About Kanooniyat:

Kanooniyat is a legal website providing daily legal updates to its user base, comprising law students, law aspirants, lawyers and legal professionals, in the form of articles, opportunities and legal jobs. Social media links: Instagram, LinkedIn, Facebook.

 

About Kanooniyat PIL Drafting Competition:

This PIL Drafting Competition by Kanooniyat aims to provide the participants with a competitive platform to learn about one of the most important skills in an advocate’s arsenal - drafting. For the evaluation process, due emphasis will be laid on a candidate’s ability to succinctly put forward the relevant facts, mention the applicable laws and put forward arguments for the same. The reasoning provided, quality of research, and formatting and language used are also applicable criteria.

 

The event is being conducted in collaboration with the Chambers of Advocate on Record, Akriti Chaubey at the Supreme Court of India. She is an independent litigating professional with almost a decade of experience in Litigation and Investment Treaty Arbitration. She has appeared in landmark Supreme Court cases like the Ayodhya dispute and the Triple Talaq matter. She, in addition to being a prolific writer, is also an advisor and teacher.

About Workshop on basics of PIL Drafting 

We understand that as students of law, you might not have any prior knowledge about drafting a PIL. For this, we have kept a special workshop in collaboration with Advocate Madhurima Ghosh on the basics of drafting and filing a PIL to be held on 20th September. This workshop will be completely free of charge for registered participants of the Kanooniyat PIL Drafting Competition.

Our Partners

The Outreach and Internship partner for this event is LawInternships (The online law school). They provide law students with a plethora of opportunities to intern according to one’s interest and aptitude. 

Our media partner is IJALR (ISSN: 2582-7340), a reputed legal journal platform. 

Our Knowledge Partner for this event is E-Justice India which provides a multitude of legal courses and is managed by CSM Partners and Associates LLP. 

 

Area of Law for the Competition:

We welcome submissions from eligible students on any contemporary socio-legal issue of their choosing. 

Eligibility for Kanooniyat PIL Drafting Competition:

  • Students (UG/ PG/ Certifications/ Diploma) from any stream from any University/ College/ Institute in India.

  • Multiple entries from one participant are not permitted.

  • Co-authorship (Team of 2) is permitted.

 

Awards and Perks:

  • Winner: Rs. 2000 + Certificate of Merit

  • Top 5 entries: Certificate of Appreciation

  • Exciting internship opportunities to top 3 winners, provided by LawInternships and under Chambers of Advocate on Record, Akriti Chaubey.

  • 25% discount on courses by E-Justice to the top 3 winners.

  • Participation Certificates to all the participants.

  • Free entry to the workshop on the basics of drafting and filing a PIL.

 

Submission Guidelines:

  • The PIL must be written solely by the registered candidate (s) (co-authorship upto two is allowed), in English, and should not have been submitted for publication elsewhere.

  • The minimum word limit for the PIL is 900 words. There is no maximum word limit.

  • All submissions must be accompanied by a 250 word synopsis. 

  • All submissions have to be made in MS Word format and should be typed in Times New Roman, font size 12 and 1.5 line spacing.

  • The page margins should be 1” or 2.54 cm on all sides.

  • All text should be aligned as justified.

  • All claims of the author (s), in the body of the manuscript, are expected to be backed by reasons along with proper citations and shall not be mere assertions.

  • Any violation of rules shall result in direct disqualification.

  • The submissions will be scrutinized through plagiarism software. Permissible limit of plagiarism is 20%.

 

Evaluation Criteria and Weightage:

1. Expression of facts and issues in a crisp manner (20 marks)

2. Application of relevant laws and precedents (30 marks)

3. Lucidity and writing skills (35 marks)

4. Formatting and citations (15 marks)

 

Copyright of the Submissions:

  1. All the PIL drafts submitted shall be the exclusive property of the organizers.

  2. The organizers shall be free to use the information/ views therein in any manner they require and deem fit.

  3. The decision of organizers in deciding the winner(s) shall be final and binding and no query, correspondence, etc. in this regard shall be entertained by the organizers.

Note:

  1. PIL draft submissions incompatible with the above rules and submission guidelines will not be considered for evaluation.

  2. The submission of entries to the competition implies acceptance of the above terms and conditions by the participant(s).

  3. Kanooniyat reserves the right to cancel the event at any point before the conduct of the event. In such a case, any fee paid as registration fee shall be refunded in full to the registered participants.

Registration and Submission Procedure:

  1. Participants are required to register for the PIL Drafting Competition by paying the registration fee. (Link Mentioned Below)

  2. Once the registration fee is paid, participants have to take a screenshot of the same and fill the registration form.

  3. After they fill the registration form, participants will receive an email acknowledging the same from our end which will also have the submission link for the PIL Drafting Competition. The registration shall be complete after this step. 

  4. Participants will have to submit their PIL drafts using the submission form before the deadline. A sample draft of the PIL format can be found here. (Participants are encouraged to find previously filed PILs for better understanding of the format and structure).

  5. The participants are required to submit their documents by 11:59 PM, 26th September 2021, after which the submission form will not accept entries.

 

Registration Fee:

The participants are required to register for Kanooniyat’s PIL Drafting Competition by paying the registration fee of Rs. 250 (single author) or Rs. 400 (co-authors), through the payment link provided, before the registration deadline, i.e., 19th September, 2021.

 

Important Links:

  1. Payment Link: https://rzp.io/l/pildrafting 

  2. Registration Link: https://forms.gle/dq2HFN6RSiwcFGKJ7 

 

Important Dates:

Event

Date

Last date to register

19 September 2021

Workshop on basics of PIL drafting

20 September 2021

Last date to submit

26 September 2021

Declaration of Results

6 October 2021

Distribution of Awards and Certificates

10 October 2021

Contact Details:

In case of any queries related to this PIL Drafting competition, feel free to contact us at:

Phone no.: 7007873010, 8209992708

Email: events@kanooniyat.com / kanooniyat@gmail.com 

The Taxation Laws (Amendment) Bill, 2021[1] was introduced in Lok Sabha on 5th August 2021 & passed on 6th August 2021. The bill proposed to amend the Income Tax Act, 1961 and the Finance Act of, 2012[2] which would scrap the consequences of the Retro Tax amendment which had been done after a supreme court judgment on 20th January 2012 citing the case of Vodafone International B.V Vs Union of India &Anr.[3]

Condition before the Finance Act, 2012

The incomes which shall be deemed to accrue or arise in India are mentioned in section 9 of the Income Tax Act, 1961. The objective of the section is to mainly enable the scope of total income under section 5 (2) of the Income Tax Act and thus to cover the same in the charging section i.e., Section 4 of the Income Tax Act.

Subsection 1 of section 9 clarifies that any income accruing or arising, whether directly or indirectly, through the transfer of a capital asset situated in India, shall be deemed to accrue or arise in India.

Condition and analysis of the Finance Act (Amendment) 2012

Explanations 4 and 5 that were added to the amendment clarified the issues further. Explanation 5 to the provisions of Section 9 (1) (i) covered all the transaction occurred or transacted from 1961 till 2012. The transactions involved the transfer of the shares of a foreign company that earns its value substantially from assets located in India, such as arising from any business connection, property, asset, or source of income situated in India.

The further analysis of the above amendment can be articulated through an example of a company A of UK, that holds shares of a company B of the USA, that holds substantial shares of company C of India.

If company A sells shares of B, it shall be deemed (and shall always be deemed) that the transferred shares of B of the USA, which is a capital asset, have been situated in India, as per the amendment made in the Finance Act, 2012. This transaction would attract the deeming provision mentioned in Section (1) (i), therefore, the tax would be payable to the Indian government. The 2012 Act had amended the IT Act to impose tax liability on the income earned from the sale of shares of a foreign company on a retrospective basis by mentioning the phrase “and always shall be deemed” (i.e., also applicable to the transactions done before May 28, 2012). As a result, the persons who sold such shares of foreign companies before the enactment of the Act (i.e., May 28, 2012) also became liable to pay tax on the income earned from such sale. The Department was now able to go after indirect transfers of assets situated in India which had occurred before the introduction of the Finance Act, 2012, and realize any demand raised on taxpayers, even where the taxpayer had a favorable judgment from the Supreme Court.

The amendment has widespread repercussions across the globe and India because of the parliament bringing a law that went back to 1961 in a retrospective way. The amendment created a sense of uncertainty and a lack of trust among foreign investors in India. The amendment also overruled a Supreme Court judgment of 2012 that went in Vodafone's favor.

The Vodafone and Cairn Energy setback

The issue with retrospective tax began after the government in 2007 asked telecom giant Vodafone to pay capital gains tax after it bought a majority stake in the telecom operations of Hutch in India. The government of India then sent a notice to Vodafone seeking ₹11,218 crores claiming it withheld tax in the purchase and also imposed penalties worth ₹9,500 crores.The matter came again into the limelight after British energy major Cairn was asked to pay ₹10,247 crores in 2014 because of its move in 2006 to bring its assets under a single holding company, Cairn India Ltd during which it paid no tax during the process.

After several issues and a few clarifications by the then finance minister, the issue was taken to the Permanent Court of Arbitration with the invoke of clauses of the Bilateral Investment Treaty with the UK & Netherlands.

In the year 2020, The Permanent Court of Arbitration in The Hague held that any attempt by India to enforce the tax demand would be a violation of the country’s international law obligations. And the said demand raised using retrospective legislation would be a “breach of the guarantee of fair and equitable treatment” guaranteed under the Bilateral Investment Treaty with the Netherlands. It further ruled out that Vodafone is entitled to 'fair and equitable treatment under Article 4 (1) of the treaty. Indian government lost this case to Vodafone which cost it $4 million.

India lost another arbitration case against Cairn Energy which cost it ₹8,000 crores. India got two setbacks simultaneously.

The taxation laws (amendment) bill, 2021 brought in

The bill is introduced in Lok Sabha and it got passed by the president on 14th August 2021 to scrap the said retrospective clarificatory amendment made in Finance Act, 2012. It has proposed to amend the Income Tax Act, 1961 to provide that no tax demand shall be raised in the future on the retrospective amendment for any indirect transfer of Indian Assets if the transaction had taken place before 28th May 2012.[4]

As mentioned in the bill, it proposes to nullify this tax liability imposed on such persons provided they fulfill certain conditions.  These conditions are:

i.                     if the person has filed an appeal or petition in this regard, it must be withdrawn or the person must submit an undertaking to withdraw it,

ii.                   if the person has initiated or given notice for any arbitration, conciliation, or mediation proceedings in this regard, the notices or claims under such proceedings must be withdrawn or the person must submit an undertaking to withdraw them,

iii.                  the person must submit an undertaking to waive the right to seek or pursue any remedy or claim in this regard, which may otherwise be available under any law in force or any bilateral agreement, and

iv.                 other conditions, as may be prescribed.

After fulfilling all the above conditions, all assessment or reassessment orders issued concerning such tax liability will be deemed to have never been issued. The bill further specified that if a person becomes eligible for a refund after fulfilling these conditions, the amount will be refunded to him, without any interest.

Effects and views on the Taxation Laws (Amendment) Bill 2021

After the widespread criticism and two huge setbacks in an international arena, and in order to attract back the foreign investors to India, the Government has introduced the Bill in the Lok Sabha.The Bill seeks to dilute the impact of the levy on indirect transfers by nullifying its retrospective effect and extending this relief from retrospective operation to both pending and concluded proceedings involving such income. The decision taken will have a possibility, if the objective is achieved, to establish or re-establish India as an investment destination to investors across the world. The image of India being evolutionary in its legislation is a possibility of hope after the decision, giving away to the end of the retrospective tax regime, which will allow investors to enter India fearlessly. The country today stands at a juncture when quick recovery of the economy after the COVID-19 pandemic is the need of the hour and foreign investment has an important role to play in promoting faster economic growth and employment. Most litigations have approximately a decade behind them, the interest itself would have been almost equal to the tax amount now being refunded. To this extent, the entities who have been subject to the wrath of the retrospective tax will have to accept the proposed amendment with a pinch of salt. Though the decision may be coming in late, to a large extent is timely and is better than the legislation not being updated at all, this decision is a strong objective of the government to improve in the ease of doing business rankings. It has significance for the present government to undo the issues created by the governments of the past that haunts them now, with many investors backing it up and supporting the pleas of foreign investors. A move to give a hand back to the foreign investors and creating a business-friendly environment and ecosystem would be some effects of the proposed amendment.

The concept of business ethics and corporate social responsibility have come to force in the recent years. These two concepts are increasing rapidly in developed as well as developing nations because of the result in the growing sense of corporate wrongdoing. Both concepts can bring significant growth to any business enterprise and there is also a basic idea that business enterprise has some of its responsibility towards the society also rather than just making profits for the shareholders which has been around from centuries. Both business ethics and corporate social responsibility are very important for the organizational growth and success of any business. This paper will highlight the basic details of both the concepts and how these concepts are important for the growth of any corporation.

Business ethics

Ethics are the code of values and principles that exercise control over the actions of a person or group of people regarding what is right and what is wrong and therefore, ethics set standards as to what is right and what is wrong in the organization’s conduct and decision making. Business ethics deals with the internal values that are part of corporate sector and also provides shapes to the decision with respect to the social responsibility for the external environment. In the concept of business ethics, ethics refers to the principle of honesty and fair dealing with the employees and customers. In the corporate sector ethics applies to the form of applied ethics or professional ethics that examines the ethical problems that arise in the business environment. Business ethics is defined as the rules, standards, codes and principles that provide guidance for morally right behavior in the decision making related to the operations of the corporations and relationship of the business with the society. It applies to those aspects of the business conduct that is adhere by each and every individual of the corporation as well as by the corporation as a whole. The overall growth of the business depends on the good ethical code of conduct that has been set to guide the management as well as the employees in the daily activities of the business. The basic idea for the practice of business ethics is that a good ethical framework will create a systematic and healthy work environment for the employees and will drive to the development of ethical human resource practices.

 

Corporate Social Responsibility (CSR)

Corporate Social Responsibility or CSR is defined under section-135 of companies act, 2013. Companies or corporations have now started to look beyond their profits and interests and now they are prioritizing the services to be rendered to the society in which they operate. The concept that a business enterprise has some responsibilities towards the society rather than just making profits for shareholders has increased in a near century. This concept has been arose because the business owners operates within the society and in return the society expects that business should also be responsible towards it. It is now clearly impossible for a business enterprise or a corporation to experience a good economic prosperity in a closed environment form the stakeholders within its environment. Therefore, the relationship of a business enterprise with its employees and stakeholders like the customers, investors, suppliers, public and governmental officials, activists and communists are the most important key for success of the business enterprise. Corporate Social Responsibility or CSR can be defined as a combining management concept, which establishes a responsible behavior within the business enterprise, its objectives, values and competencies and the interest of the stakeholders. It refers to a business system that provides the production and distribution of the wealth for the betterment and rapid growth of the business enterprise as well as the stakeholders by implementing the ethical systems and sustainable management practices in the business operations. Therefore, corporate social responsibility or CSR refers to the responsibilities of the business enterprise for its impacts towards the society and the consequences of the integration of social, environmental, ethical, human rights and customers concerns in the business operation with the close collaboration with the stakeholders. The concept of corporate social responsibility is often expressed as the assumptions of responsibilities that go beyond the economic and legal responsibilities of the business enterprise. It also refers to the discretionary activities and policies of the business enterprise to engage itself in providing a positive social change and environmental sustainability in the environment within which the business enterprise works. Corporate social responsibility also refers to the selection of institutional objectives and analyzing the results not only with the help of criteria of profitability and welfare of organization but by the help of ethical standards and judgments of social desires. According to this, the exercise of corporate social responsibility should be in consistency with the goal of corporate earning of satisfactory level of benefits and also implies a desire to give away some degree of benefits in order to achieve the non-economic objectives that are set for the business enterprise. In the recent years the concept of corporate social responsibility has been subject to debate. On the one hand, one point of view speaks that, the sole purpose of the business enterprise is to earn profits only and the other point of view speaks that, the business enterprise should work for the satisfaction and completion of desired corporate goals and also take care of the society in which the business enterprise works. Corporate social responsibility can be achieved when the business enterprise goes beyond the compliance and involves itself in the actions which are suitable for the social good, beyond the interest of earning profit. One of the most relevant theory by Mc Whilliams and Siegel, the stakeholder theory became the dominant example in the field of corporate social responsibility. A well-established model of corporate social responsibility was proposed by Caroll, which is known as the “Four Part Model of Corporate Social Responsibility”.

 

Conclusion

Corporate social responsibility and business ethics are the most important aspects of a business enterprise and they both play a key role in the growth of the corporation. Both these concepts helps the business enterprise in ensuring to create a good brand image and to meet the competitors as well. In the recent years, many business enterprises have adopted the practice of corporate social responsibility and business ethics in which they have established a particular set of guidelines according to which the business operations will take place and the corporation will also keep in mind what the society is expecting from it within which the corporation is operating. By these practices business enterprises are expected to develop reliable products and to charge fair price with a fair profit margin and to pay a genuine amount of wage to the workers in order to maintain the customer loyalty and retaining of good employees. Corporate social responsibility and business ethics help in developing a good public image of the business enterprise with help of social practices and letting the people know about these practices. Customers look for such a company who is sustainable, socially responsible towards the environment in which it operates and follows a well-designed corporate ethical structure and together these things lead to a good public image and maintain the customer loyalty. Both these concepts together bring number of advantages to a business enterprise and are very beneficial to it. A company practicing both corporate social responsibility and business ethics have great results within the corporation as well as outside the corporation. Employee’s satisfaction is high in such an organization and this brings total customer satisfaction.

AUTHORED BY: JALAJ GOVIL

End Notes-

1.       Section-135 of Companies Act, 2013.

2.       Mc Whilliams & Siegel, 2001, corporate social responsibility and theory of stakeholders.

3.       Carroll, 1979, model of corporate social responsibility “Four Part Model of Corporate Social Responsibility”.

4.       Caroll &Buchholtz, 2000, Business and Society: Ethics and Stakeholder Management

5.       Jamshed “Importance of Corporate Social Responsibility and Business Ethics” (5th August, 2020) International Journal of Trend in Scientific Research and Development (IJTSRD), volume 4, issue 5, August 2020, page no: 799-801.

6.       Godfrey Adda, Dr. John BoscoAzigwe, Aboteyure Roger Awuni “Business Ethics and Corporate Social Responsibility for Business Success and Growth” European Journal of Business and Innovation Research, volume 4, No. 6, December 2016, page no: 26-42.

      Image Source

 

In a historic international taxation systemdeal, closing cross border tax loopholes when the Finance ministers from the group of seven rich nations (G7) signed a landmark accord setting a global minimum corporate tax rate, forming the foundation of a worldwide deal. The giants are known to exploit the loopholes reducing their tax liabilities.

Introduction

US President Joe Biden proposed a $6 trillion budget “reimagining” the US economy.

He would raise top income and capital gains tax rates, changing the taxation of wealthy estates, auditing the rich preventing tax evasion. The American Families Plan[i] seeks to raise $1.5 trillion over a decade via higher taxes on the 1%.

Double Irish Dutch Sandwich

A hypothetical situation of an entrepreneur owning a UScompany. The products sold are Air pods in the UK. Earning high profits from the UK sales into the borders of the US, paying a tax rate of 35% on the profits. As it's quite high, is going to be advised by a tax lawyer to set up another entity in Ireland.

The income earned through the sale would be under the Irish jurisdiction and instead of paying 35%, paying 12.5% corporation tax according to Irish laws. Ireland has a modern and open economy attracting a huge amount of inward investment by multinationals and financial services businesses committed to OECD BEPS global tax reform process. Moving to the Cayman Islands, jurisdiction is in the Caribbean territory. The effective tax rate here is Nil, therefore he won't have to pay anything.

The US would counter by the implementation of “Controlling Foreign Corporation”(CFC) rule. Further setting up an Irish subsidiary, controlling presence in Ireland, escaping CFC rule,preventing the US taxation. Concerning the 12.5% tax in Ireland, set up another Irish entity with the controlling presence in the Cayman Islands. The first entity would claim to be the subsidiary, profits earned through the IP of the entity with controlling presence in the Cayman Islands, would pay the profits as royalty, making the Nil net profits, escaping the tax liability. Between the royalty payment ofthe Irish subsidiary with controlling presence in Ireland (A) and entity with controlling presence in the Cayman Islands (B), Ireland would charge a withholding tax on the payment. Certain transactions are not charged on tax between Irish and Dutch. (A) company would pay royalty payment to Dutch subsidiarypaying royalty to (B), both not taxed.

Google was caught by the US authorities in 2015 with identical loopholes.

Such nations are enticing major corporations and giants by unreasonably low corporate tax rates and a business-friendly environment. The companies set up their subsidiaries in countries like Ireland and Luxemburg, shifting from the US to the headquarters leading the tax revenue down, forcingtax rates reduction to compete with these nations.

In 1980, globally, corporate tax rates averaged 40.11%, and 46.52% weighted by GDP. Countries have recognized the impact that high corporate tax rates have on business investment decisions. In 2020, the average was 23.8%, and 25.85 weighted by GDP, for 177 separate tax jurisdictions.[ii]The corporate tax rates would drop even further.

Governments use reductions in fiscal burdens to:

1.       Boost the inflow of productive resources

2.      Push down the exodus of the resources

The landmark deals

On 5th June 2021, the finance ministers from the G7 nations made a landmark global tax deal of the creation of a global minimum corporate tax rate of at least 15%. The deal was signed to end the “30-year-old race to the bottom on corporate tax rates”, as rightly said by U.S. Treasury Secretary Janet Yellen urging the world’s 20 advanced nations to adopt a minimum global corporate income tax at the Chicago Council on Global Affairs. OECD has coordinated tax negotiations with 140 countries regarding the rules for taxing cross-border digital services and curbing tax base erosion.

Though the home governments could set the local corporate tax rates. The home government could increase the taxes to a minimum rate, nullifying the efforts avoiding tax liability.

Countries such as Ireland and Dublin have boomed their economies with the influx of billions of dollars in investment from giants. Their objective would be to reduce the tax rate close to 12.5% / exemptions.

The US is taxing all overseas income at the new 15%rate preventing the corporates shifting profits. When entrepreneur earns the profits in Ireland, paying the tax rate of 12.5%, the US government would interfere collecting an extra 2.5% (15% - 12.5%).

Why “Global” minimum tax rate and not “US”?

Levyinga uniform tax rate across the globe, preventing companies from France, Germany, and the UK, from having an edge over the US companies. Ifnot global, the companies from other countries would be allowed to create subsidiaries escaping the liabilities, nullify such a competitive edge over the US companies, and put everyone on the same equal platform.

The US and its advantage on digital companies

US Digital companies overpower jurisdictional limitations delivering their services digitally to other countries escaping the tax liability from humongous profits earned. The countries can use digital tax competing with such an edge over US taxations.

The opportunity negotiating with the US over its competitive advantage by aid of digital companies and catering their services on global large markets, such asIndia, and earning profits with no tax payment& US needing the support of other countriesto establish a global minimum corporate tax rate.

The ICC’s Tax Haven

In 2021, 9 nation’s cricket teams would compete in the most difficult and grand championship to win the World test Championship, 2021. The 2019 statement of comprehensive income pegged ICC’s annual net income at $392 Million, which is ₹3000 crores. The company would have to pay ₹650 crores at another place. The place where ICC operates& is registered, the British Virgin Islands (BVI), isn't known for cricket.

BVI doesn't have any taxes collected other than payroll tax, stamp duty for real estate transactions, and import duties. BVI is a zero-tax territory, with no tax on income, capital gains, sales, profits, inheritances, &corporations. Exempted Capital gains realized on most transactions by non-residents of BVI. ICC wouldn’t pay tax on its humongous global income. Its subsidiaries are located in no-tax areas such as in the FZ (Free Zone) in Dubai, providing a no-tax holiday for 10/15 years under the UAE company ownership law and 10-year residency law taxing oil, gas companies, and foreign banks.[iii] Mauritius provides holidays / extensive exemptions from taxation to entities generating external income.[iv]

Repercussions for the Globe

When the deal forces the multinational companies to pay the taxes where they operate and a global minimum corporate tax rate at 15% in the G7 and G20 in the future, benefiting the US. Bane for countries in western Europe and law tax European jurisdiction i.e the Netherlands, Ireland, Luxembourg, and a few in the Caribbean depending largely on tax rate arbitrage to attract MNCs. China has no clear objections expressed, but looking into the strained relationship between China and the US, there are some issues. Beijing being concerned as Hong Kong is the seventh-largest tax haven in the world, the largest in Asia.[v]

The tax havens loss incurred by the US treasury is nearly $50 billion a year. India’s annual tax loss for tax haven and corporate tax abuse is estimated at over $10 billion. Countries are losing a total of over $427 billion in tax yearly to international corporate tax abuse and private tax evasion.[vi]

India’s stand in the taxation regime

On September 21, 2019, FM Nirmala Sitharaman announced a reduction in 22%corporate taxes for domestic & domestic manufacturing companies to 15%. The 22%concessional tax rate for existing domestic companies,subject to conditions with the insertion of a section (115BAA) to the Income Tax Act, 1961 after the Taxation Laws (Amendment) Act, 2019.[vii]

The cuts bring India’s corporate tax to the average rate in the Asian countries, 23%, with China and South Korea at 25%, Malaysia at 24%, Vietnam at 20%, Thailand at 20%, and Singapore at 17%. The tax rate, inclusive of surcharge and cess, for the domestic companies in India is 25.17%.

Government’s stand is participativeglobally on the corporate tax rate. Immunizing the taxation system to the challenges posed by the digital companies,government has introduced “Equalisation Levy”, 2016 introducing taxation indigital economy.[viii] In a long run seems benifiting India as it is a major market for a large number of tech companies. India has a high tax regime therefore would not affect India.

The deal would reduce the tax havens largely. Solving a major cross-border taxation loophole, creating transparency, equity, fair competition, and business ethics.

AUTHORED BY: SAPTAK PANDYA