May 11, 2016 No.1
https://www.facebook.com/mehtarahulc/posts/10153478726361922
Question to ALL CAs
.
NaMo has amended Mauritius treaty as follows
.
Tax on Short Term Capital Gains before treaty modification 0%
Tax on Short Term Capital Gains now = 30% , same as others
.
But a clause says --- Income tax on interest income earned by Mauritius based banks in India will be 7.5%
.
So lets say a large foreign company-X has operations in India via company-X-India which earns say Rs 1000 crore. Business income can be converted into short term capital gains using ghapala. But now that window is closed.
.
But say same company-X now opens bank-X and gives loans at VERY high interest rate to company-X-India. So high that all profit of company-X-India goes in interest payment. So bank-X earns profits, but all profit is via interest income.
,
So will tax rate on bank-X be only 7.5%?
.
So will bank-X will have to pay 25% income tax, which is the normal tax rates for banks' profits?
https://www.facebook.com/mehtarahulc/posts/10153478726361922
Question to ALL CAs
.
NaMo has amended Mauritius treaty as follows
.
Tax on Short Term Capital Gains before treaty modification 0%
Tax on Short Term Capital Gains now = 30% , same as others
.
But a clause says --- Income tax on interest income earned by Mauritius based banks in India will be 7.5%
.
So lets say a large foreign company-X has operations in India via company-X-India which earns say Rs 1000 crore. Business income can be converted into short term capital gains using ghapala. But now that window is closed.
.
But say same company-X now opens bank-X and gives loans at VERY high interest rate to company-X-India. So high that all profit of company-X-India goes in interest payment. So bank-X earns profits, but all profit is via interest income.
,
So will tax rate on bank-X be only 7.5%?
.
So will bank-X will have to pay 25% income tax, which is the normal tax rates for banks' profits?
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