The Central Board of
Direct taxes (CBDT), the apex administrative body for taxation in India,
recently issued Circular 4 of 2015 (dated 26 March 2015), clarifying that
declaration of dividend outside India by a foreign company would not be taxable
in India under the indirect transfer provisions of the Indian Tax Laws (ITL)
since such declaration and payment of dividend does not have an effect of
transfer of any underlying asset located in India.
We are pleased to release an alert which highlights the above CBDT Circular.
This is a welcome clarification from the CBDT and it addresses the concern which had arisen on account of wide scope of the indirect transfer provisions. The CBDT Circular being clarificatory in nature would apply to all pending cases. This clarification is consistent with the recommendation made by the expert committee on the indirect transfer provisions of the ITL. This is also in line with the intent of the present Government to provide certainty and stability of tax regime in India.
We are pleased to release an alert which highlights the above CBDT Circular.
This is a welcome clarification from the CBDT and it addresses the concern which had arisen on account of wide scope of the indirect transfer provisions. The CBDT Circular being clarificatory in nature would apply to all pending cases. This clarification is consistent with the recommendation made by the expert committee on the indirect transfer provisions of the ITL. This is also in line with the intent of the present Government to provide certainty and stability of tax regime in India.
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