Latest updates

Account aggregators: financial information sharing framework
Tuli & Co
  • Insurance
  • India
  • 16 July 2019

The account aggregator ecosystem was introduced to solve the problems of data portability in the insurance sector, among others. However, the question of whether the business model is viable will largely hinge on the successful implementation of the consent architecture envisaged under the Master Directions Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions and the terms of the contractual arrangements which are entered into with the various regulated entities.

CCI rules that mere discussion of price increases does not constitute cartel
Vaish Associates Advocates
  • Competition & Antitrust
  • India
  • 11 July 2019

In November 2018 the Competition Commission of India (CCI) dismissed the allegations of cartelisation in the determination of flashlight prices against Eveready Industries India Limited, Panasonic Energy India Co Ltd, Indo National Ltd, Geep Industries (India) Pvt Ltd and the Association of Indian Dry Cell Manufacturers. Notably, the CCI exonerated the opposing parties despite the existence of two leniency applications.

Keeping up with the times: EPF goes digital
Shardul Amarchand Mangaldas & Co
  • Employment & Benefits
  • India
  • 10 July 2019

The employees' provident fund is a social security fund comprising contributions from employers and employees, which are paid to employees on their retirement. The entire process is administered by the Employees' Provident Fund Organisation (EPFO), which is a statutory body established by the Ministry of Labour and Employment. To keep up with digitisation, the EPFO recently updated the process under which subscribers can withdraw and transfer provident funds.

Does Section 195 of Income Tax Act apply to salaries of employees seconded by foreign entities?
BDO LLP
  • Corporate Tax
  • India
  • 05 July 2019

The Bombay High Court recently considered whether a taxpayer, which was resident in India and the sole owner of a business that provided personnel on an as-needed basis to foreign companies, had been required to deduct tax under Section 195 of the Income Tax Act when paying an employee who it had loaned to a Kuwait-based company. Section 195 of the act requires taxpayers to deduct tax on any payment (other than salary payments) made to non-residents.

CCI further amends combination regulations – minority acquisitions left untouched
Vaish Associates Advocates
  • Competition & Antitrust
  • India
  • 04 July 2019

In 2018 the Competition Commission of India (CCI) issued a notification which further amended the CCI (Procedure in Regard to the Transaction of Business Relating to Combinations) Regulations 2011. Following strong opposition from industry groups, the CCI has dropped a controversial amendment. This article highlights the notification's most important changes.

Casting a wider net – ESI rates amended
Shardul Amarchand Mangaldas & Co
  • Employment & Benefits
  • India
  • 03 July 2019

The Employees' State Insurance (ESI) (Central) Rules 1950 were recently amended to reduce the required rates of contribution to the statutory fund maintained by the ESI Corporation for the provision of sickness and health benefits. The aim of this change is to cast a wider net by expanding social security coverage to a larger part of the population. However, news reports indicate that – as is often the case – the change has come under criticism.

Budget 2019: a box of possibilities
BDO LLP
  • Corporate Tax
  • India
  • 28 June 2019

With a clear mandate from Indian citizens, the newly elected government is expected to bring a fresh perspective to tax matters when it issues its budget on 5 July 2019. The tax rates are unlikely to change substantially and the amendments made in the interim budget will remain intact. However, to increase India's competitiveness from an investment perspective, the government may reduce the peak tax rate for all businesses and entities.

Supreme Court delivers second landmark cartel judgment
Vaish Associates Advocates
  • Competition & Antitrust
  • India
  • 27 June 2019

In October 2018 the Supreme Court issued a landmark judgment in which it upheld the appeals of 44 liquefied petroleum gas cylinder manufacturers and dismissed the earlier finding of bid rigging. In its decision, the court emphasised the need to evaluate the market structure and conditions before determining whether a cartel exists. This judgment signifies a new direction in case law and is likely to change the manner in which India's antitrust regulator evaluates evidence of cartels in future.

Mumbai Tax Tribunal rules on service permanent establishment threshold: leave periods and multiple counting
BDO LLP
  • Corporate Tax
  • India
  • 21 June 2019

The Mumbai Tax Tribunal recently ruled in a case concerning the threshold for determining whether a taxpayer has a service permanent establishment in India, finding that the multiple counting of employees on a particular day is prohibited under the India-UK tax treaty. Further, the tribunal held that since the employee in question had been on leave and no other employee of the taxpayer had rendered services in India, the employee's leave period had to be excluded from the threshold calculation.

Award replacing contractual provisions with new terms "shocks the conscience" of Supreme Court
Khaitan & Co
  • Arbitration & ADR
  • India
  • 20 June 2019

The question of whether a contract can be amended retroactively was raised in the arbitration proceedings between Ssangyong and the National Highways Authority of India. The Supreme Court's ruling on the case is a welcome exposition on the contours of Section 34 of the Arbitration and Conciliation Act, especially in relation to challenges on grounds of violations of principles of natural justice.

CCI penalises MRI machine manufacturer, but chair disagrees with market definition
Vaish Associates Advocates
  • Competition & Antitrust
  • India
  • 20 June 2019

The Competition Commission of India (CCI) recently imposed a penalty on Italian company Esaote SpA – a world leader in dedicated magnetic resonance imaging (MRI) – and its Indian subsidiary. According to the CCI's order, the Esaote group had abused its dominant position in the market through its sale of dedicated standing/tilting MRI machines to the informant. However, the CCI chair disagreed with the relevant market adopted by the majority of the commission.

To compete or not to compete – that is the question
Shardul Amarchand Mangaldas & Co
  • Employment & Benefits
  • India
  • 19 June 2019

Non-compete restrictions are the tool most commonly used by employers to protect their proprietary interests following the end of an employment relationship, particularly in the case of C-suite employees. However, non-compete restrictions which apply beyond the term of an employment relationship are generally unenforceable in India. That said, this does not mean that employers have no recourse whatsoever.

Draft guidelines address conflict of interest situations
Tuli & Co
  • Insurance
  • India
  • 18 June 2019

The Insurance Regulatory and Development Authority recently issued the Exposure Draft on Insurance Regulatory and Development Authority of India (Conflict of Interest) Guidelines 2019, which seek to provide guidance on the conflicts of interest that arise between insurers and other insurance companies or intermediaries which have the same directors.

CBDT and GSTN to sign MoU on exchange of taxpayer information
BDO LLP
  • Corporate Tax
  • India
  • 14 June 2019

The Central Board of Direct Taxes (CBDT) has authorised the principal director general of income tax (systems) to share taxpayer information with the Goods and Service Tax Network (GSTN). The CBDT also confirmed that in order to facilitate the provision of information, it will enter into a memorandum of understanding with the GSTN, which will set out, among other things, the nature of data exchanges, the ways in which confidentiality will be maintained and mechanisms for the safe preservation of data.

Family settlements: the panacea to familial disharmony
Cyril Amarchand Mangaldas
  • Private Client & Offshore Services
  • India
  • 13 June 2019

Wealth-related disputes are common – even when family and relationships are valued over material needs. As family businesses and relationship circles get larger and more complex, parties often seek to separate commercial control, ownership and interests and achieve greater independence. This brings to the fore the significance of family settlements, which allow families to achieve these objectives amicably while preserving their values and honouring the wishes of all family members.

CBDT issues draft report on attribution of profits by permanent establishments
BDO LLP
  • Corporate Tax
  • India
  • 07 June 2019

Due to the uncertainty and unpredictability resulting from the application of Rule 10 of the Income Tax Rules, the Central Board of Direct Taxes formed a committee to examine the existing profit attribution scheme. The committee recently issued a report on this issue and is seeking comments from stakeholders. Broadly speaking, the report suggests amending Rule 10 to adopt a three-factor method to attribute profits with equal weight to sales (a demand-side factor) and manpower and assets (supply-side factors).

Supreme Court's recent take on non-disclosure and misrepresentation
Tuli & Co
  • Insurance
  • India
  • 21 May 2019

The Supreme Court recently ruled in a case between Reliance Life Insurance and the wife of an insured party who had died of a heart attack. Reliance had repudiated the respondent's claim due to the suppression of material facts by the insured, who had failed to provide details of a second policy with another insurer. In its decision, the Supreme Court considered the nature of the disclosure made by the insured and the validity of the ground for repudiation of the claim.

Regulatory sandbox proposed for insurance sector
Tuli & Co
  • Insurance
  • India
  • 14 May 2019

The Insurance Regulatory and Development Authority recently issued the Report of the Committee on the Regulatory Sandbox in the Insurance Sector in India, which proposes to establish a sandbox environment in the insurance sector. According to the report, the sandbox will facilitate innovation in the Indian insurance sector and provide an ecosystem to foster the experimentation required to increase insurance penetration in the market and benefit policyholders. However, reservations remain.

Notable case law: private share placements, slump sales and transfer pricing
BDO LLP
  • Corporate Tax
  • India
  • 10 May 2019

This article looks at notable tax decisions from the Indian courts, including a Supreme Court decision concerning the receipt of share capital in case of private share placements. It also examines the Bombay High Court's decision regarding the sale of an entire unit as a going concern and a recent case involving transfer pricing adjustments.

Significant beneficial ownership – India's pivot towards disclosure
Cyril Amarchand Mangaldas
  • Private Client & Offshore Services
  • India
  • 09 May 2019

Following the recommendations of the Financial Action Task Force, India has introduced a statutory requirement for the identification and disclosure of significant beneficial owners, whether Indian or foreign, of every company incorporated in India. This is a landmark development which will lead to a significant push towards transparency.