Economic Nexus - Ready Reckoner

Revised philosophy to defer effective date for major updates

IRS on August 14

FASB issued ASU on distinguishing liabilities from equity

Senator Maggie Hassan (D-NH), a member of the Senate Finance Committee

In an M&A transaction, acquirers have certain expectations on the future

FASB releases further updates to credit losses standard to

Customers are the driving force of any organization regardless of the sector in which it operates

Minor updates to financial instruments, credit losses and hedging accounting guidance

Inventories constitute a significant proportion of assets, especially in manufacturing and trading entities.

Disclosure requirements under Regulation S-K simplified by SEC

Section 163(j) of Internal Revenue Code was amended by Tax Cuts and Jobs Act (TCJA) to provide new rules limiting the deduction of business interest expense for tax years beginning after December 31, 2017. On November 26, 2018, the IRS issued proposed regulations addressing changes made to this section.

Proposed targeted relief for transition to Financial Instruments - credit losses standard (ASC 326)

Our previous newsletter discussed subsequent accounting in a business combination.

A current trend in the BV marketplace, especially with larger firms, is the use of knowledge centers in low cost

In its recent meeting, the FASB made an exception for valuation requirements for held-to-maturity securities upon adoption of ASC

Our previous newsletter discussed one of the most critical accounting aspects of a business combination;

The Accounting Update Q4 2018

In its recent meeting, the FASB made an exception for valuation requirements for held-to-maturity securities upon adoption of ASC

In our November edition, we have provided insights on the various nuances related

On August 8, 2018 the IRS released proposed regulations providing additional guidance on

In wake of the Supreme court's Wayfair decision, the states have started issuing guidance on their approach to economic nexus rules...

Private equity; as a category of alternative investment, has gained momentum in recent ....

On June 21, 2018, the Supreme Court issued its decision in the case of South Dakota v. Wayfair,

The Tax Cuts and Jobs Act (TCJA) amended IRC Section 965

The Texas Tax Amnesty Progra

Canada Finance Minister Bill Morneau delivered Canada's 2018 federal budget on February 27....

Estimating the value of early stage companies entails a comprehensive assessment of

Technology-based intangible assets protect or support technology and may include, patented technology

The Auditing Standards Board ('ASB') has revised several existing attestation standards

The Public Company Accounting Oversight Board ('PCAOB' or 'the Board') made a revolutionary change in the content

The thought that comes to one’s mind by the mention of

The United States (US) Treasury Department (Treasury) and Internal Revenue Service

With the notification of the Ministry of Corporate Affairs; the Companies (Accounting Standards) Amendment Rules

The guideline public company method (“GPCM”) under the market approach

For US corporations, there are special provisions under the tax laws

Back in July 2014, FEMA

On October 13, 2016, the US Treasury Department ('the Treasury') and the Internal Revenue Service ('the IRS')

This thought leadership paper covers the key aspects of the decision in the case of Medtronic

On June 29, 2016, internal revenue services ('IRS') and Treasury released the final countryby-country ('CbC') reporting

Form 5471, which is the information return of U.S. persons in the context of specific foreign corporations

On July 30, 2015, the IRS issued Rev. Proc. 2015-39, which provides a safe harbor for accrual-basis

This thought leadership paper dwells on proposed earnings stripping regulations

This thought leadership paper dwells on certain state tax related issues which need

A new lease accounting standard seeks to increase transparency and comparability

Transfer pricing has become a major tax planning strategy employed by companies to shift profits to

Although most states continue to adhere to the cost-of-performance sourcing rule when calculating the sales factor of a multistate

Shareholders might want to liquidate a corporation for several reasons including, among others, a division among the

The IRS issued long-awaited proposed regulations on what type of internal-use software qualifies for the Sec. 41

The IRS issued final regulations under Secs. 162 and 263 (T.D.9636)

With the recovering economy and the tangible property regulations(T.D. 9689 and T.D. 9636, t)

In June, the IRS made considerable modifications to the Offshore Voluntary Disclosure Program (OVDP), which for years

While the coined term "cloud computing" no longer sounds foreign to consumers or businesses,

An employee fringe benefit can take many forms. At its essence, a fringe benefit is a form of payment

The U.S. Senate sent a $42 billion package of tax incentives to President Obama for his signature, reviving dozens of lapsed breaks for 2014 and setting them to expire in less than two weeks. On December 16, 2014,

The Tax Inspector General for Tax Administration (TIGTA) has issued a report on IRS's Voluntary Classification.

It is extremely common for non U.S. persons to invest in U.S. stocks, bonds, and other U.S.-situs assets (such as U.S. real estate) through a wholly owned, foreign corporation.

IRS has issued final instructions for Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding; IRS issued

IRS has issued its "Reference Guide on the Report of Foreign Bank and Financial Accounts (FBAR)

An excise tax is imposed on gasoline fuel at 18.4 cents per gallon, and the taxes collected are placed into a special fund designated for highway and road construction and maintenance.

The IRS in September issued proposed regulations (REG-124148-05) clarifying the application of Sec. 174

The IRS, in its 'Legal Advice issued by Field Attorneys' (LAFA) memorandum number 20134301F

On September 13, 2013, the IRS released the final "repair" regulations (T.D.9636) governing

Generally, an employer is required to withhold social security and Medicare taxes from employees' wages

In general when a U.S. individual or corporation transfers an intangible asset to a foreign corporation, income is to be recognized by the U.S

Generally, a foreign person is subject to U.S. tax on its U.S. source income. Most types of U.S. source income received

In the early morning hours of Jan. 1, 2013, the Senate, by a vote of 89-8, passed H.R.8, the "American Taxpayer Relief Act"

WEBINAR - One year post Wayfair decision

The Programme of Work (‘PoW’) adopted by

In general, there are 3 types of acquisitions from a tax perspective

Case Law 1: Greaves Travel India Pvt. Ltd v. ACIT - ITA No. 6703/Del/2016

Post the release of The Taxation Laws (Amendment)

Key decisions taken by GST Council are summarized below:

Case Law 1: Rupesh Rashmikant Shah v. UOI – WP No. 2902 of 2016 (Bom HC)

Applicability of Corporate Social Responsibility (CSR)

In line with the continuous efforts of the present government

The Union Government through Central Board of Direct Taxes (‘CBDT’)

Case Law 1: ITO v. M/s. Metals Russia India Pvt. Ltd. - ITA No.108/Del/2014

To pull out the Indian economy from the current slump

Case Law 1: M/s. Knight Frank (India) Pvt Ltd v. ACIT - ITA No. 2842/Mum/2017

The Changing Tax and Regulatory Environment

MCA notified the last date of filing of form NFRA – 1

The Central Board of Direct Taxes

Govt of India, Ministry of Finance

Case Law 1: M/s. Mubea Automotive India Private Limited v. ITO – ITA No. 731 & 6869/Mum/ 2017

Gemological Institute of America Inc Vs. ACIT - ITA No. 1138/Mum/2015

MCA notifies amendment to National Company Law Tribunal rules

With the elections providing a thumping majority to the ruling dispensation and with the union budget

The India Union Budget, presented on July 5, 2019 is the first budget

Case Law 1: CIT v. SI Group-India Limited – ITA No. 447 of 2017 (Bom HC)

During last five years, world output grew at 3.6% in 2014 and again in 2018.

On June 12, 2019, the Union Cabinet approved the ratification of the Multilateral Instrument (‘MLI’).

Case Law 1: Organon India Limited v. ACIT - ITA. No. 1335/KOL/2010

The much-awaited Union Budget 2019-20 is to be presented on July 5, 2019.

On June 12, 2019, the Union Cabinet, chaired by the Prime Minister Shri Narendra Modi

Case Law 1: Bekaert Industries Private Limited v. DCIT - ITA No.146 & 171/Pun/14

The assessee, a resident ‘but not ordinarily resident’ in India

KNAV Global Credentials 2019

MCAI notifies amendments to Ind AS to align with IFRS updates

Case Law 1: PCIT v. NEO Sports Broadcast Pvt. Ltd. - ITA No. 1487 of 2018 (Bom HC)

The Securities and Exchange Board of India (‘SEBI’) in its recent circular dated May 8, 2019 has

“There’s no accounting for taste” is an idiom often attributed to the medieval age,

Case Law 1: PCIT v. M/s Pfizer Limited - ITA No. 1731/2016 (Bom HC)

Central Board of Direct Taxes’ Committee provides recommendations on profit attribution to a Permanent Establishment

Income received by a UK entity for providing consultancy services to the Indian entity would be taxable

India Market Update for the quarter ended March 2019

This alert summarises key changes made to the Income Tax Return (“ITR”) forms of AY 2019-20 vide Notification No. 32 / 2019 dated April 01, 2019 (“Notification”) issued by the Central Board of Direct Taxes (“CBDT”).

MCAI notifies new standard on leases – Ind AS 116 effective April 1,2019

ITES services involving skill-Based research and analysis to be characterized as KPO services. Charging of interest on delayed AE-receivables amounts to an independent international transaction requiring separate benchmarking.

The Central Board of Direct Taxes (‘CBDT’) vide press release dated March 15, 2019 announced that a Bilateral Competent Authority Arrangement (‘BCAA’) for exchange of country by country reports (‘CbCR’) along with Inter-Governmental agreement between India and the United States of America has been finalized and will be signed on or before March 31, 2019.

MCA amends Significant Beneficial Owners Rule - Impact: All reporting entities in India

The provisions of section 68 get triggered when the assessee fails to provide reasonable justification and explanation for

KNAV Thought Leadership has started an initiative to publish a monthly newsletter dedicated to transfer pricing updates and

Is revenue activism on retrospective applicablity of GAAR the way ahead?

Ministry of Corporate Affairs vide its notification dated 21st February 2019 has come up with the Companies (Incorporation)

Family businesses, in themselves,

The Finance Act, 2012 introduced clause (viib) to the section 56(2) of the Income tax Act, 1961 ('the Act') as an anti-abuse provision to

In this edition of our thought leadership publication, we have tracked the progress of some significant cases by the appellate

Calcutta High Court dictates

KNAV Thought Leadership has started an initiative to publish a monthly newsletter dedicated to transfer pricing updates and

KNAV's Thought Leadership team has prepared a summary of the direct and indirect tax perspective.

In this edition of our thought leadership publication, we have tracked the progress

Revised ECB norms have liberalised the foreign currency loan regime and can give a much needed kick to India Inc’s future ....

Relief to startups from angel tax under section 56(2)(viib) of the Income Tax Act, 1961 subject to certain conditions

In this edition of our thought leadership publication, we have tracked the progress

In this edition of our thought leadership publication, we have tracked the progress of some

There is no bigger challenge for an employer than conflicting interests between its employees..

In this edition of our thought leadership publication, we have tracked the progress of some

In this edition of our thought leadership publication, we have ....

Every registered person under goods and service tax (‘GST’) law, whose turnover during a financial ...

In this edition of our thought leadership publication, we have tracked the progress of some...

The GST Council approved the new return formats and

In this edition of our thought leadership publication, we have

The Indian corporate scenario is abuzz with activity surrounding

In this edition of our thought leadership publication, we have tracked the progress of some significant cases decided by the appellate forums across the country along with important press releases issued by the Central Board of Direct Taxes....

Don’t you think that people these days are professionally qualified, but financially illiterate?...

The Reserve Bank of India (RBI) with the focus on integrating the foreign direct investment....

The implementation of the Goods and Service Tax and The Insolvency and Bankruptcy code (“IBC” or “the Code”) have been touted as ....

In a case where there is no agreement or arrangement between the assessee and its associated enterprise ('AE') for incurring advertising, ..

Education Cess ('EC') and Secondary and Higher Education Cess ('SHEC') payable on taxable services were abolished effective from June 1, 2015....

The quarter had over 229 private equity/venture capital investments rounding up to a value of USD 3.24 bn. Some notable deals include..

In his late evening comment, Jaitley had this to say, ”Step by step, in every budget, I have been putting surplus money in the hands of the middle-class taxpayer....

The quarter had over 214 private equity/venture capital investments rounding up to a value of USD 5.3 bn. Some notable deals include:...

In a case where the assessee was rendering software development services....

On Friday, December 15, 2017, the House and Senate conferees jointly released a conference...

The ASB has replaced the audit standard known as SSAE 16 witha new standard (known as SSAE 18)...

In this edition of our thought leadership publication, we have tracked the progress of some significant cases.

Professional service firms need to recognise that you don’t need to compete to grow; what you need is...

We are pleased to present to you the KNAV India Market Update for the quarter ended September 2017....

International transactions meeting common portfolio must be aggregated for the purpose of benchmarking the

Unless there is a high degree of comparability between the controlled transactions and uncontrolled transactions..

Case law 1: M/s. Marico Ltd. Vs. Assistant commissioner of income tax (ITA No. 8713/Mum/2011)

No royalty addition could be made to the income of the assessee since the assessee purchased 80% of the products produced by its associated

Value v/s price....

In respect of loan given in foreign currency, LIBOR rate should be the basis for calculation of interest rate;

The guideline public company method (“GPCM”) under the market approach of valuation, uses multiples developed

Bridging the GAP between Indian GAAP and Ind AS – emphasis on AS-10 and others...

Key drivers for M&A

This update includes an analysis of private equity/venture capital investments and the key M&A deals in the quarter ended June 30, 2017..

The Central Board of Direct Taxes (‘CBDT’), vide notification number 46/2017, made amendments to the Safe Harbour Rules (‘SHRs’) issued in September 2013. The safe harbour programme issued in...

Services rendered by the associated enterprise (‘AE’) cannot be considered as stewardship services if such services add economical/commercial value ....

The Advance Pricing Agreement (‘APA’) programme has been operational in a number of countries and was launched in India in the year 2012. The primary goal of such a programme is to provide

Back in July 2014, FEMA updated the valuation guidelines and mandatorily required the use of internationally accepted

Tested party taken by the assessee cannot be disregarded by the transfer pricing officer (‘TPO’) just because it is a foreign entity.

This update includes an analysis of private equity/venture capital investments

Synergy is the increase in value that is generated by combining two entities to create a new and more valuable entity. It is that magic ingredient allowing acquirers to pay billions of dollars in premiums

When the sales between two entities exceeds 20% of total sales of the selling entity

Transaction of buy-back of shares resulting from the investment in shares cannot be treated as a loan transaction and resultantly notional interest

Contingent considerations are typically employed in transactions to bridge the valuation gap between buyer and seller arising

Guiding principles for determination of Place of Effective Management (‘PoEM’) of a company

The Economic Survey 2015-16 had predicted the Indian economy to register the GDP growth rate in the range of 7% to 7.75%. The economy was indeed treading along that path and clocked

The Economic Survey 2015-16 had predicted the Indian economy to register the GDP growth rate in the range of 7% to 7.75%. The economy was indeed treading along that path and clocked 7.2 % in the H1- FY 2016-17. Post the demonetisation.

Due diligence is a process by which all the relevant information to making a decision on a particular transaction comes to light!

The provisions of Chapter X-A of the Income Tax Act, 1961 relating to General Anti-Avoidance Rule will come into force from 1st April 2017

Traditional approaches to capital budgeting, such as discounted cash-flows (DCF), cannot capture entirely the project value, for various

When certain standard services are provided to the assessee, which may even require use of certain equipment, the consideration paid in respect of

In this report, KNAV has analyzed the state of global and Indian M&A markets from the perspective of the dealmakers, including insights on their overall objectives, outlook, challenges and other key factors influencing

On factoring in the notional interest calculated with respect to overdue receivables from the associated enterprises (‘AE’), addition cannot be mad....

The utility of valuation is no longer confined to intricate aspects relating to mergers

This update includes an analysis of private equity/venture capital investments and the key M & A deals in the quarter ended December 31...

Multinational, multi-business companies often have complicated structures, with intercorporate investments (i.e., investments in other companies) across various

While using the internal comparable price (‘CUP’) method, one cannot take a transaction between another associated

In a case wherein one company has been held to be incomparable to another company in a particular judicial precedent, it does not mean that

Case Law 1: Copal Research India Pvt. Ltd. Vs. DCIT (ITA No. 7079/Del/2014) Companies engaged in knowledge processing outsourcing (‘KPO’) busine

In any business valuation the subject matter being valued is the ‘business along with its operational net assets’.

The quarter had over 326 private equity/venture capital investments rounding up to a value of US$ 2.43 bn. Some notable deals include

Acquisitions are motivated by various factors some of them being operating synergies with existing businesses, foray into new business segments, as a part of a turn-around strategy etc. However, many a time acquisitions are

The spread of value added tax (‘VAT’) and goods and services tax (‘GST’) has

The concept of marketability centers on the ease with which the stockholder

The transfer pricing officer (‘TPO’) shall determine the arms’ length price (‘ALP’) based on the factum of the receipt of service and not on

Scheduled commercial banks, insurers/insurance companies and non-banking financial companies will be faced with unique challenges on adopting Ind AS in accordance with the phased road map laid down by the

This thought leadership paper provides insights on the concept of beta in valuation.

The amount that a buyer pays to acquire control of a company typically exceeds the current market value

Private equity/venture capital (‘PE/VC’) firms invested US$3.96 bn in the quarter ended June 2016, this update includes an analysis of PE/VC investments. We have also analyzed some key mergers & acquisitions

The income approach is one of the common ways of determining the value of a business by considering expected returns on an investment

Case law 1: Shri Soundarrajan Parthasarathy Vs deputy commissioner of income tax (ITA Nos. 335 & 209/MDS/2016)

Loan transactions – interest rate must be based on economic and market factors affecting the currency and data available for debt issuances of the currency in which loan has to be repaid rather than foreign currency or

Assessing Officer (‘AO’) barred from rejecting the bonafide quotation as a valid input and resorting to unscientific and unrecognized methods for

Sale of shares of an Indian company by a nonresident to a non-resident under group reorganization is not taxable in India

First Blue Home Finance Ltd. Vs. DCIT (ITA No.3072/Del/2013)

KPO services are not comparable to BPO services for identifying comparables for benchmarking an international transaction & determining the ALP.....

Taxation of dividend declared by foreign company is outside the ambit of Section 9 of the Income tax Act, 1961 ("the Act")

Lower authorities are bound to follow the order of the Hon'ble Tribunal. Blatant failure to do so could attract contempt of court proceedings.

A total of US$ 1.65bn invested across 134 transactions in the quarter ended June 2015. Highest traction was in the technology/ internet sector with the Ecommerce sector leading with a total of 30 investments

Agency service provided by the foreign entity cannot be considered as consultancy or technical service and no TDS is to be deducted on the same.

Agency service provided by the foreign entity cannot be considered as consultancy or technical service and no TDS is to be deducted on the same.

Loans given to wholly-owned foreign subsidiaries out of interestfree funds needs to be bench-marked at LIBOR as it falls within the ambit of 'International Transaction'.....

The appropriate ALP for guarantee commission in respect of corporate guarantee given on behalf of AE and rate of interest charged for loan advanced to the wholly owned subsidiary may be taken at 0.5% an....

This budget has signalled the Government's clear intent to move forward with fast paced reforms to bring India to its earlier growth rate trajectory of 8-8.5%.

ITAT deletes the TP adjustment, supporting assessee's Internal TNMM carried out on the basis of functional similarity rather than product similarity as essential for applying TNMM.

On October 10, 2014, the Bombay High Court had pronounced the ruling in case of Vodafone India Services Private Limited ("Vodafone") bringing a big relief to the UK-based mobile service

Payments of incidental services for installation and commissioning of machines are not liable to be tax as fee for technical services

If services relating to industrial, commercial or scientific experience do not involve imparting of know-how or transfer of any knowledge, experience or skill, then

Consideration received for furnishing technical services, would not be treated as 'royalty' under DTAA of India & Austria. Consideration received for

Fee received for "foreign exchange deal matching system services" constitutes "royalty" under Article 12 of India-UK DTAA & s. 9(1)(vi) of the ...

Case Law-Reuters Transaction Services Limited Vs DDIT (ITA NO. 6947/MUM/2012 and ITA NO.7211/MUM

This budget has signalled the Government's clear intent to move forward with fast paced reforms to bring India to its earlier growth rate trajectory of 8-9%. The new Government has had just about 1 ½ months to put togeth....

Case law - Nortel Networks India International Inc vs. DDIT (Delhi - Trib.) Profits attributed on estimation basis to the PE constituted out of the transactions between associated enterprise

The assessee is engaged in the business of advertising, communication, publicity and merchandise, including undertaking market research, planning and providing consultancy services

Case law - Bharti Airtel Limited Vs. Addl. Commissioner of Income Tax [I.T.A. No.: 5816/Del/2012]

A transaction such as a corporate guarantee which has no bearing on profits, incomes, losses or assets of the enterprise is not an 'international transaction' u/s 92B(1) and not subject to transfer pricing.

The international transactions entered into by the assessee with its Associated Enterprises ("AEs") were referred to the Transfer Pricing Officer

Given the fact, that the total quantum of transfer pricing adjustments made during FY 2012-13 were INR 70,016 Crores,

In a quest to give a major impetus to the investment climate in the country

Khozema Anajwalla Profile

Work on a variety of assignments

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