAT (excise duty)  Central Sales tax  Value added tax  Service tax  Octroi duty/entry tax  Stamp Duty  R&D cess  Works contract tax  Turnover tax  Purchase tax  Secondary and higher education cess

15 INTERNATIONAL TAX TREATIES  Treaties with favorable jurisdictions such as Mauritius, Cyprus, Singapore and the Netherlands  India has entered double tax treaty with 79 Countries

16 IMPORTANT HR STATUTES  TRAINING, RECRUITMENT AND SCREENING  Employment exchanges (Compulsory notification of vacancies) act, 1959  The payment of gratuity act, 1972  The apprentices act, 1961  Contract labour (regulation and abolition) act, 1970  Child labour (prohibition and regulation) act, 1986  PAY, SALARY AND BONUS  Minimum wages act, 1948  Payment of wages act, 1936  Equal remuneration act, 1976  Payment of bonus act, 1965 COND Next Slide……

17  EMPLOYMET TERMS, CONDITIONS AND BENEFITS  Factories act, 1948  Shops and commercial establishments acts  Industrial employment (Standing orders) act, 1946  Maternity benefit act, 1961  SOCIAL SECURITY, INSURANCE AND COMPENSATION  Employees’ provident funds and miscellaneous act, 1952 (“epf act”)  Employees’ state insurance act, 1948 (“esi act”)  Workmen’s compensation act, 1923  Disputes and liabilities  Industrial disputes act, 1947  Employer’s liability act, 1938

18 INTELLECTUAL PROPERTY  Patents  Copy Rights  Trade Marks  Trade Secretes  Geographical indication of goods

19 ACCOUNTS AND AUDIT  Indian Accounting Standards  Audit and Assurance Standards  Guidance notes  Standards on internal audit  Opinion of expert advisory of ICAI  IFRS to be implemented in 2011

20 REPORTING REQUIREMENTS

21 INCOME TAX  Annual Tax Return  Quarterly withholding tax return  Accountant report under of transfer pricing rule  Tax audit report  Accountant report in case of MAT  Accountant report in case of STPI/EOU/SEZ

22 COMPANY LAW  Filling of annual audited financial statements  Filling of annual return  Filling of documents in case of  Change of Director  Change of Capital  Change of Registered Office  Registration of Charge

23 EXCHANGE CONTROL LAW/RBI  Intimation to RBI from receipt of capital  Intimation to RBI from the date of allotment of shares  Annual return to RBI

24 SERVICE TAX LAW  Monthly deposit of tax  Half yearly tax return  Refund of Service Tax within 1 year

25 STPI  Monthly progress report  Annual return  Filling of Softex form  Reimbursement of CST on half yearly basis

26 VAT/CST  Monthly/Quarterly return  Annual return

27 EXTRACTION OF EARNINGS OUT OF INDIA  Dividend  Buyback  Redemption

28 EXIT STRATEGY  Dissolution of company  Sale of share  Merger/Amalgamation  IPO

29 INCOME TAX LAW AT A GLANCE IN INDIA

30 INCOME TAX AT A GLANCE  CHARGEABILITY  Income arising or accruing or receiving in India including specified deeming income  TAX RULE  Resident Rule  Source Rule  TAX PAYER TYPE  Residents  Non Residents  Resident but not Ordinarily Resident COND Next Slide……

31  SCOPE  Worldwide Income Taxable in case of Resident  Indian Sourced Income Taxable in case of Non Resident  Worldwide Income except Business Income Taxable in case of Resident but not Ordinarily Resident  PERIOD  12 months period from 1st April to 31st March (Accounting Year)  Law as exists in next year applicable (Assessment Year)  CLASSIFICATION AND COMPUTATION OF INCOME  Income is classified as below and then computed according to the procedure specified for each classification  SALARY  HOUSE PROP0ERTY  BUSINESS/PROFESSION  CAPITAL GAIN  OTHER SOURCES (RESIDUARY) COND Next Slide……

32  EXEMPTIONS AND DEDUCTIONS  Various specified exemptions and deductions are allowed based on various incentive schemes  MODE OF TAX PAYMENT  Self Assessment (at the time of filing tax return)  Advance Tax ( 3 to 4 installments on estimated basis)  TDS (deposited by buyer on behalf)  WITHHOLDING TAXES  Certain specified transactions are subject to withholding taxes  FILING REQUIREMENTS  31st July (In case of Individual)  30th Sept. (In case of corporation or non corporation if turnover exceeds 4 million)  Revised return within 1 year from end of A/Y COND Next Slide……

33  ASSESSMENT PROCEDURE  Accepted as such (If not selected for audit within six months from the end of A/Y )  Selected for Scrutiny (Audit)  TIME PERIOD FOR ASSESSMENT  1 year from the end of A/Y if not selected for Audit  2 years from the end of A/Y if selected for Audit  REASSESSMENT PROCEDURE  If income escaped taxation or wrong information by tax payer within 4/6 years from the end of A/Y  TIME PERIOD FOR REASSESSMENT  9 months from the end of the F/Y in which notice is served  RECTIFICATION OF ORDER  Within 4 years from the end of the F/Y in which order is passed or 6 months from the end of the month in which rectification application is received COND Next Slide……

34  REVISION OF ORDER BY COMMISSIONER  Within 2 years from the end of the F/Y in which order was passed  REVISION OF ORDER BY COMMISSIONER IF TAX PAYER REQUESTED  Within 1 year from the end of the F/Y in which order was passed  REFUND  Tax payer is entitled to refund of excess tax deposited with 6% per annum  INTEREST  12% per annum for delay in filing return, deposit of tax etc. COND Next Slide……

35  PENALTIES  Maximum 300% of tax amount  PROSECUTION  Willful attempt to evade tax  Willful failure to file tax return  Willful failure to file documents and accounts  Falsification of books of accounts and documents  False statements  False returns  Willful non compliance PUNISHMENT  Imprisonment ranges from 6 months to 7 years with fine or without fine subject to trial in the court

36 WEALTH TAX  IF TAXABLE WEALTH EXCEEDS RS. 3 MILLION  WEALTH 1.03%

37 INCOME TAX TABLE Domestic Company33.99% Foreign Company42.23% Dividend distribution tax16.995% Capital gains tax on exit or restructuring 0% to 42.23% (long/short term) Withholding TaxesNagging problems Minimum Alternate TaxDomestic companies: raised from 11.33% to % Foreign companies: raised from % to %

38 NEW DIRECT TAX CODE  TAXATION OF COMPANIES: Companies: 25% Branch profit tax: 15%  GAAR Introduce  Treaty Override Introduced  Short Term/Long Term Capital 30%  Residence rule for companies: Place of control and management, wholly or partly in India, at any time in the year  Wealth 0.25% (basic exemption USD 10 Millions)

39 TAX RATE COMPARISION Corporate Income Tax Rate 30%25% Minimum Alternative Tax 15% (of book profits) 2% of gross assets Capital Gains0% - 40%30% Branch Profit Tax0%15% Withholding Taxes (payments to non- residents)  Dividends0%(DDT of 15% is applicable)  Interest10% - 40%20%  Royalty10%20% (on gross basis)  Service and Management 10%20% (on gross basis)

40 INTERNATIONAL TAXATION AT A GLANCE

41 INTERNATIONAL TAX AT A GLANCE  All payments in the nature of chargeable income subject to Withholding Tax.  Withholding Tax rate as stated in either Treaty or Domestic Tax Law which is more beneficial to tax payer.  Provisions to lower Withholding Tax rate in Indian Tax Law.  Indian Party making payment of income to Non Resident or Business Connection or Employer treated as “Representative Assesses” (Agent).  Income from “Permanent Establishment” is always on Tax Authority’s Radar.  Underlying Tax Credit available to US Corporations not Individuals.

42 DOUBLE TAXATION TREATY BETWEEN INDIA & USA RATE  DIVIDENDNIL  INTEREST10-15%  ROYALTY10% in case of use of Industrial, Commercial and Scientific Equipment 15% if payer is Government or Specified Organization 20% in other Cases  FEE FOR INCLUDED 10% in case of use of Technical or Consulting SERVICES Services, Ancillary & Subsidiary to Industrial, Commercial and Scientific Equipment 15% if payer is Government or Specified Organization 20% in other Cases

43 TRANSFER PRICING LAW IN INDIA

44 INTRODUCTION TO TRANSFER PRICING In India, Transfer Pricing regulations were introduced from April 1,2001 as a measure to curb tax avoidance. Any Income arising from an international transaction to be computed at the arm’s length price (ALP). The Central Board of Direct Taxes has set up a separate cell for dealing with cases of transfer pricing SOURCE  OECD guidelines  US regulations and jurisprudence  Indian jurisprudence

45 ARM’S LENGTH PRINCIPLE “Where an enterprise enters into transactions with associated enterprises, in order to determine fair profit of that enterprise, the price of the transactions should be compared with those entered into by two independent enterprise under uncontrolled conditions and under similar circumstances.”

46 APPLICABILITY  INTERNATIONAL TRANSACTIONS  ASSOCIATED ENTERPRISES

47  Purchase  Sale  Lease of tangible or intangible property  Provision of services  Lending or borrowing money or  Any other transaction having a bearing on the profits, income, losses or Assets of such enterprise. INTERNATIONAL TRANSACTIONS

48 ASSOCIATED ENTERPRISES PRIMARY ASSOCIATION Management/Control/Capital SECONDARY ASSOCIATION  Direct or indirect voting power of at least 26%  Common parent holds voting power of at least 26% in both  Loan of 51% or more of value of assets  Guarantee of 10% or more of total borrowings  One appoints more than half of directions on board or one executive director of other  Common parent appoints more than half of directors on board or executive director in both  Whole dependence on use of IPR’s of the other  Buying of bulk raw materials, Sales to one party etc.

49 STEPS FOR DETERMINATION OF ALP STEPS INVOLVED IN THE DETERMINATION OF THE ALP:  Identification of the “International Transaction”  Identification of an “Uncontrolled Transaction”  Identification and comparison of specific characteristics of the two transactions (Comparability) as per Rule 10A and 10B. Finding out whether differences, if any, between the two transactions can be reconciled/resolved  Ascertaining the most appropriate method  Determination of the arm’s length price by applying the method chosen.

50 METHODS The specific methods prescribed for computing arm’s length price, which are as follows:  TRADITIONAL TRANSACTION METHOD  TRANSACTIONAL PROFIT METHOD

51 TRADITIONAL TRANSACTION METHOD  COMPARABLE UNCONTROLLED PRICE METHOD: Under this method, the first step is to identify the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction. Then such price is to be adjusted on account of differences, which could materially affect the price in the open market, if any, between the transactions being compared or between the enterprises entering into such transaction. Such adjusted price can be called as arm’s length price computed under this method. This method involves comparison of prices both internal and external.  RESALE PRICE METHOD: Under this method, the first step is to identify the price at which property purchased or services obtained by the enterprise from an “Associated enterprise” is resold or are provided to an unrelated enterprise. From such resale price, the amount of a normal gross profit margin accruing to the enterprise or to an unrelated enterprise from same or similar transaction is to be reduced. The price so arrived is further reduced by the expenses incurred by the COND Next Slide……

52 enterprise in connection with the said transaction. Then such price is to be adjusted to take into account the functional and other differences, including differences in accounting practices, which could materially affect the amount of gross profit margin in the open market, between the transactions being compared or between the enterprises entering into such transactions. Such adjusted price can be called as arm’s length price computed under this method.  COST PLUS METHOD: Under this method, the first step is to determine the direct and indirect cost of production incurred by the enterprise in respect of property transferred or services provided to an associated enterprise. The next step is to determine the normal gross profit mark-up to such costs computed according to the same accounting norms of the enterprise or unrelated enterprise in connection with the same or similar comparable uncontrolled transaction. The said normal gross profit mark-up is to be adjusted on account of functional and other differences if any, which could materially affect such profit mark-up in the open market, between the transactions being compared or between the enterprises entering into such transaction. Such profit mark-up is to be added in the cost calculated as per the first step. The sum so arrived at, can be called as arm’s length price computed under this method.

53 TRANSACTIONAL PROFIT METHOD  PROFIT SPLIT METHOD: Under this method, the first step is to determine the combined net profit of the “Associated enterprise” arising from the international transaction in which the enterprises are engaged. After that the relative contribution made by each of the associated enterprise the combined net profit is evaluated on the basis of the functions performed, assets employed or to be employed, reliable external data and risks assumed by each enterprise. The combined net profit is then split amongst the enterprises in proportion of their relative contributions and such apportioned profit shall be taken into account to arrive at the arm’s length price in relation to the international transaction.  TRANSACTIONAL NET MARGIN METHOD: Under this method, first the net profit margin realized by the enterprise from an international transaction entered into with an “Associated enterprise” is computed in relation to costs incurred or sales effected or assets employed or to be employed or any other relevant base. Then the net profit margin realized COND Next Slide……

54 by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction is computed with regard to the same base. Such net profit margin arising in comparable uncontrolled transactions is to be adjusted on account of differences if any, which could materially affect the net profit margin in the open market, between the transactions being compared or between the enterprises entering into such transaction.

55 SUMMARY OF METHODS MethodsProduct Comparability Functional comparability ApproachRemarks CUPVery HighMediumPrices are benchmark ed Very difficult to apply as very high degree of comparability required RPMHighMedium GPM (on sales) benchmark ed Difficult to apply as high degree of comparability required CPLMHigh GPM (on costs) benchmark ed Difficult to apply as high degree of comparability required PSMMedium Very HighProfit Margins Complex Method, sparingly used TNMMMediumVery HighNet Profit Most commonly used Method

56 SELECTION OF MOST APPROPRIATE METHOD THE MOST APPROPRIATE METHOD SHALL BE SELECTED HAVING REGARD TO THE FOLLOWING:  The nature and class of the international transaction;  The class or classes of associated enterprise entering into the transaction and the functions performed by them taking into account assets employed or to be employed and risks assumed by such enterprises;  The availability, coverage and reliability of data necessary for application of the method;  The degree of comparability existing between the international transaction and the uncontrolled transaction and between the enterprises entering into such transactions;  The extent to which reliable and accurate adjustments can be made to account for differences, if any, between the transactions being compared and the enterprises entering into such transactions;  The nature, extent and reliability of assumptions required to be made in application of a method; It is provided that where more than one price is determined.

57 COMPARABILITY FACTORS FOR COMPARING AN INTERNATIONAL TRANSACTION WITH AN UNCONTROLLED TRANSACTION, REFERENCE SHOULD BE MADE TO THE FOLLOWING:  The specific characteristics of the property transferred or services provided in either transaction;  The functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions;  The contractual terms (whether or not such terms are formal or in writing) of the transactions which lay down, explicitly or implicitly the responsibilities, risks and benefits to be divided between the respective parties to the transactions;  Conditions prevailing in the markets in which the respective parties to the transactions operate, including the geographical location and size of the markets, the laws and government orders in force costs of labor and capital in the markets, overall economic development and level of competition and whether the markets are wholesale or retail.

58 TRANSFER-PRICING AUDIT  Limit of Rs. 5 Crores has been enhanced to Rs. 15 Crores with effect from Financial Year  Use of data in the year the transaction takes place; however at the time of preparation of documentation the assesses had access to data only of prior years. TPOs are seeking to rerun comparable search with current data.

59 ASSESMENT PROCEDURE File tax return & Accountant’s Report (30th September)  Reference to be made to TP Officer (‘TPO’) by the Assessing Officer (‘AO’); Compulsory Reference to be made by AO if international transaction exceed Rs 150 million  Notice to be issued by the TPO for calling supporting documents and evidences  TP Audit  Preparation of Draft order  Passing of order within 1 month from the end of the month if No Objection on the draft order by the Tax payer within 30 days or time expires for filing the objections within 30 days  If tax payers has objection he will file objections to Dispute Resolution Panel within 30 days from the date of draft order  Dispute Resolution after hearing TPO and Tax payer along with evidences will either give directions to the TPO or no directions, within 9 months from the end to the month in which the draft order is forwarded to the tax payer  Within 1 month from the end of the month in which direction is received, or expiry of 9 months whichever is earlier, the TPO will pass the final order in conformity with the directions of the Dispute Resolution Panel  Based on results of the above mentioned procedure Assessing Officer will pass the order

60 REPORTING REQUIREMENTS  Every tax payer entering into international transaction to obtained an accountant report in prescribed form i.e. Form 3CEB.  Every accountant report to be submitted on or before the due date for filing tax return  Accountant report contain the following information  Contains summary of international transaction  Contains details of tax payer  Contains method employed to determine ALP

61 DOCUMENTATION ENTITY RELATEDPRICE RELATED TRANSACTION RELATED  Profile of industry  Profile of group  Profile of Indian entity  Profile of associated enterprises  Transaction terms  Functional analysis (functions, assets and risks)  Economic analysis (method selecting, comparable benchmarking)  Forecasts, budgets,  Agreements  Invoices  Pricing related correspondence (letters, s etc.)

62 PENALTY DEFAULTNATURE OF PENALTY In case of a post inquiry adjustment, there is deemed to be a concealment of income 100 – 300 % of tax on the adjusted amount Failure to maintain documents2% of the value each international transaction Failure to furnish documents2% of the value each international transaction Failure to furnish accountant’s report Rs. 100,00

63 KEY ISSUES/CONTROVERSY  Use of secret comparables not prohibited  Selection of time period  Availability of corporate data  Limited guidance on adjustment methodology  Avoid loss making companies and negative net worth  Circular interferes with the judicial discretion of TPO  No safe harbor clause provisions  No advance pricing agreement provision  Use of current data rather than data available up-to the date of filing of Tax return  No significant legal precedents on Transfer pricing matters as yet  No use of earlier years data

64 RECENT EXPERIENCES/ TAKE-AWAY  Adjustment allowed  Working capital  Risks  Growth  IP  Under utilization of capacity  Difference in accounting policies  Loss making comparables accepted except continuous loss making companies  Independent comparable having related party transactions (more than 15%) not accepted  OECD and US Guidelines on Transfer Pricing accepted  Emphasis on FAR analysis than other economic factors COND Next Slide……..

65  Segmental results to be considered  Transfer Pricing not an exact science and hence reasonable presumption and approximation accepted  Multiple year data generally not accepted  Transfer Pricing law in India at very infancy stage  Start-up company and low net worth companies not accepted  In TNMM, comparability at broader level in terms of product accepted

66 DOMESTIC LAW DISPUTE RESOLUTION PROCESS Transfer Pricing Officer Dispute Resolution Panel Appellate Tribunal High CourtSupreme Court Order passed within 1 month from end of the month in which direction from Dispute Resolution Panel is received or end of 9 month from the end of month in which draft order is forwarded. Direction to be issued within 9 month from the end of the month in which objection are forwarded  Final fact finding authority  No specific time limit  Generally order passed within 2 – 4 years from filing of appeal  Revenue can also go on appeal if Commissioner decides in favor of taxpayer  Final fact finding authority  No specific time limit  Generally order passed within 2 – 4 years from filing of appeal  Revenue can also go on appeal if Commissioner decides in favor of taxpayer

67 INTERNATIONAL DISPUTE RESOLUTION PROCESS (MUTUAL AGREEMENT PROCEDURE PROCESS) Overseas Taxpayer Overseas Competent Authority Indian competent Authority India Tax administration  Overseas Taxpayer can invoke CA proceedings in case there is double taxation or taxation not in accordance with the tax treaty  Technically, application is possible even before assessment is made.  If overseas CA consider the application appropriated, application forwarded to the Indian CA  CAOVERSEAS CA could request Taxpayer for additional information  Indian CA ON RECEIE OF map REQUEST FROM OVERESAS CA could consider the same for discussion  Additional information could be requested before the cases in expected  In case the matter is resolved between the CAs and accepted by the Taxpayer, the same is communicated to the Tax Officer  Overseas and India CAs would initiate negotiate negotiation and attempt to reach an amicable resolution  CAs may set up certain procedures/guidelines which they will adhere to during the negotiation process  In case the CAs reaches a resolution, the proposed agreement should be communicated to the Taxpayer for his acceptance.  Taxpayer has option not to accept the agreement in case it is detrimental taxpayer may seek correlative relief in the overseas jurisdiction

68 EVALUATION OF ALTERNATIVE DISPUTE RESOLUTIO OPTIONS CriteriaMapAppeal Time frameGenerally 1-2 yearsCan range from 2 to 20 years, depending upon level ApproachMore scope for negotiation /compromise, CAs could agree on a “ middle path” Legalistic approach, no negotiations Taxpayer involvementAt the discretion of CASignificant involvement Binding natureBinding on CA, Taxpayer need mot accept if detrimental can continue with domestic tax law appeal Binding, but sequential appeals ca be made to higher judicial authorities. Double tax mitigationPossibility of avoiding double tax impact through correlative relief Double tax exposure if appeal is against taxpayer, correlative relief to be separately pursued. Collection of taxesMOU for suspending collection of taxed (with US) STAY FO DEMAND AT THE DISCRETIO OF THE Tax officer and Appellate Authorities FinallyGreater change of reaching finality, decision of CA binding on Tax officer Tax officer can prefer appeal if first- level appeal is in Taxpayer’s favor ExperienceInadequate experience in TP, but better general appreciation of international tax issues n/Limit TP experience at this stage CoveragePossibility of covering even subsequent years on the basis of anticipated adverse results Would need t await assessment order for ach year before filing appeal.

69 WHAT WE DO FOR QUARK SOFTWARE WE OFFER THE FOLLOWING:  REPRESENTATION SERVICES  Income Tax  International Tax  Transfer Pricing  Appeal  REPRESENTATION SERVICES  Service Tax  Foreign Investment Promotion Board  Department of Company Affairs  Exchange Control Department  STPI COND Next Slide…….

70 REVIEW SERVICES  AUDIT & ASSURANCE SERVICES  Management audit  Special audit  CERTIFICATION  COMPLIANCE & PLANNING SERVICES  OPINIONS  CONSULTATIONS & ADVISORY SERVICES  SIGNATORY SERVICES

71 PERFORMANCE DURING LAST ONE YEAR  TAX SAVINGS (ACTUAL) USD 1.04 Millions Year (185 K) Year (858 K) (base on last year KPMG order)  TAX SAVINGS (VERY LIKELY) USD 596 K Year (65 K) TDS Survey (531 K)  NUMBER OF TAX CASES GOT THROW General Assessment 6 Transfer Pricing3 FBT6 Appeals4 COND Next Slide…….

72  Review of various returns filled periodically  Certification Services  Signatory services  Various opinions on Service Tax, Income Tax, Company Law etc.  Compliances  Corporate Secretarial services

73 TAX CALENDER

74 SL NO. NAME OF COMPANYTYPEAUTHORITY STATUS AS ON A QUARK SYSTEMS PVT. LTD 1 F/Y Appeal Second Appellate Authority (ITAT) Case referred back to the Transfer Pricing Officer 2 F/Y AppealFirst Appellate Authority (CIT-A) Case adjourned to F/Y Scrutiny/AuditTax Officer Hearing is under progress 4F/Y Scrutiny/AuditTax Officer Next date is yet to be fixed 5F/Y Scrutiny/AuditTransfer Pricing Officer F/Y Scrutiny/AuditTax Officer Next date is yet to be fixed 7F/Y Scrutiny/AuditTransfer Pricing Officer Date not fixed B QUARK MEDIA HOUSE INDIA PVT. LTD 1 F/Y AppealFirst Appellate Authority (CIT-A) Case adjourned to F/Y Scrutiny/AuditTax Officer Hearing is under progress 3F/Y Scrutiny/AuditTax Officer Next date is yet to be fixed 4F/Y Scrutiny/AuditTransfer Pricing Officer F/Y Scrutiny/AuditTax Officer Next date is yet to be fixed 6F/Y Scrutiny/AuditTransfer Pricing Officer Date not fixed C QUARK COMMERCE INDIA PVT. LTD 1 F/Y AppealFirst Appellate Authority (CIT-A) Case adjourned to F/Y Scrutiny/AuditTax Officer Hearing is under progress 3F/Y Scrutiny/AuditTax Officer Next date is yet to be fixed 4F/Y Scrutiny/AuditTransfer Pricing Officer Date not fixed

75 THANK YOU Registered office: SCO 35, Second Floor, Sector -26, Chandigarh Tel , , Fax , Mobile


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