Trade & Tax Laws

FEMA

   UNDER FEMA ACT, 1999

FEMA (Foreign Exchange Management Act, 1999) designed for promoting the development as well as maintenance of the Indian foreign exchange market in an orderly manner. At present, FEMA can be applied across India as well as across all the branches, agencies and offices outside of India controlled or owned by an individual who is an Indian resident.

Following are the compliance:

  1. Annual Return on Foreign Liabilities and Assets (FLA Return)

Please note:

If the Indian company does not have any outstanding investment in respect of FDI as on end of the reporting year, the Company need not submit the FLA Return.

Similarly, if the Indian company has not received any fresh FDI in the latest year but the company has outstanding FDI, then that company is still required to submit the FLA Return every year by 15 July.

 

  1. Annual Performance Report (APR)

Please note:

Annual Performance Report (APR) is required to be certified by the statutory auditor of the Indian party.

Certification of APRs by the Statutory Auditor or Chartered Accountant shall not be insisted upon in the case of Resident Individuals and self-certification can be accepted in such case.

      3. External Commercial Borrowings (ECB) under Foreign Exchange Management Act, 1999

 

     4. Single Master Form

 Please note:

With effect from September 01,2018 Subsumes of FC-GRP, FC-TRS, LLP-I, LLP-II, CN, ESOP, DI, DRR forms into one single master form.

 

CUSTOM

Custom duties are levied on nearly all goods that are imported into the nation. While export duties are levied on goods as specified by the Second Schedule, import duties are not levied on certain items like fertilizers, food grains, lifesaving drugs etc. Custom duty can be classified into the following types:

  • Basic Customs Duty: This duty is imposed on the value of goods at a specified rate as it is fixed on an ad-valorem basis. After being amended time and again, it is currently regulated by the Customs Tariff Act, 1975. The Central Government, however, holds the rights to exempt specific goods from this tax.
  • Countervailing Duty: CVD or Additional Customs Duty is levied on imported goods that fall under Section 3 of the Customs Tariff Act of 1975. It is the same as the Central Excise Duty which is levied on similar goods that are produced in India.
  • Education Cess: The cess used to be levied at 2% and an additional 1% of the aggregate of customs duties.
  • Protective Duty: This duty is imposed in order to shield the domestic industry against the imports at rates that are recommended by the Tariff Commissioner.
  • Safeguard Duty: As the name suggests, this duty serves as a means of safeguarding the rise in imports. Sometimes, if the government feels that a rise in imports can damage the existing domestic industry, it may levy this duty.
  • Anti-Dumping Duty: This duty is based on the dumping margin, i.e. the difference between the export price and the normal price. It is only imposed when the goods that are imported are below the fair market price.

 

GST

As a significant step towards the reform of indirect taxation in India, the Central Government has introduced the Goods and Service Tax (GST). GST is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India and will subsume many indirect taxes levied by the Central and State Governments. GST will be implemented through Central GST (CGST), Integrated GST (IGST) and State GST (SGST).

Four laws (IGST, CGST, UTGST & GST (Compensation to the States), Act) have received President assent. All the States & UT expected to pass State GST Act, by end of May 2017. GST law is expected to take effect from July 1, 2017.

GST is the biggest tax-related reform in the country bringing uniformity in the taxation structure and eliminating the cascading of taxes that was levied in the past. The GST Council meets from time to time to revise the GST rates for various products.

GST stands for Goods and Services Tax. It is classified into three types:

 

CGST –Central GST

SGST –State GST

IGST –Integrated GST

 

GST Tax Rates on some common items:

 

 

FOREIGN TRADE POLICY

Foreign trade policies are government actions, especially tariffs, import quotas, and export subsidies, designed to increase net exports by promoting exports or restricting imports. The Government, through the implementation of the policy, seeks to develop the manufacturing and service sectors.

Various government authorities such as Central Board of Indirect Taxes (CBIC), Directorate General of Foreign Trade (DGFT), Ministry of Environment, Forest and Climate Change etc.

 

WE ASSISTING OUR CLIENTS IN RELATION TO FOLLOWING COMPLIANCE WITH LEGISLATIVE AND REGULATORY FRAMEWORK UNDER CUSTOMS AND FOREIGN TRADE POLICIES.

 

  • Advisory assistance in relation to Customs valuation including interaction with Special Valuation Branch of Customs, classification related disputes, license requirements such as for SCOMET items, etc;
  • Assistance in relation to HSN classification of products based on their functionality and technical description;
  • Assistance in relation to various import-export procedures including post-import audit and pre-notice consultation process;
  • Assistance to Companies in set up/demerger/exit of units located in Special Economic Zone (SEZ), Export Oriented Unit (EOU) etc;
  • Strategic consultation in relation to investigations conducted by the Directorate of Revenue Intelligence;
  • Assistance in relation to filing of applications for obtaining export incentives such as Service Exports from India Scheme (SEIS) and Merchandise Exports from India Scheme (MEIS) under the Foreign Trade Policy;
  • Assistance in Brand rate fixation for claiming duty drawback where all industry rate of drawback is not available;
  • Obtaining/ Regularisation of various licenses under Advance Authorisation and Export Promotion Capital Goods (EPCG) schemes;
  • Assistance in undertaking compliances under various Free Trade Agreements of India;
  • Assistance to various government authorities such as Customs, DGFT and SEZ for developing policies to ensure trade facilitation and ease of doing of business.

 

 

INCOME TAX

 

INDIAN TAXATION SYSTEM

The tax structure in India is divided into direct and indirect taxes. The implementation of both the taxes differ.

 

  • DIRECT TAXES are levied on taxable income earned by individuals and corporate entities, the burden to deposit taxes is on the assesse themselves.
  • INDIRECT TAXES are levied on the sale and provision of goods and services respectively and the burden to collect and deposit taxes is on the sellers instead of the assesse directly.

 

DIRECT TAX

A.Income Tax Act:

An income tax is a tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations. Income taxes are a source of revenue for governments.

 

BWealth Tax Act:

The Wealth Tax Act was enacted in 1951 and is responsible for the taxation related to the net wealth of an individual, a company or a Hindu Unified Family. The simplest calculation of wealth tax was that if the net wealth exceeded Rs. 30 lakhs, then 1% of the amount that exceeded Rs. 30 lakhs was payable as tax. It was abolished in the budget announced in 2015. It has since been replaced with a surcharge of 12% on individuals that earn more than Rs. 1 crore per annum. It is also applicable to companies that have a revenue of over Rs. 10 crores per annum. The new guidelines drastically increased the amount the government would collect in taxes as opposed the amount they would collect through the wealth tax.

 

CGift Tax Act:

The Gift Tax Act came into existence in 1958 and stated that if an individual received gifts, monetary or valuables, as gifts, a tax was to be to be paid on such gifts. The tax on such gifts was maintained at 30% but it was abolished in 1998. Initially if a gift was given, and it was something like property, jewellery, shares etc. it was taxable. According to the new rules gifts given by family members like brothers, sister, parents, spouse, aunts and uncles are not taxable. Even gifts given to you by the local authorities is exempt from this tax. How the tax works now is that if someone, other than the exempt entities, gifts you anything that exceeds a value of Rs. 50,000 then the entire gift amount is taxable.

 

What is Income Tax Slabs?

In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab.

Such tax slabs tend to undergo a change during every budget.

1.INCOME TAX SLAB RATE FOR INDIVIDUALS

1.1 Individual (resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year:

1.2 Resident senior citizen, i.e., every individual, being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:

1.3 Resident super senior citizen, i.e., every individual, being a resident in India, who is of the age of 80 years or more at any time during the previous year:

Plus:

Surcharge: 10% of tax where total income exceeds Rs. 50 lakh

15% of tax where total income exceeds Rs. 1 crore

Education cess: 3% of tax plus surcharge

2.INCOME TAX RATES FOR HUF/AOP/BOI/ANY OTHER ARTIFICIAL JURIDICAL PERSON:

Plus:

Surcharge       10% of tax where total income exceeds Rs. 50 lakh
15% of tax where total income exceeds Rs. 1 crore

Education cess:      3% of tax plus surcharge

3.TAX RATE FOR PARTNERSHIP FIRM:

A partnership firm (including LLP) is taxable at 30%.

Plus:

Surcharge       : 12% of tax where total income exceeds Rs. 1 crore

Education cess: 3% of tax plus surcharge

 

4.TAX SLAB RATE FOR DOMESTIC COMPANY:

A domestic company is taxable at 30%. However, tax rate is 25% if turnover or gross receipt of the company does not exceed Rs. 50 crore.

Plus:

Surcharge: 7% of tax where total income exceeds Rs. 1 crore

12% of tax where total income exceeds Rs. 10 crore

Education cess: 3% of tax plus surcharge

5. TAX RATES FOR FOREIGN COMPANY:

A foreign company is taxable at 40%

Plus:

Surcharge: 2% of tax where total income exceeds Rs. 1 crore

5% of tax where total income exceeds Rs. 10 crore

Education cess: 3% of tax plus surcharge

 

 

INTERNATIONAL TAXATION LAW

We are able to provide you with seamless advisory and compliance solutions in International tax.

We, LEGALLANDS LLP, The Law Firm having Transfer Pricing team with its rich experience and demonstrated capabilities offers comprehensive solutions in areas such as Transfer Pricing Documentation, Transfer Pricing assessments and other value added services such as Benchmarking services, Drafting of Inter-company agreements etc.

 

Following are the compliance to be done under Transfer Pricing:- 

  • Creating Transfer Pricing Documentation
  • Representing before Transfer Pricing Authorities
  • Other Value Added Services relating to:
  • Planning Opportunities to achieve lower taxation for the group
  • Assisting clients in Benchmarking vis a vis other players in the same industry
  • Drafting of Inter-Company agreements, review of documentation etc.
  • Advising foreign clients on tax structuring and avoidance of Double Tax Avoidance Agreement (DTAA);
  • Cross-Border Debt Recovery cases & proceedings;
  • International Due Diligence including business set-up / project viability report and market surveys
  • Taxation of Ex-Patriates and Non-Residents Indians;
  • Registration and obtaining tax exemptions under Section 12-A & 80-G of Income Tax Act,1961 for not for profit organisations;
  • Accounting Advisory and System Development Services including Designing and implementation of accounting system and MIS reports (Designing and Appraisal)

 

 

LEGALLANDS LLP consistently endeavours to get together the necessities and prerequisites of its customers and demonstrate to be a beneficiary aid as and at whatever point required. To bring more subtleties on same, contact our client assistance official today at connect@legallands.com

 

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