Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Home Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles News Highlights
Extracts
Home List
← Previous Next →

India-UK Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (DTAC or the Convention) - Suspension of Collection of Taxes during Mutual Agreement Procedure (MAP)

Income Tax - Instruction No. 03/2015 - Dated:- 10-4-2015 - Instruction No. 3 /2015 F. No. 500/2/2015-APA-Il Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Foreign Tax and Tax Research Division-I APA-II Section New Delhi, dated the 10th April, 2015 To All Principal CCsIT and CCsIT All Principal DsGIT and DsGIT Subject: - Regarding. Article 27 of the India-UK DTAC provides for a Mutual Agreement Procedure-(MAP) for avoidance of double taxation. Paragrap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

his MoU was brought to the notice of the field formation vide Instruction No. 3/2004 dated 19/3/2004, wherein it was stated that the collection of outstanding taxes in the case of a taxpayer, who is a resident of UK and whose request under MAP is under consideration of the Competent Authorities, shall be kept in abeyance subject to furnishing of a bank guarantee of an amount equal to the amount of tax under dispute and interest accruing thereon as per the provisions of the Income-tax Act. 3. In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

may have been charged to tax in the hands of its Associated Enterprise (AE) in UK, is covered under the provisions of the aforesaid MoU. 4. In view of the' above, Instruction No. 3/2004 dated 19/3/2004 is modified as under: 4.1 On receipt of a formal request for suspension of collection of outstanding tax in terms of the MoU from a taxpayer being a resident of UK, or a resident of India in cases involving transfer pricing adjustments, where MAP has been invoked through the UK Competent Autho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.2 The effect of the MoU is that the furnishing of the bank guarantee should be treated as sufficient arrangement to qualify for exercising discretion by the Assessing Officer for extension of time limit for payment of taxes in terms of sub-section (3) of Section 220 of the Income-tax Act. The extension, however, shall subsist only fill the time the case is under MAP. In case the Competent Authorities agree that there is no resolution possible, an intimation to this effect shall be given to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

taxpayer. In case the taxpayer fails to pay the demand, the bank guarantee so furnished shall be invoked after seeking the consent of the Indian Competent Authority, which shall grant the some after intimating its counterpart in UK. 4.4 The Assessing Officers as well as their controlling officers are advised to keep a close watch on the limitation of the bank guarantee furnished under the MAP. 5. A copy of the MoU, along with its Annexure containing the model draft format of the bank guarantee, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ON OF TAXES DURING MUTUAL AGREEMENT PROCEDURE Having regard to the hardship faced by the taxpayers during the pendency of a mutual agreement procedure, the Competent Authorities of India and the United States under the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the "Convention") have determined and agreed that efficient processing of Mutual Agreement Procedure ("MAP") cases will be facilitated by defer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts published procedures regarding MAP proceedings (currently set forth in Rev. Proc. 2002-52 or any successor procedure), until putting into effect a mutually agreed disposition of the MAP proceedings concerning the amounts in question; and (B) The Competent. Authorities have arranged and desired to agree that with regard to amounts of taxes covered under Article 2 of the Convention and potentially payable to the government of India, the Assessing Officer will suspend collection until putting in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ernments. (2) in India, as security, a taxpayer shall provide an irrevocable Bank Guarantee issued by any scheduled bank, or by an Indian branch of a foreign bank approved by the Reserve Bank of India to carry out banking business in India, as per annexure 'A' to this Memorandum. (3) In the United States, as security, a taxpayer shall, upon demand, provide an irrevocable Letter of Credit issued by a United States bank that is a of the Federal Reserve system, or by a United States branch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with domestic laws, and subject- to further adjustment for interest on these amounts calculated at the statutory rate on non-payments. (5) Collection and assessment (if applicable) of any interest or penalty levied from the concerned taxpayer, in relation to amounts suspended' from collection or deferred from assessment (if applicable) under this Agreement, shall also be suspended. (6) The amounts of tax(es) identified under. Recitals (A) and (B) above, shall include but are not limited to: .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he subject of MAP proceedings for prior, current or future taxable years. (7) The Competent Authorities shall endeavour to either resolve or close the case within a period of two years from the date on which one Competent Authority notifies the other that the application from the Taxpayer(s) for assistance under the MAP has been received. 8) Any draw-down upon a Bank Guarantee or letter of Credit referred to in paragraph (2) or (3) above will be authorised only after notice by one Competent Auth .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

terms of this Memorandum may be reviewed by the Competent Authorities at any time in the future upon the request of either party. ANNEXURE A To, The President of India acting through and represented by [Designation], Income Tax Department, Ministry of Finance, Government of India, New Delhi Bank Guarantee Bank Guarantee as security for keeping the recovery of tax demand in abeyance during the pendency of a Mutual Agreement Procedure ("MAP") [Applicable in case of non-resident assessees .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f, Finance, Government of India, New Delhi (hereinafter called "the Government" ). WHEREAS the Government has agreed that __[INSERT name, address, permanent acccount number of the Assessee]__ (hereinafter called "the Assessee", which expression shall, unless excluded by or repugnant to the context, include its successors and assignees) shall furnish a Bank Guarantee in respect of a demand of Rs.__[INSERT Amount of Tax in dispute]. for the assessment year(s) , in lieu of which .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o treat the Assessee as not in default for Rs __[INSERT Amount of Tax in dispute, plus interest specified in paragraph (1) below]. for the assessment year(s)__ (1) The Bank irrevocably guarantees and undertakes, for the term provided in paragraph (2) below, that the Bank shall indemnify and keep indemnified the Government to the extent of the said sum of Rs .[INSERT Amount of Tax in dispute]. (Rupees __,[written text]) and interest accruing at the rate specified in the Income Tax Act of 1961 as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is Bank Guarantee, the decision of the Government as to whether any amount should be paid out by the Bank to the Government hereunder shall be final and binding. (2) The Bank further agrees that the guarantee herein contained shall remain in full force and effect for a period of 3 years from the date hereof, i.e., till _[INSERT date] ; and further agrees to renew this guarantee for another 3 years on the following terms: the Bank will provide the Government with written notice no later than 60 d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

piration of the Bank Guarantee. Provided further that, notwithstanding any other things contained herein, the liabilities of the Bank shall be limited to the maximum of the guaranteed amount of Rs.__[INSERT amount of tax in dispute]_ (Rupees _[INSERT written text]-), as increased by interest pursuant to paragraph (1 ) during the term of this Bank Guarantee; and unless a claim in writing is lodged with the Bank, or action to enforce the claim under the guarantee is filed or initiated against the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he taxable years in question: (i) the payment by the Bank or the Assessee to the Government of the guaranteed amounts; (ii) the payment by the Assessee to the Government of all amounts owed, as agreed to by the Competent Authorities in a MAP Agreement; (iii) a MAP Agreement by the Competent Authorities that the Government will not seek to recover any part of the previously-demanded amounts; or (iv) the Assessee furnishes to the Government similar security from another Bank. (4) The guarantee her .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s under this guarantee by any exercise by the Government of the liberty with reference to the matter aforesaid or by reasons of time being given to the Assessee, or by any other act of forbearance or enforcement on the part of the Government, or by any indulgence by the Government to the Assessee, or by any other matter or thing whatsoever which under the law relating to sureties would but for these provisions have the effect of so releasing the Bank from its such liability. The Bank hereby agre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Forum
what is new what is new
  ↓     bird's eye view     ↓  


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version