india to tax investment independently

The presence of these provisions makes the Model BIT pro-state with limited rights to foreign investors.

Furthermore, although the attempt of the Model BIT is to reduce arbitral discretion, as the discussion shows, many provisions still remain undefined and vague; thus, continue to grant significant discretion to ISDS arbitral tribunals.

Therefore, our analysis shows that India has not been quite successful in developing a model that balances investment protection with the state’s right to regulate nor in reducing arbitral discretion. In view of this, this paper suggests how these goals could be achieved by providing alternative formulations.

Indian BIT practice needs to evolve keeping the following in mind: First, India’s desire to increase foreign investment inflows, especially under government initiatives like Make in India.

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You can invest in your child’s name in instruments like PPF, certain mutual funds, ulips and traditional insurance plans, as these are entitled to tax benefit under Section 80C.

In general, under most DTAAs, profit from a direct investment in real estate is taxed in the country in which the property is located, so an NRI who purchases real estate in India will be taxed as per applicable Indian tax rates as mentioned earlier. However, the tax outcome of an investment in equity or debt can vary quite substantially depending on the country from which the investment is made.

It is for this reason that most investments into India come through a small number of jurisdictions that have preferential tax rates for investments in equity or debt. For example, much of the equity investments into India come from Mauritius and much of the debt investments into India come from Cyprus.

The scholarship need NOT necessarily be awarded by Government. ‘Cost of education’ includes not only the tuition fees but all other expenses which are incidental to acquiring education. Scholarship may have been given by Govt., University, Board, Trust, etc.

Awards by Government

All payments receive in cash or kind as an award given by the central or state governments or by a body recognized by the central government is tax free income.

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Therefore a natural course of action would have been to progressively bring the regulations at par with other asset classes,” he said.

“Instead, today, with this clarification, we have taken a step backwards. If a regressive provision such as this would have been applicable in equities, it would have discouraged retail investors from participating,” he added.

Discouraging Crypto = Discouraging Innovation

This is one of the top reason why countries around the world are taking cautious steps in Crypto taxation

Hope Indian Government hears the youth and ensures that Indian Crypto industry remains competitive ✌️#UnfairCryptoTax

— Nischal (Shardeum) ⚡️ (@NischalShetty) March 21, 2022

If you made loss in Bitcoin, you cannot set it off with profit in Ethereum.

However, the burden is now on the payee to demonstrate to the Tax Authority that it is eligible for treaty benefits, and in most cases, this will require filing a return. Some payees have the misguided impression that they only have to file a return if they have a permanent establishment in India; but, even if the India-sourced income is exempt from tax under a tax treaty, or if the Indian payer has already withheld the tax, the payee must still file an Indian income tax return.

Non-residents can choose to be governed by Indian tax law or by the provisions of an applicable tax treaty.
In order to be governed by an applicable tax treaty, non-residents must file a Form 13, “Application by a person for a certificate for no deduction/collection of tax or deduction/collection of tax at a lower rate” if seeking approval for withholding at lower rates.

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✅ How much tax free income?

As per income tax slabs for FY 2021-22, If you earn below Rs 2.5 lakhs in India, you don’t need to pay income tax. Senior Citizens above 80 years of age don’t have to pay taxes up to income of Rs 5 Lakhs.
Also if you fulfil certain conditions income up to Rs 5 Lakh becomes tax free due to application of Section 87A.

✅ How much salary is tax free in India?

As per income tax slabs for FY 2021-22, If your net taxable salary after all eligible deductions is below Rs 2.5 lakhs in India, you don’t need to pay income tax.

This means that profits may be permitted to be taken in a lower cost jurisdiction than would normally be the case and distributed from there back to the overseas headquarters. This makes complete sense when developing a business in Asia, as capital injections and investments can then be made from the lower tax jurisdiction.

The distribution of dividends back to the home domicile can also be arranged in a beneficial and less tax burdensome manner than would otherwise be possible.

Many preferred holding company jurisdictions maintain DTAAs that limit or eliminate the level of withholding taxes payable on dividends coming from subsidiary countries and going to parent companies.

Deviations and specific provisions in some of the tax treaties offer a number of opportunities for tax planning.

Mauritius has been a popular jurisdiction for establishing a holding company to route FDI into India, along with Cyprus and Singapore. India’s beneficial tax arrangement with these countries led to them becoming the top sources for foreign direct investment (FDI) into India.

It is this outcome that ultimately motivated the Indian government’s plans to revamp its respective tax treaties with them. On December 30, 2016, Singapore and India agreed on amending their DTAA for capital gain income.

With the new agreement in effect since April 1, 2017, India aims to tackle investments coming into the country through shell companies and prevent tax avoidance.

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