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Class Notes
(June & Dec 2023)

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is of
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charge, under an Act.

2) types by faxes:1) DIRECT TAX

2) Indirect Tax

3)I ndian constitution;

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1) 3 list cunion. State, cancurrent

2) C.NO 82 of list I

3) made by Parliament

4) Source of
income tax laws,
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2) Income Ita Ruler, 1982

3) Finance Act

4) circular, potification
① Judgements
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·
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-

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xx2
Tax
+ Surchase (if any) XX22

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> MR Cif 923) -

XXL

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↑
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--

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Tax payable -

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2
3
⑬3 B
R
EB ⑭

33
B B 3 Y

I I 3 M

2I ③
 Rule
Income of P.Y is taxable in A.Y.

to General Rule
->
case-1

Income of non-resident shipping business

2) Income of person leaving India permanently

3) Income of discontinued business

4) Income person trying to transfer his

a
asset for avoiding the

5) AP/Boll ATP formed for particular

purpose.

Case-2
-

Cases where Income taxable

is in the year in
which it comes to the notice of AO

-> Indian Black money undisclosed Income

& 2
B M

21 B

I 22

3
3

23
3 M
93 M
⑪12

⑧ LTC4 112.

, 112

1112
example
-

HI
Dividend SURO

See
Case 148 OI TI
Tax on

44 Dir

I 20 Lakh GOL non -

-

I now so you loy loy

# For 802 1Sar 15x 15%

IV 210 300 a'yor 15% 154

X 806 2.2018 3CV 15% 25%

VI 3er 200 720cr 15%25%

XII 1,4012 6er 7400 15437%

 HWE
↳ A OPI B01IA JP.
2324

#AOP consisting only co- SOLNIC, >50LCTE

upto =

10%, <I9r=15%
20GM 202N
 1920
GO IN

202

202N

9024
 (MMR) Rate
Ammarginal
#
Highest Slab Rate
of Individual 30y
-

I
Highst Slab Rate Individual -

37y
t
my cess
-
4y
-

-
42.744Y
 Ecrup to lovely
10
V
Capital Receipts VIS Revenue Receipts

Revenue Receipts Capital Recipes

↓

Receipts
i
from ordinary
Capital other
course of bunniess
Gains Receibes
↓ -
↓
Taxable Taxable Generally
Not taxable
↑
 of
case society
roth co-op215%
#FER
PRICING

into force?
-law
came

VG Swiss Ad Sale of VG INDIALtd. (India]

(Switzerland) Chips -
X Tax Rate-30%
Tax transaction 201
Heaven Country
-

ALD1EmY 8L
=

(ax Rate & 5%]

↓
I Purchase SoL =

Sak price 201

Profitdecreaseby
Profit increase by 12,00,000
12,00,00 x30%
x 5%
Add Tax = 12,00,00
Tax Savez 3,60,000
60,000/-

Net Benefit 3,60,000

=
- 60,0

3,00,000 -
#
 ↑

transaction should be

in the nature oft

1) Purchase, Sale
lease property
of

2) Provision of Service

3) lending, Borrowing
of money

2) Allocation of Cost (EXP

5) Transaction which
effects profit.
-relative of Individual
 Huf Member/Relative as member
d Ere Bltd
-
Control -
Contol
to

by X
VG Associate -
cFirms7Y-
51. X 2
ml ofcupmethod
-

Azu
VG Led Ludial VG LdLuSA)
Sale= sc units
9400p.u

sale-yo unit
AEX

&900pU

PC Ltd (Jaban]

formation
a

1) Sal to 44 Lellus) on Basis,

CIF sale to py

Ltd on FOB Basis. Lost as Ins4 Freight E501-PU

=

2) Y4Ld Cindia) gives nearrancy to V4Hd(us) for

6 months butnot to pultd. Cost

of warranty:

Zol-pu Der Annum

Since
3)
sale ygLd(us)
to is high in quantity,
discount by E60/- per is
unit to be given
Solution
-
-
-

Price Charge in comparable. v. Price 900

-nal
Difference

FOB & LIF 50

*

warranty (to
x() 35
#

Discount
->
60
- -

ALP 925
Increase in Income (925-400] x5000 26,25000
=

Resale Price method

-

v4 US ↳d. VG India Le Myctd

Purchase sold
& 101001000 12,00,000

GP Margin = 20%

winformation

Y4 us 4d., has a brand value which gives benefitely.

of sale price.
 solution
-
-

Resale Price outsider

to
of item purchased from A2=1,00,000

e) Normal GPMargin (19,00,00 x20%) =(2,40,0w)

-000

C Functional Differences Ad5 12,000

↑

[11000x14] -

n
9,72,000

Increase in Income of x4 India Le 10,00,00

(w)
28,00
-
 Section 92CE Secondary Adjustment

Adjustmentin T-P

Primary Adjustment Secondary Adj

N

·
Increase in the Income ·

Treating Excess money

as deemed loan and
due ACDadjustment Interest
to
Calculating on

such excess money.

Excess money- ALP

5 Actual T. V

Cases where Secondary has

Adjustment to be made

Where primary Adjustment of TP has been:

·
made sno-moto by assessee in Rol

·
made
by Arl Auth.
Appellate

·
Determined by APA

·
made due to safe harbour Rules.
 Excess Money Repatriation
excess available As
with Shall be
money
repatriate to India from As with in 90 days

from!
a) Date of order (if Primary Ads done by so]

b) Due Date of Ral Cotter Casy)

# ItNot reputriated with in 90 days,

excess money shall be treated as deemed loan

to A3 and InterstIncome on such advance

shall be computed from Next day of!

Date order
of
·

·
Due date of Rol
#Rate Adjustment
for Secondary

*
International transaction IfInternational trans

Is denominated in INR. IS denominated in EC

↓ ↓

1 Year SBI Rate of an ISAPRIL 6month LIBORRATE

op P-Y 3.25%
+

as on 3019 by P.Y

3%

NO Requirement ofSecondary Adjustment

1) Ifamount
of primary ady is upto lar

2) Primary
If ady is made in report of

Ay 16-17 eacher
 Question
--
--

YG India Hel Chips sold 24 us Hel

& 20 crory

ALP2 30 crory

Increase in Income of 44 India Ltd by As

Pass an order on
11612034 locrory
=

No India Hd.
The order Accepted by 44

excess he repatriated
money low should be

to India 116) 2027 + 90dsys 3018)

=
2024

Assume nor repatriated upto 311312025

1 Year SBI Rate of an Ilulay 9%

=

Sh Interest Income for Py 24-25=

[alslan-3113125) 1012 x 1925%X-B

A
1,0169,178)-
=

365
Itassesses opt to pay Add Income taxanllily-

1000 x 20.9664% =
20,96,6401-
VG STUDY HUB CA VIVEK GABA CS - PROFESSIONAL

Transfer Pricing Chapter ( Section Analysis)

Sec 92C(3): Determination of ALP by A.O

In the following cases ALP shall be computer A.O.

i) Assessee fails to computer ALP as per most appropriate method.

ii) Data used for computer ALP is not reliable or not correct.

iii) Documents are not maintained by Assessee as per Sec92D.

iv) Assessee fails to furnish info& docs required u/s 92D.

Provided that an opportunity of being heard shall be given by A.O to the

Assessee.

Sec 92C(4): Effect of ALP determined by A.O.

If ALP is computer by A.O. under sub-section (3) then

a. If income of one enterprise is increased by A.O. the income of the other

Associated enterprise shall not change [unaffected]

b. If income of one Associated Enterprise is increased by A.O. then

deduction under chapter VI-A & Sec 10AA shall not be allowed against
increased part of its income.

Sec 92CA: Reference to Transfer Pricing officer/Power of TPO

i) If A.O considers it necessary, he may refer the computation of ALP to TPO,

with previous approval of CIT/PCIT.

ii) TPO shall gather material for computation of ALP & shall require assessee
to produce evidence.

1
VG STUDY HUB CA VIVEK GABA CS - PROFESSIONAL

iii) During the course of proceedings before T.P.O. if any other international
transaction (which was not referred by A.O) comes to his knowledge, then
T.P.O. shall consider such other transaction also.

iv) on the basis of material evidence, T.P.O. shall computer the ALP & pass
an order computing ALP.

v) Order of T.P.O is binding on A.O.

vi) The T.P.O shall pass the order before days prior to the last date for
completion of Assessment allowed u/s 153&153B.

vii) If Assessment proceedings are stayed by any court or reference has been
made u/s 90/90A, the time available to TPO for making an order [after
excluding the time for which assessment proceedings were stayed or time
taken for receipt of information us 90/90A) less than 60 days, then
remaining period shall be extended to 60 days.

viii) If any case referred to T.P.O. then time limit allowed u/s 153& 153B
shall be

Sec92CB: Safe Harbour Rules

For determination of income u/s 9(1) (i) or Arm’s length price CBDT may
notify safe harbour rules.

“safe harbour” means circumstances in which the income-tax authorities

shall accept the transfer price declared by the assessee.

For AY 21-22 Safe Harbour rules not notified till Now For Exam

Sec 92D: Maintenance of information & Documents

i) Assessee entering into International transaction pr specified domestic

transaction required to maintain document as specified by CBDT.

2
VG STUDY HUB CA VIVEK GABA CS - PROFESSIONAL

ii) Constituent entity of an international group, shall keep and maintain such
information and document in respect of an international group as may be
prescribed (master file)

iii) The AO or the CIT (A) may, in the course of any proceeding under this Act,
require any person referred to point (I) to furnish any information or
document referred therein, within a period of 30 days from the date of
receipt of a notice. (It may be extended by further 30 days)

iv) Constituent entity shall furnish the information and document referred
therein to the authority prescribed u/s 286 within the time and manner as
may be prescribed.

NOTE

1. Documents are required to be maintained only if value of International

transaction is more than 1cr.

2.Documents are required to be kept for 8 years from the end of relevant
A.Y.

Sec 92E: Report of CA.

Assessee required to file report of CA in the Form NO. 3CEB upto 31sh Oct. of
A.Y.

Section Default Penalty

271AA i. Failures to keep &
maintain info
& docs as Per Sec 92D. 2% of transaction
ii. Fails to report Value
transactions
iii. Fails to maintain /
furnish correct info /
document
iv. Fails to furnish info & 5,00,000

3
VG STUDY HUB CA VIVEK GABA CS - PROFESSIONAL

doc. (Master File)

271G Fails to furnish info & 2% of Transactions
documents as per Sec value
92D
271BA Failure to furnish report 1,00,000
of CA as per Sec 92E.
270A Failure to report any Penalty of 200% of
transactions would Taxes apply
constitute ‘misreporting
of income’

Sec 92CC: Advance Pricing c Agreement (APA)

The CBDT with the approval of Central Govt, may enter into APA with any
person for determination;

(a) arm’s length price(ALP) or specifying the manner in which the ALP is to
be determined, in relation to an international transaction to be entered into
by that person.

(b) income referred to section 9(i),or specifying the manner in which said
income is to be determined, as is reasonably attributable to the operations
carried out in India by or on behalf of that person, being a NR.

2. The manner of determination of the arm’s length price refferred to in

clause (a) or the income referred to in clause (b), may include the methods
referred to in sec. 92C(1) or the methods provided by rules made under this
Act, respectively, with such adjustments or variations, as may be necessary
or expedient so to do.

3. APA is applicable for maximum consecutive 5 years.

4. The APA shall be binding on:

4
VG STUDY HUB CA VIVEK GABA CS - PROFESSIONAL

a) The person who entered into APA b) The IT Authority till level of CIT/PCIT

5.APA shall not binding if there is change in law / facts.

6. With the approval of CG, CBDT may declare an APA to be void-ab-inito, if

it finds that the APA has been obtained by fraud or misrepresentation of
facts.

7. APA may apply for any period maximum 4 years preceding first of the P.Y.
referred in APA (Roll back provision).

8. If APA apply then provisions of section 92C & 92CA does not apply.

9. Consequences of declaration of an APA as void ab intio:

(a) All the provisions of the Act shall apply to such person as if such APA had
never been entered into.

(b) The period beginning with the date of such APA and ending on the date
of order declaring the APA as void ab initio, shall be excluded for the
purpose of computation of any period of limitation under this Act (for
example period of limitation specified in the section 153, 1153B etc). This is
irrespective of anything contained in any other provision of the Act.

c) In case the period of limitation after exclusion of the above-mentioned

period is less than 60 days, such remaining period of limitation shall be
extended to 60 days.

10. If an application is made by a person for entering into an APA, then the
proceeding, in respect of such person for the purpose of the Act, shall be
deemed to be pending.

11. Conditions for applying for rollback provisions: The agreement shall
contain rollback provision in respect of an international transaction subject
the following namely:-

5
VG STUDY HUB CA VIVEK GABA CS - PROFESSIONAL

i) The international transaction is same as the international transaction to

which the agreement (other than the rollback provision) applies;

ii) The return of income for the relevant rollback year has been or is
furnished by the applicant before the due date as specified in section 139(1)

iii) The report in respect of the international transaction had been furnished
in accordance with section 92E;

iv) The applicability of rollback provision, in respect of an international

transaction, has been requested by the applicant for all the rollback years in
which the said international transaction has been undertaken by the
applicant.

v) The applicant has made an made application seeking rollback in Form

3CEDA
VI) Application submit with fee of Eslake
Non-applicability of Rollback provision: Rollback provision shall not be
provided in respect of an international transaction for a rollback year, if -
[Rule No. 10MA]

(i) The determination of ALP of the said international transaction for the said
year has been subject matter of an appeal before the ITAT and the ITAT has
passed an order disposing of such appeal at any time before signing of the
agreement; or

(ii) The application of rollback provision has the effect of reducing the total
income or increasing the loss, as the case may be, of the applicant as
declared in the return of income of the said year.

6
VG STUDY HUB CA VIVEK GABA CS - PROFESSIONAL

Sec 92CD: Effect of APA

1. Where prior to the date of entering APA, any return of income has already
been furnished for any P.Y. to which APA applies, then such person shall
furnish modified return per APA within 3 months from the end of the month
in which APA was entered into.

2. Where assessment for any P.Y. to which APA applies are pending on the
date of modified return, the AO shall complete assessment as per APA, AO
will get extra one year for completion of Assessment.

3. Where assessment for P.Y. to which APA applies already completed

before filing of modified return then A.O. shall pass an order modifying the
total income of that P.Y. within one year from the end of financial year in
which time modified return was furnished

For Balance : Read Class Notes.

7
VG STUDY HUB CA VIVEK GABA CS - PROFESSIONAL

Sec 92CD: Effect of APA

1. Where prior to the date of entering APA, any return of income has already
been furnished for any P.Y. to which APA applies, then such person shall
furnish modified return per APA within 3 months from the end of the month
in which APA was entered into.

2. Where assessment for any P.Y. to which APA applies are pending on the
date of modified return, the AO shall complete assessment as per APA, AO
will get extra one year for completion of Assessment.

3. Where assessment for P.Y. to which APA applies already completed

before filing of modified return then A.O. shall pass an order modifying the
total income of that P.Y. within one year from the end of financial year in
which time modified return was furnished

For Balance : Read Class Notes.

7
 PROFESSIONAL PROGRAMME

SUPPLEMENT

FOR

ADVANCED TAX LAWS

(Part II - Direct Tax and International Tax)

(Relevant for Students appearing in June, 2023 Examination)

MODULE 1- PAPER 2

Students appearing in June, 2023 Examination shall note the following:

1. For Direct taxes, Finance Act, 2022 is applicable.

2. Applicable Assessment year is 2023-24 (Previous Year 2022-23).

Students are also required to update themselves on all the relevant Rules, Notifications,
Circulars, Clarifications, etc. issued by the CBDT & Central Government, on or before 30th
Nov, 2022.

Disclaimer: This document has been prepared purely for academic purposes only and it does not necessarily reflect the views of
ICSI. Any person wishing to act on the basis of this document should do so only after cross checking with the original source.

1
Sr. Lesson No. Amendments to Regulations /Rules /Act /Circular /Notification Weblink
No. (For Details)
1. Lesson 18 Imposition of charge on the prescribed electronic modes under https://www.in
section 269SU of the Income-tax Act, 1961 [Circular No. 16/2020 cometaxindia.g
Taxation of Dated August 30, 2020] ov.in/communi
Companies, cations/circular
LLP and Non- Section 269SU of the Income tax Act, 1961 provides every person having /circular-16-
Resident a business turnover of more than Rs. 50 Crores during the immediately 2020.pdf
preceding previous year shall mandatorily provide facilities for accepting
payment through prescribed electronic modes.

However representations were received that banks are collecting charges

on transactions carried out through UPI.

Hence, Central Board of Direct Taxes 'CBDT' vide its Circular No.
16/2020 Dated August 30, 2020 advised banks to refund all the charges
collected on and after 1st January 2020 on transactions carried out
using the electronic modes as prescribed under section 269SU and not
to impose any such charges on any future transactions carried through
the prescribed digital modes.
2. Lesson 20 Notification No. 83 (October 19, 2020) https://www.in
cometaxindia.g
Basics of The Central Government vide Notification No. 83 Dated October 19, ov.in/communi
International 2020 notifies that where the variation between the arm’s length price cations/notifica
Taxation – determined under section 92C of the Income tax Act, 1961 and the price tion/notificatio
Transfer at which the international transaction or specified domestic transaction n_83_2020.pdf
Pricing has actually been undertaken does not exceed 1% of the latter in respect
of wholesale trading and 3% of the latter in all other cases, the price at
which the international transaction or specified domestic transaction has
actually been undertaken shall be deemed to be the arm’s length price for
assessment year 2020- 2021.

Accordingly, the price at which the international transaction or

specified domestic transaction has actually been undertaken shall be
deemed to be the arm’s length price if the variation between the arm’s
length price and the price at which the international transaction or
specified domestic transaction has actually been undertaken does not
exceed 1% of the latter in respect of wholesale trading and 3% of the
latter in all other cases.
3. Lesson 18 Amount of remuneration prescribed under section 9A(3)(m) of the https://www.in
Income-tax Act, 1961 (Circular No. 1/2021 Dated January 15, 2021) cometaxindia.g
Taxation of ov.in/communi
Finance (No 2) Act, 2019 amended clause (m) of sub-section (3) of
Companies, cations/circular
section 9A of the Income-tax Act, 1961 w.e.f. 01.04.2019 to provide for
LLP & Non- /circular_1_202
payment of remuneration by an eligible investment fund to an eligible
Resident 1.pdf
fund manager in respect of fund management activity undertaken by him
on its behalf to be not less than the amount calculated in such manner as
may be prescribed.
Accordingly, rule 10V of the Income-tax Rules, 1962 has been amended,
w.e.f. 01.04.2019, vide Notification No 29/2020 dated 27.05.2020 by way
of insertion of sub-rules (12) and (13) as follow:
2
 Sub-rule (12) provides for the amount of remuneration to be paid by the
fund to a fund manager. 2nd proviso of the said sub-rule provides that the
fund may seek Board's approval in case where the amount of
remuneration is lower than the amount so prescribed.

In this regard, representations have been received expressing inability to

comply with the provisions of sub-rule 12 of rule 10V of the Rules
regarding the amount of remuneration to be paid by the fund to a fund
manager for the financial year 2019-20 as the said Notification No
29/2020 was notified after the financial year got over and the financial
year 2020-21 had already commenced.

In order to avoid genuine hardship in such cases, the Board, provided

that for the financial years 2019-20 and 2020- 21 in cases where the
remuneration paid to the fund manager is lower than the amount of
remuneration prescribed under sub-rule (12) of rule l0V of the Rules,
but is at arm's length, it shall be sufficient compliance to clause (m) of
sub-section (3) of section 9A of the Act. It is stated that the
remuneration to be paid to the fund manager, for the financial year
2021- 22, shall be in accordance with sub-rule (12) of rule 10V of the
Rules and the application for lower remuneration in terms of 2nd
proviso for this year, if any, may be filed not later than 1st February,
2021.
4. Lesson 18 Thresholds for the purposes of Significant Economic Presence - Rule https://www.in
11UD [Notification No. 41 Dated May 3, 2021] cometaxindia.
Taxation of gov.in/commu
Companies, The Central Board of Direct Taxes has notified the Income-tax (13th nications/notif
LLP and Non- Amendment) Rules, 2021 which shall come into force from 1st April ication/notific
resident
2022. Through this amendment a new rule 11UD has been inserted which ation_41_2021
notifies the threshold for significant economic presence. .pdf
As per the new rule, for the thresholds “the amount of aggregate of
payments arising from transaction or transactions in respect of any goods,
services or property carried out by a non-resident with any person in
India, including provision of download of data or software in India during
the previous year, shall be two crore rupees.”

Further, the number of users with whom systematic and continuous

business activities are solicited or who are engaged in interaction shall be
three lakhs.

Accordingly, the threshold limit has been notified for the purpose of
significant economic presence.

5. Lesson 22 Income-tax (16th Amendment) Rules, 2021 [Notification No. 68 https://www.in

Dated May 24, 2021] cometaxindia.g
Income Tax ov.in/communi
Implication on The Central Board of Direct Taxes on 24th May 2021 has published the cations/notifica
specified Income- tax (16th Amendment) Rules, 2021 which has notified a new tion/notificatio
transactions rule for computation of fair value of capital assets in slump sale. As per n_68_2021.pdf
the Amendment a new rule 11UAE has been inserted which provides two
3
 formulae for calculation of fair market value of the capital asset.

The FMV1 shall be the fair market value of the capital assets
transferred by way of slump sale determined and FMV2 shall be the
fair market value of the consideration received or accruing as a result
of transfer by way of slump sale.
6. Lesson 22 Cost Inflation Index for FY 2021-22 [Notification No. 73 Dated June https://www.in
15, 2021] cometaxindia.g
Income Tax ov.in/communi
Implication on The Central Board of Direct Taxes (CBDT) has notified the cost inflation cations/notifica
Specified index (CII) for FY 2021-22 as "317" via a notification dated June 15, tion/notificatio
Transactions 2021. CII is used to calculate the inflation adjusted cost price of an asset. n_73_2021.pdf

Accordingly, the above inflation adjusted price then is used to arrive at

long-term capital gains or long-term losses.

7. Lesson 18 Guidelines under section 9B and sub-section (4) of section 45 of the https://www.in
Income-tax Act, 1961 [Circular No. 14 Dated July 02, 2021] cometaxindia.g
Taxation of ov.in/communi
Companies , The Government has inserted a new section 9B of the Income Tax Act, cations/circular
LLP and Non- 1961 and substituted sub-section (4) of section 45 of the Income Tax Act, /circular_14_20
Resident 1961 by the Finance Act, 2021. The CBDT has come out with 21.pdf
Notification No. 76 dated July 2, 2021 to insert sub-rule (5) to Rule 8AA
and a new Rule-8AB so as to prescribe the manner of calculating the
income chargeable to tax under section 45(4) of the Act as "capital gains"
and also the manner in which such income shall be attributed to
remaining assets with the specified entity under clause (iii) of section 48
of the Act.

Further, the CBDT issued Circular No. 14 dated July 02, 2021 to provide
guidelines for application of section 9B and section 45(4) read with the
aforesaid rules.
8. Lesson 18 Income Tax (19th Amendment), Rules, 2021 [Notification No. 77 https://egazett
Dated July 7, 2021] e.nic.in/Write
Taxation of ReadData/202
Companies , The Central Board of Direct taxes hereby makes Income-tax (19th 1/228152.pdf
LLP and Non- Amendment), Rules, 2021 further to amend the Income-tax Rules, 1962.
Resident As per notification, after rule 8AB, rule 8AC [i.e. Computation of short
term capital gains and written down value under section 50 where
depreciation on goodwill has been obtained] has been inserted.
9. Lesson 18 Income Tax (22nd Amendment) Rules 2021 [Dated August 9, 2021] https://www.in
cometaxindia.g
Taxation of CBDT has notified Income tax (22nd Amendment) Rules, 2021 to insert ov.in/communi
Companies , the following two rules as follow: cations/notifica
LLP and Non- Computation of exempt income of specified fund for the tion/notificatio
Resident purposes of clause (4D) of section 10 n_90_2021.pdf

Rule
The Rule provides formula for computation of income attributable
21AI
to units held by non-resident (not being the permanent
establishment of a non-resident in India) in a specified fund for the
purpose of clause (4D) of section 10 of the Income tax Act, 1961.
4
 Determination of income of a specified fund attributable to
units held by non-residents under sub-section (1A) of section
115AD

Rule The Rule provides formula of calculation, for purposes of sub-

21AJ section (1A) of section 115AD, the income of a specified fund by
way of short-term or long-term capital gains, referred to in clause
(b) of sub-section (1) of section 115AD, attributable to the units
held by non-resident (not being the permanent establishment of a
non-resident in India)
10. Lesson 18 Income tax (23rd Amendment) Rules, 2021 [Notification No. 92 https://www.in
Dated August 10, 2021] cometaxindia.g
Taxation of ov.in/communi
Companies , CBDT notifies the Income tax (23rd Amendment), Rules, 2021, to cations/notifica
LLP and Non- prescribe the procedure / methodology for re-computation of book profit tion/notificatio
Resident u/s 115JB of the Income tax Act, 1961, to provide relief in MAT payable n_92_2021.pdf
in certain cases.

Accordingly, new IT Rule 10RB on ‘Relief in tax payable u/s 115JB(1)

due to operation of section 115JB(2D)’ along with new FORM No.
3CEEA for ‘annual furnishing of particulars of re-computation for any
adjustment on account of income of past year(s) included in books of
account of previous year by a Company on account of secondary
adjustment u/s 92CE or on account of an Advance Pricing Agreement
entered u/s 92CC’ have been introduced/ inserted in the Income Tax
Rules, 1962.
11. Lesson 20 Income Tax 30th Amendment Rules 2021 [Notification No. 117 Dated https://egazette.
Sept. 24, 2021] nic.in/WriteRea
Basics of dData/2021/22
International The Central Board of Direct Taxes hereby makes the Income-tax (30th 9929.pdf
Taxation Amendment) Rules, 2021 as per which, in the Income-tax Rules, 1962, in
rule 10TD [Safe Harbour Rules], in sub-rule (3B), for the words and
figures “assessment year 2020-21”, the words and figures “assessment
years 2020-21 and 2021-22” shall be substituted.
12. Lesson 20 Notification No. 135 [Dated December 8, 2021] https://incomet
axindia.gov.in/
Basics of The Protocol, amending the Agreement between the Government of the communication
International Republic of India and the Government of the Kyrgyz Republic for the s/notification/n
Taxation avoidance of double taxation and for the prevention of fiscal evasion with otification-135-
respect to taxes on income which was signed at New Delhi on 13th April, 2021.pdf
1999, has been signed at Bishkek, Kyrgyz Republic on 14th June, 2019,
as set out in the Annexure. The date of entry into force of the said
amending Protocol is the 22nd October, 2020, being the date of the later
notification of the completion of the procedures required by the
respective laws for the entry into force of the said amending Protocol, in
accordance with Article 3 of the said amending Protocol.

Now, therefore, in exercise of the powers conferred by sub-section (1) of

section 90 of the Income-tax Act, 1961, the Central Government hereby
notifies that all the provisions of the said amending Protocol shall have
effect in the Union of India.
5
13. Lesson 20 Clarification regarding the Most-Favoured-Nation (MFN) clause in https://incomet
the Protocol to India's DTAAs with certain countries [Circular No. 3 axindia.gov.in/
Basics of Dated 3rd February, 2022] communication
International s/circular/circul
Taxation The Protocol to India’s Double Taxation Avoidance Agreements ar-3-2022.pdf
(DTAAs) with some of the countries, especially the European States and
OECD members contains a provision, referred to as the Most-Favoured-
Nation (MFN) clause. Though each MFN clause in these DTAAs has a
different formulation, the general underlying provision is that if after the
signature/ entry into force of the DTAA with the first State, India enters
into a DTAA with another OECD Member State, wherein India limits its
source taxation rights in relation to certain items of income (such as
dividends, interest income, royalties, Fees for Technical Services, etc.) to
a rate lower or a scope more restricted than the scope provided for those
items of income in the DTAA with the first State, such beneficial
treatment should also be extended to the First State.

The Central Board of Direct Taxes (CBDT) has received representations

seeking clarity on the applicability of the MFN clause (particularly to
dividend withholding rates) available in the Protocol to some of the
DTAAs with OECD member States. India’s DTAAs with countries,
namely Slovenia, Colombia, and Lithuania, provide for the lower rate of
source taxation with respect to certain items of income. However, these
States were not members of the OECD at the time of the conclusion of
their DTAAs with India and have become members of the OECD
thereafter.

On a plain reading of the MFN clauses in India’s DTAAs especially with

respect to the above-mentioned countries, it is clear that there is a
requirement that the third State is to be a member of the OECD both at
the time of conclusion of the treaty with India as well as at the time of
applicability of MFN clause. Therefore, it is clarified that for the
applicability of the MFN clause, the third State has to be an OECD
Member State on the date of the conclusion of DTAA with India.

It may also be pointed out that the MFN clause in these DTAAs clearly
states that the reduced rate takes effect from the date of entry into force of
Indian DTAA with the third State. Thus, the declaration in the
decree/bulletin/publication of The Netherlands, France, and the Swiss
Confederation to make the reduced rate effective from the date of the
third State becoming member of OECD subsequent to the entry into force
of a DTAA is not in accordance with the relevant provision of the MFN
clause in the Protocol. In fact, these countries could not have made it
effective from the date of entry into force of Indian DTAA with the third
State as the third State was not a member of the OECD on such date of
entry into force. This makes it clear that the intention of the MFN
clause in the Protocol of the DTAAs is not to give the benefit of India’s
DTAA with the third State which was not a member of OECD when
India entered into DTAA with it.

6
14. Lesson 22 Cost Inflation Index FY 2022-23 [Notification No. 62 Dated June 14, https://incomet
2022] axindia.gov.in/
Income Tax communication
Implication on Financial Year Cost Inflation Index s/notification/n
specified 2022-23 331 otification-62-
transactions 2022.pdf

7
OECD/G20 Inclusive Framework on BEPS
Base erosion and profit shifting (BEPS)
BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift
profits to locations with no/low tax rates and no/little economic activity, resulting in:

l little or no corporate tax being paid.

l annual revenue losses for governments of at least 100 – 240 billion USD,
equivalent to 4 – 10% of global corporate income tax revenue.

2015
Under the OECD/G20 BEPS Project, over 60 countries delivered 15 Actions
to tackle tax avoidance, improve the coherence of international tax rules
and ensure a more transparent tax environment (BEPS package).

BEPS
15
Action 1 Action 4 Action 5
Action 2 Action 3
DIGITAL INTEREST HARMFUL TAX
HYBRIDS CFC RULES
ECONOMY DEDUCTIONS PRACTICES

Actions
Action 6 Action 7 Action 8 Action 9 Action 10
TREATY PERMANENT TRANSFER TRANSFER TRANSFER
ABUSE ESTABLISHMENT PRICING PRICING PRICING

Action 13
Action 11 Action 12 Action 14 Action 15
TRANSFER
BEPS DATA AGGRESSIVE TAX DISPUTE MULTILATERAL
PRICING
ANALYSIS PLANNING RESOLUTION INSTRUMENT
DOCUMENTATION

2016 Over 1 5 Members of the

Inclusive Framework
The OECD/G20 Inclusive Framework on BEPS (IF) was established to
ensure interested countries and jurisdictions, including developing Other jurisdictions
economies, can participate on an equal footing in the development 68%
of standards on BEPS related issues, while reviewing and monitoring
the implementation of the OECD/G20 BEPS Project. 26% OECD

2017
The first high-level signing ceremony of the Multilateral Instrument
(MLI) took place. To date, more than 90 jurisdictions have signed the 6% G20 (non OECD)

MLI, which enables the efficient implementation of tax treaty related

BEPS measures without the need to bilaterally renegotiate individual tax
treaties. Over 1 680 tax treaties will be modified.

ctp.beps@oecd.org

www.oecd.org/tax/beps
http://oe.cd/beps-regional-meetings
OECD/G20 Inclusive Framework on BEPS
2018-20
The OECD/G20 Inclusive Framework on BEPS is working on consensus-
based, long-term solutions to the tax challenges arising from the
digitalisation of the economy. During its 29-30 January 2020 meeting it
decided to move ahead with a two-pillar approach, including:

l under the first pillar, solutions for determining the allocation of taxing rights
("nexus and profit allocation"),

l under the second pillar, the design of a system to ensure that MNEs pay a
minimum level of tax on profits. This is intended to address remaining
issues identified by the OECD/G20 BEPS Project.

l IF working parties and groups are now carrying out the technical work under the guidance
of the IF Steering Group. Building on the previous consultations on BEPS, a set of regional
outreach consultations on digitalisation are carried out in partnership with regional
organisations and development banks.

l Plenary meetings of the IF on BEPS generally take place twice a year: in January at the
OECD in Paris, and and mid-year usually in an IF member country.

l To become a member of the IF, a country or jurisdiction needs to commit to the BEPS
package and pay an annual membership fee of 20 800 EUR (subject to annual adjustment
for inflation).

5th meeting of the Inclusive Framework in Lima, Peru on 27 – 28 June 2018

ctp.beps@oecd.org

www.oecd.org/tax/beps
http://oe.cd/beps-regional-meetings