Tag - income tax

SCN-8 “CONTROLLED FOREIGN COPRORATIONS”

Hello Readers, Welcome to the SCN Series. Today's Term is CONTROLLED FOREIGN COPRORATIONS (CFC): It is an anti tax avoidance measure where a parent company opens a subsidiary in low tax jurisdiction and then evade the tax by non distribution of dividend or profits to the shareholders of parent company. Here it is..... Controlled Foreign Corporations (CFCs) are corporate entities incorporated in an overseas low tax jurisdiction and controlled directly or indirectly by residents of a higher tax jurisdiction (Parent State). Since each corporate entity [...]

SCN-6 “CbC REPORTING”

Hello Readers. Welcome to the SCN Series. Today's term is from International Taxation part of the Income Tax: CbC Reporting: In order to prevent tax avoidance, Multinational Enterprises (MNEs) whose consolidated revenue of International Group is more than Rs. 5,500 crores (as reflected in the consolidated financial statements for the preceding accounting year) are required to report to the income tax department annually for each tax jurisdiction (each country) in which they do business the information set out therein. This reporting is called the Country-by-Country (CbC) Reporting. Click here for the [...]

SCN-1 “Tax Treaty”

Hello Readers, Starting with the first concept of this series: Tax Treaty Also known as a Bilateral Agreement, A tax treaty is a bilateral agreement signed between two nations so as to prevent the issues of double taxation on income. As per this agreement, both the nations decide the rates of tax that has to be applied to an income of a person in both the nations i.e. country of origin of income and the home country. Sometimes, it is in the form of [...]

International Taxation – FAR Analysis

Hello Readers, Hope you have read the previous parts. Click here to see the previous parts. FAR Analysis Functions, Assets and Risk (‘FAR’) analysis is an analysis of the functions performed, taking into account assets used and risks assumed by associated enterprises (AEs) in controlled transactions. A method of finding and organizing facts about a business in terms of the functions performed, assets used (including intangible property) and risks assumed by such business to: Identify how they are divided among the AEs; and Ø [...]

Become An Informer of Income Tax Dept. and Get Rewards up to Rs 5 Crore

The centre government has launched Income Tax Informants Reward Scheme, 2018, after superseding the 2007 award scheme, under which a person can get reward up to Rs 50 lakh for giving specific information about substantial evasion of tax on income or assets in India. Also, those informing the government about 'undisclosed black money' stashed abroad can win awards up to Rs 5 crore. Anyone who informs about Benami properties can get awards up to Rs 1 crore. The scheme comes [...]

International Taxation – Profit Level Indicators

Hello Readers, Hope you have read the previous parts. Click here to see the previous parts. Profit Level Indicators  A profit level indicator (PLI) is selected to test the profitability of tested party. PLIs are ratios that measure relationships between profits and costs incurred or resources employed. PLI should always have an untainted* base (denominator) like adopting cost as base for export transactions and revenue as base for import transactions. *A tainted income or expense would mean one that is received from an AE paid [...]

Base Erosion & Profit Shifting – A Global Challenge

Base Erosion & Profit Shifting – A Global Challenge Meaning: “Recently more and more enterprises organised abroad by American firms have arranged their corporate structures aided by artificial arrangements between parent and subsidiary regarding intercompany pricing, the transfer of patent licensing rights, the shifting of management fees, and similar practices in order to reduce sharply or eliminate completely their tax liabilities both at home and abroad.” So, Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and [...]

LEAVE TRAVEL CONCESSION/ASSISTANCE- TAXATION ISSUES

We go on travel with our families ,if we can get tax benefits, why waste it. Hence the article on Leave Travel allowance or LTA. Have you claimed LTA? Leave Travel Allowance (LTA) is basically defined as the cost of travel granted to employees to travel anywhere in India, while on leave from work. It is allowed twice in a block of four calendar years. These blocks of 4 years are predefined by the government. These are: 2002 – 2005 2006 – 2009 2010 [...]

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