Ergo Update26 May '23
Proposals for relaxation of valuation rules for Angel Tax Provision
As per Indian tax laws (“ITL”), any ‘excess premium’ received by an Indian closely held company (“ICo”) upon allotment of shares (equity or preference shares) to resident or non-resident investors (unless exempted) is taxed as ordinary income of ICo (“Angel Tax Provision”). The ‘excess premium’ will be the difference between the consideration received by the ICo for share issuance and the prescribed fair market value of such shares (Tax FMV).
Ergo Update26 May '23
Judgment in Commissioner of Service Tax vs. Mumbai International Airport Pvt Ltd
A 2-judge bench of the Supreme Court of India (SC) vide its judgment dated 19 May 2023 in the case of Central GST Delhi III vs. Delhi International Airport Ltd, Civil Appeal No. 8996/2019 along with CA No. 2465/2020 and CA Nos. 4751-4753/2021 has held that the Development Fees collected under section 22A of the Airport Authority of India Act, 1994 (AAI Act)by Airport Authorities such as Delhi International Airport (DIAL), Mumbai International Airport and GMR Hyderabad International Airport (GHIAL), shall not be chargeable to Service tax and dismissed the batch of appeals filed by the Service Tax/Central Goods and Service Tax Department and upheld the orders passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Mumbai (in the case of Mumbai International Airport Limited).
Ergo Update23 May '23
Amendments to the (Indian) Competition Law Framework Go Live
Only a few days before the Competition Commission of India (CCI) celebrated its 14th Annual Day on 20 May 2023, the Ministry of Corporate Affairs (MCA) notified the enforcement of certain provisions of the Competition (Amendment) Act, 2023 (CAA 23), with effect from 18 May 2023. A detailed overview of the provisions of the CAA 23 along with our views are available here, here, and here.
Ergo Update19 May '23
Legal Entity Identifier (LEI) Code now mandatory for listed debt securities
The Securities and Exchange Board of India (SEBI) vide its circular bearing reference no. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2023/64 dated 3 May 2023 (Circular) has introduced obtention of ‘Legal Entity Identifier’ code (LEI) for entities who have issued or propose to issue listed debt securities, in a phased manner and effective immediately. LEI is a 20 (twenty) character, globally recognized identification code provided for legal entities participating in financial transactions, which creates a unique reference system that helps identify legal entities on a globally accessible database.
Ergo Update17 May '23
Karnataka High Court quashes INR 21,000 Crore (~US$ 3 Billion) GST demand; clarifies GST position on online gaming
In a landmark judgment with far reaching consequences on the online gaming sector in India, a single judge bench of the Karnataka High Court (High Court), in the matter of Gameskraft Technologies Private Limited (GTPL), has quashed and set aside a INR 21,000 crore (~USD 3 Billion) goods and services tax (GST) show cause notice (SCN) against GTPL – the biggest tax notice ever issued in India, as per some reports.
Sudipta Bhattacharjee, Onkar Sharma
Ergo Update17 May '23
Final Verdict by Supreme Court on Computation of Property Tax in Mumbai
The Hon’ble Supreme Court (SC) has, by a recent order, settled a long standing dispute between property owners and developers in Mumbai and Municipal Corporation of Greater Mumbai (MCGM), in relation to the power and entitlement of MCGM to levy property tax based on capital value (CV) system as against the prevalent rateable value (RV) system.
Amit H Wadhwani
Ergo Update15 May '23
RBI Releases Master Direction To Regulate Outsourcing of IT Services
The Reserve Bank of India (RBI) has issued a master direction on outsourcing of information technology services by REs (as described below) on 10 April 2023 (Direction). The RBI had published a draft master direction for public feedback on 23 June 2022, pursuant to which the Direction has been released. The Direction aims to mitigate risks (as described below) faced by REs due to material outsourcing of information technology (IT) or IT enabled services as identified under the Direction (collectively, “IT services”) to providers of IT or IT enabled services (Service Providers).
Ergo Update11 May '23
Union Cabinet approves National Medical Devices Policy 2023
In a major boost to the medical devices company sector, the Union Cabinet, chaired by Hon’ble Prime Minister Narendra Modi, has approved the National Medical Devices Policy 2023 (NMDP) on 27 April 2023 and the final policy has been notified on 03 May 2023 in e-Gazette of India. This is in furtherance to the ‘approach paper to National Medical Device Policy, 2022’ published for stakeholder consultation by the Department of Pharmaceuticals (DoP) on 10 May 2022.
Ergo Update10 May '23
RBI proposes to crackdown on penal charges as a revenue enhancement tool
The Reserve Bank of India (RBI), through its ‘Draft Circular for Comments on Fair Lending Practice – Penal Charges in Loan Account’ (Draft Circular), released on 12 April 2023, has sought suggestions from the stakeholders on the implementation of the proposed guidelines relating to levying of penal charges on the loans disbursed by the RBI’s regulated entities (REs) in India.
Ergo Newsflash09 May '23
Sunil Kumar Ruling and Implementation of Pension Provisions under Social Security Code
Until this month, there appeared to be limited visibility as regards the implementation of the labour code regime. While the Code on Social Security, 2020 (SS Code) received the assent of the President of India on 28 September 2020, the enforcement of the new legislative framework remained uncertain, barring the provision for identifying the beneficiaries under the SS Code through Aadhaar. However, on 3 May 2023, by way of notifications in the Official Gazette (collectively, Notification), the Ministry of Labour and Employment, Government of India, brought few more provisions of the SS Code into force.
Ergo Update04 May '23
Tribunal denies forex benefit and resultant loss on sale of shares
In a first ruling on the issue, the Income Tax Appellate Tribunal, Mumbai (Tribunal) in the case of Legatum Ventures Limited (Taxpayer) [ITA No. 1627/2022], ruled that capital gains on sale of unlisted shares by a non-resident must be computed strictly as per Section 112(1)(c)(iii) of the Income Tax Act, 1961 (ITA) without considering the computation provisions under Section 48 of ITA.
Ergo Update02 May '23
Supreme Court holds that an unstamped arbitration agreement is ‘non-existent’ at the pre-referral stage
In a judgment with far reaching consequences, a five-judge Constitutional Bench of the Supreme Court of India in the matter of N.N. Global Mercantile Private Limited v. Indo Unique Flame Ltd. Civil Appeal No(s). 3802-3803 of 2023 provided clarity on the effects of an unstamped or insufficiently stamped arbitration agreement in proceedings to refer disputes to arbitration on a party’s application, answering the reference made to it by the three-judge bench of the Supreme Court in N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited and Others, (2021) 4 SCC 379 (N.N. Global). Our Ergo Update on the reference made by the three-judge bench is at [Ergo Update dated. 20.1.21].
Aseem Chaturvedi, Jeevan Ballav Panda, Jyoti Sinha
Ergo Update01 May '23
Indian Space Policy 2023 – a gravitational shift in the space sector
On 20 April 2023, the Indian Space Research Organization (ISRO) released the Indian Space Policy 2023 (Space Policy), which was reported to have received the nod of the Union Cabinet on 6 April 2023. The Space Policy has been issued subsequent to the reforms announced by the Government in space domain by opening doors for participation of non-governmental entities (NGEs) and enable a level-playing field. Accordingly, the Space Policy aims to set out a composite framework to implement these reforms and create a thriving space ecosystem.
Harsh Walia, Shobhit Chandra
Ergo Update24 Apr '23
Supreme Court rules that arm’s length price determination by Tax Tribunal can be subject to judicial review before the High Court
The Hon’ble SC reversed the Karnataka HC judgment on the issue of comparables selection and whether it constitutes a 'substantial question of law'.
Ergo Update24 Apr '23
India loses WTO Dispute Vis-A-Vis Import Duties on certain ICT Products
On 2 April 2019, the European Union (EU) requested consultations with India concerning the tariff treatment that India accords to certain goods in the Information and Communications Technology (ICT) sector.
Sudipta Bhattacharjee, Udayan Choksi
Ergo Update21 Apr '23
Tamil Nadu Bans Online Gambling
The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill 2022 (Bill) received the assent of the Governor of Tamil Nadu, Mr R N Ravi, on 7 April 2023. Pursuant to the Madras High Court striking down the Tamil Nadu Gaming and Police Laws (Amendment) Act 2021 , the Tamil Nadu government constituted a five-member committee led by former Justice K Chandru (Justice Chandru Committee) to assess the adverse effects of online gaming with stakes and advise on the possibility of introducing a new law to regulate online gambling.
Ganesh Prasad, Tanu Banerjee
Ergo Newsflash21 Apr '23
Proof of Joint Option under EPF Scheme Not Required for Joint Option under EPS Scheme: Kerala High Court’s Interim Order
Through an interim order, the Kerala High Court has opined on the requirement of producing copies evidencing exercise of joint option under Paragraph 26(6) of the Employees’ Provident Funds Scheme, 1952 (EPF Scheme) for the purpose of exercise of joint option for higher pension benefits under the Employees’ Pension Scheme, 1995 (EPS Scheme) pursuant to the ruling of the Supreme Court of India in Employes’ Provident Fund Organisation (EPFO) and Another v Sunil Kumar and Others [AIR 2022 SC 5634] (SC Ruling). In this update, we examine the key takeaways of this order (Interim Order) in the case of Saheer S and Others v Union of India and Others [Writ Petition (Civil) Number 8979 of 2023 (Kerala High Court)].
Ergo Update20 Apr '23
Third judge of Bombay High Court pronounces verdict on powers of State to levy GST on Intermediary Services to foreign customers
Taxation of intermediary services to offshore customers / clients has been one of the most contentious topics of the GST regime. An “intermediary service” has been defined as an activity of facilitating provision of goods or services between two or more persons. As per Section 13(8)(b) of the IGST Act, the “place of supply” for intermediary services, is deemed to be the location of the “supplier” of services.