¨General Anti-Avoidance Rules ¤Discretion to Tax Authorities to disregard, re-characterize and re-classify Income, if it is considered to be a potentially abusive transaction
¨Wealth Tax Implications ¤Proposed Direct Tax Code (to come into force April 1, 2011) ¤Provides for taxation of private discretionary trusts in case the assets exceed INR 500 million ¤
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¨ ¨Investment on a Non-repatriation basis ¤Purchase shares / convertible debentures issued by an Indian company, dated G-SECS, t-bills, units of domestic mutual funds on non-repatriation basis without any limit ¨Investment on a repatriation basis ¤Purchase on repatriation basis, without any limits, Government dated securities (other than bearer securities) or treasury bills or units of domestic mutual funds; bonds issued by a public sector undertaking (PSU) in India ¨Investment in immovable property ¤Purchase residential/ commercial premises ¤Restrictions on purchase of plantations, agricultural lands ¨ ¨ ¨ ¨ ¨ ¨ ¨Foreign Direct Investment ¤Acquisition of shares in an Indian company by way of fresh subscription as well as transfer of shares ¤Significantly liberalised regime; Principle – What is not specifically restricted / prohibited is open for 100% FDI ¤Certain sectors are prohibited while certain have minimum capitalisation requirements ¨Foreign Portfolio Investment ¤Purchase/sell shares/convertible debentures of Indian companies on Stock Exchanges upto 5% of the paid-up capital/ paid-up value of each series of shares/ convertible debentures of listed Indian companies ¤Aggregate ceiling 10%. Can be raised to 24% by special resolution passed by the general body of the Indian company ¤NRI cannot further sell these shares by way of private arrangement; Short selling is not permitted ¤Can be made on a repatriable/ non-repatriable basis ¤FII route : NRIs can invest into a broad-based fund registered with an FII ¨ ¨ ¨ ¨ ¨ ¨ ¨Liberalised Remittance Scheme ¤Indian residents permitted to freely remit upto USD 200,000 per financial year (April- March) ¤Any permitted capital or current account transactions or a combination of both. Includes remittances towards gift and donation by a resident individual ¤Certain restrictions relating to those in the nature of remittance for margins or margin calls to overseas exchanges/ overseas counterparty ¤No restriction on setting up of personal holding companies, trusts, investments in securities, immovable property, etc. ¤Cannot be directly/indirectly invested into certain jurisdictions viz: Mauritius, Pakistan, Bhutan and Nepal ¨ ¨ ¨ ¨ ¨ ¨
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