Non-residents will have to pay tax in India if transactions exceed ₹2 crore
IANSMay 6, 2021, 17:03 IST
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Non-residents undertaking
transactions with Indian parties will trigger taxability under the domestic law in India even if they do not have physical presence in the country and operate digitised businesses.
The
Central Board of Direct Taxes has notified new rules for operation of business by non-residents under which any transaction over ₹2 crore (apex $27,100) in respect of any goods, services or property carried out by them with any person in India including provision of download of data or software in India, will attract tax in India.
India on Monday notified a revenue threshold of Rs 2 crore and a limit of 300,000 users for non-resident technology firms such as Google, Facebook, Netflix, to pay tax in India under new or revised bilateral tax pacts. This is part of the Significant Economic Presence (SEP) principle, which was introduced in the Finance Bill 2018-19, and which widened the scope of ‘business connection’ to include provision of download of data or software, if aggregate payments from such transactions exceed a prescribed amount, or if a multinational s interaction is with a prescribed number of users. “…the amount of aggregate of payments arising from transaction, or transactions of goods, services or property carried out by a non-resident, with any person in India…including download of data or software in India during the previous year, shall be Rs 2 crore…the number of users with whom systematic and continuous business activities are solicited or who are engaged in interaction shall
Income Tax Dept sets threshold for significant economic presence
May 03, 2021
Appeal to Commissioner can be filed within the time provided or May 31×
Rules prescribing thresholds for SEP provisions would have limited impact, say experts
The Income Tax Department on Monday notified a threshold for Significant Economic Presence (SEP). This will come into effect from April 1, 2022. However, experts are not much convinced about the new threshold
According to a gazette notification dated May 3, for the thresholds “the amount of aggregate of payments arising from transaction or transactions in respect of any goods, services or property carried out by a non-resident with any person in India, including provision of download of data or software in India during the previous year, shall be two crore rupees.” Also, the number of users with whom systematic and continuous business activities are solicited or who are engaged in interaction shall be three lakhs, the notification mentioned
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The Finance Act, 2020 came into force on 1st January 2021. A
major objective of the Finance Act, 2020 is to generate increased
revenue, provide tax incentives to stimulate economic growth,
streamline existing tax incentive regimes, and to clarify
ambiguities in various laws. The Finance Act, 2020 (coming on the
heels of the Finance Act, 2019) is the second of such statutes in
two consecutive years to be enacted by the Buhari administration.
These statutes allow the Federal Government to undertake targeted
amendments of several laws at the same time to achieve its fiscal
Budget 2021: Tax relief high on tech sector s wishlist this year
Given the strategic importance of the technology sector, it is important to ensure that the government continues to support this sector through favourable policies
The current COVID-19 pandemic has further accelerated the rate of technology adoption across sectors
India is one of the biggest and fastest growing digital markets in the world. The number of internet subscribers in India currently stands at around 740 million, and an estimated 60% of the population is expected to use the internet by 2022, and by 2025, India s digital economy could contribute 18-23% to overall economic activity.
The current COVID-19 pandemic has further accelerated the rate of technology adoption across sectors, making it imperative for government, corporates, and consumers to rely on digital channels for accessing goods, services, information, and entertainment.