• Service: Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/6/2013

India - Tax residency certificates; expatriates’ stock options taxation 

August 6: The KPMG member firm in India prepared reports on the following developments (read the August 2013 reports by clicking on the hyperlinks provided below):
  • Additional information for non-residents to provide along with their tax residency certificates - India’s Central Board of Direct Taxes issued guidance (a notification) amending the Income-tax Rules, 1962, and prescribing additional information that non-residents are to provide along with their tax residency certificates.

    Read an August 2013 report [PDF 201 KB]

  • Funds held in escrow not subject to tax levy by tax authorities - The Delhi High Court held that the Indian tax authorities cannot initiate a proceeding to demand payment (i.e., levy) of funds held in a bank escrow account when the escrowed funds are intended to be used as consideration and payment for a sale of the taxpayer’s shares. Neither the share purchase agreement nor the escrow agreement provided a contingency that would enable the taxpayer to receive funds. Thus, since the taxpayer had no interest in the escrowed funds, the Assessing Officer could not demand these funds to satisfy the taxpayer’s liability.

    The case is: AAA Portfolios Pvt. Ltd. Read an August 2013 report [PDF 201 KB]

  • Proportionate taxation of stock options of expatriate employee - The Delhi Bench of the Income-tax Appellate Tribunal held that only a proportionate value of employee stock option plan (ESOP) benefits is taxable in India—i.e., the portion pertaining to the India-specific job or activity performed by the employee.

    The case is: Robert Arthur Keltz. Read an August 2013 report [PDF 197 KB]

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