Title: SEZ Registration (1)
1- PRESENTATION
- on
- DOING BUSINESS
- IN INDIA
Registered office SCO 35, Second Floor, Sector
-26, Chandigarh 160 019Tel- 91-172-2790366,
2790075, Fax-91-172-2790260, Mobile-09814011278 Em
ail raman_at_ramanaggarwal.com
2 3ABOUT ARA
- ARA is a firm of chartered accountants.
- ARA firm was formed in the 1988 (22 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 MBAs. - ARA have state of the art facility in Chandigarh,
New Delhi Pune. - ARA have more then 100 Corporate Clients and
leading MNCs (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.
4SERVICES 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
5TEAM
S.NO NAME QUALIFICATION EXPERIENCE
1 Mr. Raman Aggarwal Fellow Chartered Accountant 25 Years in Accounts, Finance, Tax, Legal, Management etc.
2 Mrs. Simpy Gupta Bachelor in Law. Company Secretary 15 Years in Legal Corporate affairs
3 Mr. Sameer Sawrup Fellow Chartered Accountant 16 Years in Accounts, Finance, Tax, Legal, Management etc
4 Mr. Unni Krishnan Graduate 18 Years experience in Corporate Affairs
5 Ms. Arti Post Graduate 9 years experience in Regulatory Compliances
6 Mr. Sanjay Aggarwal Chartered Accountant 18 Years Accounts, Finance Tax
7 Mr. Suman Master in Commerce 14 Years in Accounts, Finance, Tax, Legal, Management etc
8 Mr. Vineet Thakral Master in Law Management 2 Years Tax and Regulatory
9 Ms. Manmeet Kaur Masters in Law 3 Years Legal
10 Mr. Nikhil Vats Bachelor in Law 2 Years Legal
11 Ms. Neelam Bachelor in Law 3 Years Legal
12 Ms. Moonu Rana Bachelor in Law 2 Years Legal
- More than 15 other Professionally Qualified
Support Staff
6DOING BUSINESS IN INDIA
7FOREIGN DIRECT INVESTMENT IN INDIA
- AUTOMATIC ROUTE
- APPROVAL ROUTE
8ENTRY STRATEGY
- JOINT VENTURE
- WHOLLY OWNED SUBSIDIARY
- BRANCH OFFICE
- AGENCY
9FORMS OF ENTERPRISES IN INDIA
INCORPORATED ENTITY
- Private Limited Company
- Public Limited Company
UNINCORPORATED ENTITIES
- Branch Office
- Liaison Office
- Project Office
- Partnership
- Trust
10TYPE OF SECURITIES
- Equity Share
- Preference Share
- Debenture
11LAWS GOVERNING BUSINESS IN INDIA
- The Companies Act. 1956
- 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
12IMPORTANT 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
13DIRECT TAXES
- INCOME TAX
- DIVIDEND DISTRIBUTION TAX
14INDIRECT TAX
- Customs duty
- CENVAT (excise duty)
- Central Sales tax
- Value added tax
- Service tax
- Octroi duty/entry tax
- Stamp Duty
- RD cess
- Works contract tax
- Turnover tax
- Purchase tax
- Secondary and higher education cess
15INTERNATIONAL TAX TREATIES
- Treaties with favorable jurisdictions such as
Mauritius, Cyprus, Singapore and the Netherlands - India has entered double tax treaty with 79
Countries
16IMPORTANT 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)
Workmens compensation act, 1923
Disputes and liabilities
Industrial disputes act, 1947
Employers liability act, 1938
18INTELLECTUAL PROPERTY
- Patents
- Copy Rights
- Trade Marks
- Trade Secretes
- Geographical indication of goods
19ACCOUNTS 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
20REPORTING REQUIREMENTS
21INCOME 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
22COMPANY 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
23EXCHANGE CONTROL LAW/RBI
- Intimation to RBI from receipt of capital
- Intimation to RBI from the date of allotment of
shares - Annual return to RBI
24SERVICE TAX LAW
- Monthly deposit of tax
- Half yearly tax return
- Refund of Service Tax within 1 year
25STPI
- Monthly progress report
- Annual return
- Filling of Softex form
- Reimbursement of CST on half yearly basis
26VAT/CST
- Monthly/Quarterly return
- Annual return
27EXTRACTION OF EARNINGS OUT OF INDIA
- Dividend
- Buyback
- Redemption
28EXIT STRATEGY
- Dissolution of company
- Sale of share
- Merger/Amalgamation
- IPO
29- INCOME TAX LAW AT A GLANCE
- IN
- INDIA
30INCOME 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)
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 6 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 interest _at_ 6 per annum - INTEREST
- Interest _at_ 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
36Appellant Authorities
- There are 4 level of appellant authorities -
- Commissioner of Income Tax (within Tax dept)
- 2) Income Tax Appellant Tribunal (Lower Court)
- 3) High Court
- 4) Supreme Court of India
-
37WEALTH TAX
- IF TAXABLE WEALTH EXCEEDS RS. 3 MILLION
- WEALTH TAX _at_ 1.03
38INCOME TAX TABLE
Domestic Company 33.99
Foreign Company 42.23
Dividend distribution tax 16.995
Capital gains tax on exit or restructuring 0 to 42.23 (long/short term)
Withholding Taxes Nagging problems
Minimum Alternate Tax Domestic companies raised from 11.33 to 16.995 Foreign companies raised from 10.558 to 15.836
39NEW DIRECT TAX CODE
- TAXATION OF COMPANIES
- Companies 25
- Branch profit tax 15
- GAAR Introduce
- Treaty Override Introduced
- Short Term/Long Term Capital gains _at_ 30
- Residence rule for companies Place of control
and management, wholly or partly in India, at any
time in the year - Wealth tax _at_ 0.25 (basic exemption USD 10
Millions) -
40TAX RATE COMPARISION
Corporate Income Tax Rate 30 25
Minimum Alternative Tax 15 (of book profits) 2 of gross assets
Capital Gains 0 - 40 30
Branch Profit Tax 0 15
Withholding Taxes (payments to non-residents)
Dividends 0(DDT of 15 is applicable) 0 (DDT of 15 is applicable)
Interest 10 - 40 20
Royalty 10 20 (on gross basis)
Service and Management 10 20 (on gross basis)
41- INTERNATIONAL TAXATION
- AT A
- GLANCE
42INTERNATIONAL 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 Authoritys Radar. - Underlying Tax Credit available to US
Corporations not Individuals.
43DOUBLE TAXATION TREATY BETWEEN INDIA USA
- RATE
- DIVIDEND NIL
- INTEREST 10-15
- ROYALTY 10 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
-
44TRANSFER PRICING LAW IN INDIA
45INTRODUCTION 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 arms 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
46ARMS 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.
47APPLICABILITY
- INTERNATIONAL TRANSACTIONS
- ASSOCIATED ENTERPRISES
48INTERNATIONAL TRANSACTIONS
- 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.
49ASSOCIATED 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 IPRs of the other
- Buying of bulk raw materials, Sales to one party
etc.
50STEPS 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 arms length price by
applying the method chosen.
51METHODS
- The specific methods prescribed for computing
arms - length price, which are as follows
- TRADITIONAL TRANSACTION METHOD
- TRANSACTIONAL PROFIT METHOD
52TRADITIONAL 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 arms 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
53- 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 arms 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
arms length price computed under this method. -
54TRANSACTIONAL 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 arms
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
55- 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.
56SUMMARY OF METHODS
Methods Product Comparability Functional comparability Approach Remarks
CUP Very High Medium Prices are benchmarked Very difficult to apply as very high degree of comparability required
RPM High Medium GPM (on sales) benchmarked Difficult to apply as high degree of comparability required
CPLM High High GPM (on costs) benchmarked Difficult to apply as high degree of comparability required
PSM Medium Very High Profit Margins Complex Method, sparingly used
TNMM Medium Very High Net Profit Most commonly used Method
57SELECTION 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.
58COMPARABILITY 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.
59TRANSFER-PRICING AUDIT
- Limit of Rs. 5 Crores has been enhanced to Rs. 15
Crores with effect from Financial Year 2005-06. - 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.
60ASSESMENT PROCEDURE
File tax return Accountants Report (30th September)
i
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 50 million
i
Notice to be issued by the TPO for calling supporting documents and evidences
i
TP Audit
i
Preparation of Draft order
i
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
i
If tax payers has objection he will file objections to Dispute Resolution Panel within 30 days from the date of draft order
i
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
i
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
i
Based on results of the above mentioned procedure Assessing Officer will pass the order
61REPORTING 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
62DOCUMENTATION
ENTITY RELATED PRICE 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, emails etc.)
63PENALTY
DEFAULT NATURE 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 documents 2 of the value each international transaction
Failure to furnish documents 2 of the value each international transaction
Failure to furnish accountants report Rs. 100,00
64KEY 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
65RECENT 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..
66- 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
67DOMESTIC LAW DISPUTE RESOLUTION PROCESS
Transfer Pricing Officer
Dispute Resolution
Panel
Appellate Tribunal
High Court
Supreme 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.
- 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
Direction to be issued within 9 month from the
end of the month in which objection are forwarded
68INTERNATIONAL 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
69EVALUATION OF ALTERNATIVE DISPUTE RESOLUTIO
OPTIONS
Criteria Map Appeal
Time frame Generally 1-2 years Can range from 2 to 20 years, depending upon level
Approach More scope for negotiation /compromise, CAs could agree on a middle path Legalistic approach, no negotiations
Taxpayer involvement At the discretion of CA Significant involvement
Binding nature Binding 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 mitigation Possibility of avoiding double tax impact through correlative relief Double tax exposure if appeal is against taxpayer, correlative relief to be separately pursued.
Collection of taxes MOU for suspending collection of taxed (with US) STAY FO DEMAND AT THE DISCRETIO OF THE Tax officer and Appellate Authorities
Finally Greater change of reaching finality, decision of CA binding on Tax officer Tax officer can prefer appeal if first-level appeal is in Taxpayers favor
Experience Inadequate experience in TP, but better general appreciation of international tax issues n/Limit TP experience at this stage
Coverage Possibility of covering even subsequent years on the basis of anticipated adverse results Would need t await assessment order for ach year before filing appeal.
70WHAT 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.
71- REVIEW SERVICES
- AUDIT ASSURANCE SERVICES
- Management audit
- Special audit
- CERTIFICATION
- COMPLIANCE PLANNING SERVICES
- OPINIONS
- CONSULTATIONS ADVISORY SERVICES
- SIGNATORY SERVICES
72 73SL NO. NAME OF COMPANY NAME OF COMPANY TYPE AUTHORITY AUTHORITY STATUS AS ON 16.11.2010
A QUARK SYSTEMS PVT. LTD QUARK SYSTEMS PVT. LTD QUARK SYSTEMS PVT. LTD QUARK SYSTEMS PVT. LTD QUARK SYSTEMS PVT. LTD QUARK SYSTEMS PVT. LTD
1 A/Y 2004-05 Appeal- Department Appeal- Department Third Appellate Authority (High Court) Date not fixed as we are not confirmed whether dept. will go in appeal Date not fixed as we are not confirmed whether dept. will go in appeal
2 A/Y 2005-06 Appeal- Department Appeal- Department Second Appellate Authority (ITAT) Case adjourned to 08.12.2010 Case adjourned to 08.12.2010
3 A/Y 2006-07 Appeal Company Appeal Company Dispute Resolution Panel Order Received Order Received
4 A/Y 2007-08 Scrutiny/Audit Scrutiny/Audit Tax Officer Case is fixed for 17.11.2010 Case is fixed for 17.11.2010
5 A/Y 2007-08 Scrutiny/Audit Scrutiny/Audit Transfer Pricing Officer Order received Order received
6 A/Y 2008-09 Scrutiny/Audit Scrutiny/Audit Tax Officer Case is fixed for 17.11.2010 Case is fixed for 17.11.2010
7 A/Y 2009-10 Scrutiny/Audit Scrutiny/Audit Tax Officer Case is fixed for 17.11.2010 Case is fixed for 17.11.2010
B QUARK MEDIA HOUSE INDIA PVT. LTD QUARK MEDIA HOUSE INDIA PVT. LTD QUARK MEDIA HOUSE INDIA PVT. LTD QUARK MEDIA HOUSE INDIA PVT. LTD QUARK MEDIA HOUSE INDIA PVT. LTD QUARK MEDIA HOUSE INDIA PVT. LTD
1 A/Y 2005-06 Appeal- Department Appeal- Department Second Appellate Authority (ITAT) Case is fixed for 08.12.2010 Case is fixed for 08.12.2010
2 A/Y 2006-07 Appeal- Department Appeal- Department Second Appellate Authority (ITAT) Hearing is under progress Hearing is under progress
3 A/Y 2007-08 Scrutiny/Audit Scrutiny/Audit Tax Officer Case is fixed for 22.11.2010 Case is fixed for 22.11.2010
4 A/Y 2007-08 Scrutiny/Audit Scrutiny/Audit Transfer Pricing Officer Order received Order received
5 A/Y 2008-09 Scrutiny/Audit Scrutiny/Audit Tax Officer Case is fixed for 22.11.2010 Case is fixed for 22.11.2010
6 A/Y 2008-09 Scrutiny/Audit Scrutiny/Audit Transfer Pricing Officer Documents Submission submitted Documents Submission submitted
7 A/Y 2009-10 Scrutiny/Audit Scrutiny/Audit Tax Officer Case is fixed for 22.11.2010 Case is fixed for 22.11.2010
74C QUARK COMMERCE INDIA PVT. LTD QUARK COMMERCE INDIA PVT. LTD QUARK COMMERCE INDIA PVT. LTD QUARK COMMERCE INDIA PVT. LTD
1 A/Y 2005-06 Appeal- Department Second Appellate Authorities (ITAT) Case is fixed for 08.12.2010
2 A/Y 2006-07 Scrutiny/Audit First Appellate Authority (CIT-A) Hearing is under progress
3 A/Y 2008-09 Scrutiny/Audit Tax Officer Date not fixed
4 A/Y 2008-09 Scrutiny/Audit Transfer Pricing Officer Documents arguments submitted
5 A/Y 2009-10 Scrutiny/Audit Tax Officer Company merged
d QUARK INDIA PVT. LTD QUARK INDIA PVT. LTD QUARK INDIA PVT. LTD QUARK INDIA PVT. LTD
1 A/Y 2004-05 Appeal- Department Second Appellate Authorities (ITAT) Hearing under progress
2 A/Y 2008-09 Scrutiny/Audit Tax officer Case is fixed for 25.11.2010
75THANK YOU
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