Recent International Developments in Indian Tax Landscape with respect to Indo-US Tax Treaty

A conference was held in PHD Chambers of Commerce and Industry on ‘Recent developments in Indian Tax with respect to Indo-US tax treaty’. The event witnessed the presence of distinguished personalities from CA field, Revenue department of GOI, US Embassy and Indo American Chamber of Commerce (IACC).

It was a great learning opportunity for a newbie like me. The highlight was presence of CA practitioners and Government representative on the same platform. It was a pleasure to witness both the taxmen and tax payers share their diverse viewpoints and yet agree to each other.

Mr. Aseem Chawla, Regional President, IACC, NIC addressed the event by introducing all panel members.  Mr. Sanjay Vasudeva, Senior Partner, SCV & Co. LLP led the discussion. He talked about USA being a major defence partner of India. USA has been the world’s largest economy since 1871. India is leading the world in terms of highest growth percentage in GDP. India has also improved its ranking in terms of ease of doing business (EODB) by reaching 77th spot. He also talked about major issues between India and USA: GSP, H1B1 visas and Indian e-commerce policy.

Mr Aseem Chawla introduced technical jargons brought in by US government’s Tax Cuts and Jobs Act. It included the likes of global intangible low-tax income (GILTI), base erosion anti-avoidance tax (BEAT), foreign derived intangible income (FDII) and inversions.

Mr. Vidur Puri, Partner, SCV & Co. LLP told that Section 9 of Income Tax Act, 1961 has been amended as per permanent establishment- fixed place of business. For services, 90 days presence is required to form a permanent establishment. He talked about major cases- F1,GE and Morgan Stanley

Mr. Kamlesh Varshney, Joint Secretary (TPL), Ministry of Finance enlightened about the taxmen point of view on framing laws. He told that 6 months time period is only a guidance in determining permanent establishment. He also discussed about the taxability of liaison office in case of negotiation services.

He also discussed about the major challenges ahead of permanent establishment- digitisation, equalisation levy. G20 will release a report in 2020 to come up with a new solution to digitisation. It will be based on the concepts of user contributions and market intangibles.

It was a fruitful discussion on issues regarding taxation of permanent establishment and digitisation.