Insights
September 7, 2015

POSITIVE SIGNAL TO FIIS AND FPIs – NO MAT PRIOR TO APRIL 1, 2015

Background Section 115JB of India’s Income-tax Act, 1961 (the “IT Act”), provides for taxation of those companies who, despite showing high profits in their books and paying substantial dividends, do not pay or pay only marginal taxes, by taking advantage of the various tax concessions and incentives available under the IT Act.  Minimum Alternate Tax…

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Foreign Investment Private Equity and Venture Capital Tax
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September 1, 2015

POLICIES AND TRENDS IN INDIA’S SOLAR ENERGY SECTOR

Introduction In its Union Budget, 2015, the Indian government has set an ambitious target of installing 175,000 Megawatts (“MW”) of renewable energy by 2022, which will include 100,000 MW of solar energy, 60,000 MW of wind energy, 10,000 MW of biomass energy and 5,000 MW of small hydro energy.  This is in line with the…

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Foreign Investment Tax
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July 31, 2015

FOREIGN COMPANIES RECEIVING MONEYS FROM INDIAN PAYERS MAY NOT NEED A PERMANENT ACCOUNT NUMBER (PAN)

Background The provisions of section 90(2) of the Income-tax Act, 1961 (the “Act”) permit a non-resident to avail either the provisions of the Act or the Double Taxation Avoidance Agreement (the “DTAA”), whichever are more beneficial.  There are various judicial precedents propounding the principle that beneficial DTAA provisions override the provisions of the Act. However,…

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Tax
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July 10, 2015

BORROWERS BEWARE – BANKS CAN NOW TAKE OVER COMPANIES TO RECOVER THEIR DEBT

Introduction To address various issues surrounding distressed assets in the banking system, on February 26, 2014, the Reserve Bank of India (the “RBI”) issued the Framework for Revitalising Distressed Assets in the Economy (the “Framework”). The Framework, inter alia, requires lenders to compulsorily form a Joint Lenders Forum (the “JLF”) if the principal or interest…

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Banking and Finance Insolvency and Restructuring
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July 2, 2015

PRIVATE COMPANIES CAN NOW BREATHE EASIER IN INDIA

Introduction On June 5, 2015, the Ministry of Corporate Affairs, Government of India (the “MCA”) issued a notification (the “Notification”), which significantly reduces the compliance requirements for private companies under the Companies Act, 2013 (the “Act”). With these changes, corporate governance of private companies will become easier.  This update discusses the key changes. Key exemptions…

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Corporate/M&A Private Equity and Venture Capital
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June 5, 2015

INDIAN GOVERNMENT AMENDS COMPANY LAW, INTRODUCES MANDATORY SECRETARIAL STANDARDS AND A NEW INCORPORATION FORM

Introduction On August 29, 2013, the Companies Act, 2013 (the “2013 Act”) received the assent of the President of India.  Since then, 282 sections of the 2013 Act have been brought into force in three (3) phases.  Further, between March 27 and March 31, 2014, twenty-one (21) new rules were notified under the 2013 Act…

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Corporate/M&A
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May 21, 2015

CLARIFICATIONS TO INDIA’S FOREIGN DIRECT INVESTMENT POLICY

Introduction On May 12, 2015, the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India (the “DIPP”) issued the consolidated foreign direct investment policy circular of 2015 (the “FDI Policy 2015”). The circular on consolidated foreign direct investment policy is updated by the DIPP every year and captures all the…

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Corporate/M&A Foreign Investment
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April 29, 2015

SHOULD FOREIGN PORTFOLIO INVESTORS BE WORRIED ABOUT MAT?

Background Minimum Alternate Tax (“MAT”) is a tax levied under the Income-tax Act, 1961 (“IT Act”) on the book profit of a company where the overall tax paid by the company is less than 18.5% of the book profit.  Generally speaking, in the case of non-resident entities who do not have a permanent establishment in…

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Foreign Investment Private Equity and Venture Capital Tax
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April 2, 2015

CRITIQUE OF THE UNDISCLOSED FOREIGN INCOME AND ASSETS (IMPOSITION OF TAX) BILL, 2015

In his budget speech on February 28, 2015, the Finance Minister (“FM”) made it clear that black (unaccounted) money was eating into the Indian economy and this problem would have to be tackled forcefully.  While the FM acknowledged that there were limitations under the Income-tax Act, 1961 (the “IT Act”) to deal with black money,…

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Tax
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March 26, 2015

INDIA’S SUPREME COURT UPHOLDS THE RIGHT TO FREEDOM OF SPEECH AND EXPRESSION

Introduction On March 24, 2015, the Hon’ble Supreme Court of India (the “SC”) pronounced its judgment on constitutional validity of Sections 66A, 69A and 79 of the Information Technology Act, 2000 (the “IT Act”) and the Information Technology (Intermediary Guidelines) Rules, 2011 (the “Intermediary Rules”). The SC declared Section 66A of the IT Act to…

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Disputes and Arbitration Technology, Telecommunication and Media
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