Cabinet approves granting permanent residency status to foreign investors

The Union Cabinet on 31st August 2016 approved the scheme for grant of Permanent Residency Status (“PRS”) to foreign investors subject to the relevant conditions as stated under:

  1. Applicable only to foreign investors fulfilling the prescribed eligibility conditions, his/her spouse and dependents.
  2. In order to avail this scheme, the foreign investor will have to invest a minimum of Rs 10 crores, to be brought within 18 months, or Rs 25 crores, to be brought within 36 months. Further, the foreign investment should result in generating employment for at least 20 resident Indians every financial year.
  3. PRS will be granted for a period of 10 years initially with multiple entry facilities which can be renewed for another 10 years.
  4. PRS will serve as a multiple entry visa without any stay stipulation and PRS holders will be exempted from the registration requirements.
  5. PRS holders will be allowed to purchase one residential property for dwelling purpose.
  6. The spouse/ dependents of the PRS holder will be allowed to take up employment in private sector (in relaxation to salary stipulations for Employment Visa) and undertake studies in India.

The scheme is expected to encourage foreign investment in India and facilitate Make in India Programme. Under the Scheme, suitable provisions will be incorporated in the Visa Manual to provide for the grant of PRS to foreign investors.

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No Indirect recovery of tax during pendency of stay

The Central Board of Excise &Customs (“CBEC”) has vide a circular dated 4th July, 2016 directed that recovery proceedings in relation to an order of the High Court or Tribunal of a confirmed demand may be initiated only after a period of 60 days from the date of order of Hon’ble Tribunal or the Hon’ble High Court, as the case may be, where no stay has been granted by Hon’ble High Court or Hon’ble Supreme Court against the order of Hon’ble Tribunal or Hon’ble High Court. Further in case there is a stay application pending before the Commissioner (Appeals) or CESTAT for periods prior to 6th August 2014, no recovery shall be made during the pendency of the stay application. The circular would also be useful in making a uniform practice regarding the recovery of confirmed demands of indirect taxes. It may be noted that a confirmed demand for tax arises when, after the inspection of the submissions of taxpayers, an order is issued by the CBEC to pay the remaining tax.

Appropriate amendments have been made to Section 129E of the Customs Act, 1962 and Section 35F of the Central Excise Act, 1944. The said circular was issued to ensure that the assessee gets enough opportunity to appeal before the commencement of recovery proceedings in indirect taxes.

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Tax exemption on investments above fair market rate for startups

Issuing shares above market value is taxable as per Section 56(2) (viib) of the Income Tax Act, 1961 however the Central Government may exempt certain classes from tax under Section 56(2) (viib) by notification. The Central Board of Direst Taxes (“CBDT”) has vide a notification dated 14th June, 2016 notified the much-awaited tax exemption on investments above fair market rate for startups (more…)

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India and Mauritius sign the Protocol for amendment of the Convention for DTAA

The Indian Government has on 10th May 2016 amended the India-Mauritius treaty for the Avoidance of Double Taxation (“DTAA”) and the prevention of fiscal evasion with respect to taxes on income and capital gains between India and Mauritius. (more…)

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Amendment to the provisions relating to Quoting of “PAN”

In order to collect information for certain types of transactions from third parties in a non-intrusive manner, the Income-tax Rules require quoting of Permanent Account Number (“PAN”) where the transactions exceed a specified limit. In order to bring a balance between burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value, the Government has enhanced the monetary limits of certain transactions which require quoting of PAN. (more…)

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