tax

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Background

The Income-tax Act, 1961 (“IT Act”) contains various machinery provisions which enable tax authorities to recover tax dues from taxpayers. When payments are made to non-residents that are chargeable to tax under the IT Act, payers (both resident and non-resident) are obligated to withhold tax at applicable rates prior to remittance of funds. Typically, no such obligation arises if the payments are not subject to tax in India. Thus, there are times when taxpayers don’t withhold tax on payments, believing they should not be subject to tax under the IT Act. However, if the Indian tax authorities take a different view, they may initiate proceedings under section 201 of the IT Act against such taxpayers, i.e., the person responsible for withholding taxes.Continue Reading Orders for default in withholding tax on payments made to non-residents must be passed in a reasonable time

CBDT exempts GIFT City aircraft leasing cos from withholding on dividend distributed inter se , but is it enough?

Despite India being the third[1] largest domestic aviation market in the world, a majority of the aircrafts in the country (more than 70% approximately) are procured through lease arrangements, with most of them being provided by overseas lessors. Airline companies do not have the financial wherewithal to purchase aircrafts and hence, are forced to take them on lease. However, since the aircraft financing industry is at a nascent stage in India and considering the risks involved, new players are unwilling to enter the business. While leasing aircrafts helps to manage the liquidity position of aircraft operating companies, it comes at a heavy cost and significant financial risks for aircraft operating companies and creates huge trade imbalance for the country.Continue Reading CBDT exempts GIFT City aircraft leasing cos from withholding on dividend distributed inter se, but is it enough?