Tax Trends in Emerging India Survey

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Tax Trends inEmerging India

Survey 2011

kpmg.com/in


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2011 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

Acknowledgement

We gratefully acknowledge the contribution of participants and thank them for their valuable time.

Over the last couple of months, several senior people within KPMG have worked hard to conduct

interviews and complete the results. We thank the team for their efforts and, in particular, weacknowledge the efforts of Punit Shah, Girish Vanvari, Nabin Balodia, Gautam Chemburkar, Naveen Gupta

and Hariharan Gangadharan in putting the report together.


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The transition of India from an insular economy in the early nineties

to a global economy is indeed remarkable. As we come to grips with

being a part of a global economy, it is imperative that the tax policies of

the country keep pace with the global tax regime.

The last decade has seen an evolution at the Indian Tax Office. The settingup of International Taxation and TP cells manifests that. Having said this,

the tax environment in India is often viewed as complex with multiplicity of

indirect taxes, burgeoning litigation and a lack of certainty. As India moves

towards implementation of the new Direct Taxes Code and the Goods and

Services Tax, the critical question which comes up is - what are the pain

points that taxpayers in India experience in relation to tax policies and their

implementation, and how far are these addressed in the proposed legislations?

We believe that tax policies can be an effective mechanism to promote

investments, both international and domestic, which India needs in abundance.

We at KPMG in India have carried out a survey to seek inputs as would facilitate a

dialogue between some of the largest Indian Corporates and the Government so

that tax policies and their implementation are in sync with the expectations of the

corporate world. We are delighted to present our findings in this Report.

As these findings indicate, tax policies are an important consideration in any

investment decision. Corporate India is increasingly concerned about the lack of

certainty and the positions taken by the Revenue Authorities on a variety of issues. The

fact that it takes a significant amount of time to reach a conclusion on litigation, is an

area of concern. We hope that these findings and the attendant suggestions will providea broad framework to the Revenue Authorities on the concerns of Corporate India. We

expect to closely work with the Government in the implementation of policies that will

facilitate the growth of Corporate India and ensure a vibrant Indian economy.

Dinesh Kanabar

Deputy CEO & Chairman Tax

KPMG in India

November 2011

Preface


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Contents

Executive Summary 02

Survey findings 03Significance of tax in decision-making 05

Tax policy as a tool for fostering growth 06

Expectations from a changing tax system 07

Direct Taxes Code 09

Indirect taxes and GST 11

Compliance and procedural issues 13

Dispute resolution mechanisms 14

Transfer Pricing 15

Merger and Acquisitions 17Limited Liability Partnerships 18

Taxation of expatriates 18

Sector specific issues 19

Methodology 23

Way forward 25

1


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Executive SummaryIn a time of global economic

uncertainty, businesses are

increasingly paying close attention

to the challenges posed by tax

regimes all over the world. Withmounting concerns over transfer

pricing adjustments, uncertainties

surrounding taxability of transactions

and the multiplicity of indirect levies,

taxpayers in India are no exception to

this global trend.

It is in this background that this Survey

seeks to evaluate how the Indian

tax system is perceived among the

taxpayer community and to identifykey areas of concern, so that the

emergent trends can be identified and

taken up for resolution at appropriate

policy levels.

Tax regimes are rarely, if ever, popular

with taxpayers. Yet, the Indian tax

system did not fare too well with only

one percent of respondents viewing it

as being very conducive to economic

growth. Several respondents

identified the lack of certainty in both

tax policy as well as administration as

contributing to this perception.

Specifically, TP emerged as one ofthe key challenges faced by taxpayers

with respondents raising several

concerns over the way transfer pricing

norms are administered in India.

While policy changes such as the

introduction APA regime are keenly

awaited, many respondents seem to

prefer a wait and watch approach in

this regard.

The proposed reforms in the taxsystem also drew a mixed response,

with the GST generating more

optimism than the DTC. However,

the consultative approach of the

Government in pursuing this reform

agenda was appreciated.

While e-governance initiatives in

the tax system were lauded, several

respondents felt that the benefit

of improved systems had not yetresulted in quick processing of

refunds. The need for effective dispute

resolution too continued to be felt

with the DRP being widely perceived

as not having entirely achieved its

objectives.

While the seriousness of many

of the concerns highlighted in the

survey cannot be underestimated,

there is little doubt that tackling them

proactively will provide policy makers

with a huge opportunity to make

the Indian tax system vastly more

attractive to investors, thus providing

a much needed fillip to our economic

future.

2


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Survey findings

3


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4


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5

Significance of tax indecision-makingA significant number of participants

viewed tax as an important determinantof the investment climate in India. As

the Government seeks to hasten the

pace of liberalisation, the message

that seems to be emerging is that

while foreign investment will continue

to flow into India on account of its

inherent economic advantages, tax

constitutes an important part of decision

making, and not dealing with tax issues

appropriately could have adverse

consequences.

Understandably, transfer pricing is a key

cause for concern. To some extent, this

problem is not peculiar to India alone.

However, the recent transfer pricing

audits with a potential adjustment of

USD10 bn reflects the heightened

concern in the taxpayer community as

to whether transfer pricing is viewed

by the Government solely as a tool to

ensure that a fair arms length price is

charged in inter-company transactions.

The fact that most transfer pricingadjustments have a potential for

economic double taxation accentuates

this concern. Perhaps the lesser

concern shown by respondents towards

indirect taxes is due to the perception

that indirect tax liability is borne by

customers or alternatively set-off

against input credit.

Respondentsconsider tax tobe a significantfactor in decision-making and vitalto the health ofbusiness.

64%

Key concerns


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6

Tax policy as a tool forfostering growth

Given that most corporates globally do

not regard any tax regime as being very

conducive to growth, the above resultsare not surprising. Indian tax rates

cannot be considered as excessively

high. Yet, there are several non-tax

rate related issues that were identified

by respondents as being a cause for

concern.

These include the increasing trend of tax

disputes on cross-border transactions,

heightened TP adjustments, unexpected

changes in tax policies/implementation

and a general lack of certainity.

However, the willingness of theGovernment to introduce reforms has

been well received by respondents.

Eighty percent of respondents surveyed

attributed high sensitivity and concern

to sudden and unexpected changes

proposed by the Government like

withdrawal of tax holidays. This is

followed by concern expressed by 74

percent of the respondents on recent

tax disputes raised by tax authorities

on cross-border transactions. Otherissues identified include the uncertainty

surrounding the India-Mauritius

DTAA (60 percent) and increased TP

adjustments (54 percent)

While the seriousness of these

challenges cannot be underestimated,

tackling these issues proactively

would provide policy makers with a

huge opportunity to make the Indian

tax system vastly more attractive to

investors without necessarily having to

cut tax rates.

felt that the Indian tax system was

moderately conducive to growth.

While 64 percent of respondents viewedtax as being an important constituentof decision making, only one percentthought highly of the Indian tax system.

55%


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7

Expectations from achanging tax systemThe Indian tax system is expected to witness a paradigm shift with the introduction

of the DTC and GST. Both legislations currently being deliberated by Governmentcommittees, seek to eliminate distortions in tax structure by providing greater

simplification, reducing the scope for litigation and improving compliance.

It is interesting to note that while 78 percent of respondents were optimistic about

the probable benefits of implementation of GST, only 57 percent were enthused

about the DTC. However, the consultative process adopted by the Government in

relation to these legislations has found favour.


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Introduction of DTC and GST will mark a watershed.These reforms will result in moderation of rates,simplification of laws and better compliance.

Union Finance Ministers Budget Speech 2011-12


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9

Direct Taxes CodeHeralding certainty or adding to complexity?

The Government has announced its

intention to introduce DTC with effect

from 1 April 2012. While the jury is stillout as to whether this deadline will be

met, there are increased expectations

that many of the provisions of the DTC

will find place in the Union Budget 2012

should the introduction of the DTC be

delayed.

Despite the stated objectives behind

the DTC, more than 50 percent

of the respondents expressed anapprehention that the DTC could add to

the complexity in law. Residency rules

topped the list of provisions that add

more complexity with 80 percent of the

respondents expressing the view that

it would require further clarification and

careful enforcement; else it may prove

to be counter-productive.

DTC concerns


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10

Respondents from the financial services

sector were particularly concerned

about the lack of clarity on passive

income under the CFC rules.

There was also a strong level of support

for anti- evasion tools proposed in

the DTC. This breaks all stereotypesand re-inforces the fact that the

corporate sector is supportive of

the Governments efforts to combat

tax evasion. However, respondents

expressed anxiousness about the

implementation of anti avoidance

provisions in the DTC, especially as

regards the burden of proof and the

consistency in its application.

In this regard, the approach to the GAAR

adopted by countries like Australia and

Canada may serve as a useful reference

for policymakers. Canada places the

onus of proving avoidance on the tax

authorities, and Australia requires a

mandatory reference to an independent

panel consisting of outside experts priorto invocation of the GAAR. A similar

approach in India would go a long way

in assuaging some of the concerns

highlighted by the respondents.

Finally, an overwhelming number of

respondents felt that the proposed

Residency Rules and the CFC

regulations are not consistent with the

aspirations of Corporate India in wanting

to become a global player.

There should be some basis for tax authorities toinvoke GAAR. The burden of proof should be on the taxauthorities.

CFO of a leading energy company


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11 | Challenges faced by British business in India11

Indirect TaxesStrengthening the value chain

Often quoted as the single largest

reform initiative in the history of the

indirect tax system in India, GST hasraised expectations of businesses

across industries. With the current

system riddled with multiplicity of taxes

at the Centre and State levels and the

cascading impact of indirect taxes,

businesses are eager for a common

enactment subsuming the plethora

of taxes at the Centre and the States.

India is thus all set to join the 150 odd

countries which have already introduced

a GST/National VAT. Like Canada andBrazil, the Indian GST will be a dual GST

encompassing a Central as well as State

GST

On the GST, respondents expressed concerns on areas such as cross-location

credit fungibility, continuation of exemptions / concessions post-implementation,

additional costs for re-configuring IT infrastructure and the proposed tax on stock

transfer. The need for further simplification and concerns on the implementation by

the government were also highlighted

Quite a few respondents expressed concern on the challenges faced by them while

obtaining the refund of taxes paid on inputs/ input services used in provision of

services that are exported.

Of the respondentsare optimisticabout GST and areeagerly awaiting itsimplementation

78%

GST would be a changefor the better. It seems

business friendly.General Manager (Finance) of a

global automobile company


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12

When asked to share their experiences in respect of refund claims of input

credits, a majority of respondents felt that it was a long drawn process and that it a

substantial amount of time involved in processing of refund claims.

On their experience with the reverse charge mechanism i.e. where they are

required to discharge the Service Tax liability on receipt of services, several

respondents highlighted the difficulties involved in having to obtain /amend Service

Tax registrations to include the one off (not recurring) taxable service imported. The

impact of this was seen as particularly acute in situations where the respondents

are receiving such one-off services frequently.

Most of the respondents felt that the requirement that the invoice should be issued

within a period of 14 days from the completion of the taxable service was complex

and difficult in practice. The underlying message seems to be that tax should follow

business and not vice versa.

Of the respondents saidthat the change in Point of

Taxation rules has impactedtheir operations

54%

Our main concerns arethe increased costs toconsumers, administrative

uncertainties and theamount of investmentrequired to reconfigure theIT infrastructure.

Head of Taxation of a leading

multinational bank

It seems there may be serious implementationchallenges concerning GST. There are also concernsabout improper drafting and giving wide discretionarypowers to authorities.

Senior Vice President (Global Tax)of a leading Indian pharmaceutical company

Impact of Point of Taxation Rules


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13

Compliance and proceduralissuesWe surveyed the respondents on key

challenges faced by them with respectto various compliance and procedural

issues. Not surprisingly, the top-most

concern of respondents was the

introduction of a higher withholding

tax rate of 20 percent in the absence

of PAN, with 93 percent of them

favouring its discontinuance. More than

two-thirds of respondents responded

that they faced difficulties in obtainingrefunds and an equivalent number cited

mismatch of TDS credit in the Online Tax

Statement (Form 26AS) against physical

TDS certificates as a major challenge.

A majority (59 percent) of respondents

do not favour DDT due to the

uncertainty involved in availing credit

for it in foreign jurisdictions. A sizeable

number of respondents expressed

concern about the arbitrary manner

in which penalty provisions were

administered.

The key takeaways on this front seem

to be that while the DDT was intended

to usher in simplicity in the tax regime

applicable to dividends, it is not without

its own share of challenges. The

Government should reconsider whether

a withholding tax regime would be

more effective than DDT. There is also a

need for serious reconsideration of the

provisions of section 206AA, especially

for non-resident assesses.

There is no such thing thatquickens the processing ofrefunds - it is a myth.

Head of Tax of a leading

multinational bank

Applicability of Section206AA should be restrictedto domestic transactionsand requirements ofobtaining certificates fromchartered accountants forinternational transactionsshould be done away with.

Tax Director of a global

software manufacturer

Compliance/ Procedural Concerns


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There is an urgent needfor structural changessuch as - making officersmore accountable and re-defining their performanceindicators.

Director (Finance) of a multinational

electronic goods and office equipment

manufacturer

Dispute resolutionmechanismsThe survey results interestingly show

a sharp contrast between the twodispute resolution mechanisms the

DRP and the AAR. While a majority (57

percent) of respondents considered

Advance Rulings to be an effective

mechanism for achieving tax certainty in

international transactions, an opposite

trend was observed in the case of

DRP with 79 percent of respondents

responding that the DRP had not met

its objective of facilitating expeditious

resolution of disputes.

The takeaway from this seems to

be that the DRP as an initiative wasintroduced with the right intentions, but

has been lacking in implementation. It is

critical to devise measures to make the

DRP more effective. For this, a proper

framework needs to be in place which

permits the DRP to be able to deal with

issues on merits without worrying about

its impact as a precedent.


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15 | Challenges faced by British business in India15

Transfer PricingIn the 10 years that have elapsed since

its introduction, TP has emerged as one

of the most significant challenges faced

by taxpayers in India. An overwhelming

majority (65 percent) of the respondents

said they were facing challenges in TP.

From an illustrative list of issues, we

asked respondents to mark out the

ones they considered most significant.

The issues which concerned the largest

number of respondents (38 percent)

were the cross charge of costs and

rendering of services.

Amongst the 21 percent who fell in the residuary category, the issues most cited

were the use of unrealistic profit margins and the choice of unrealistic comparables

by the TPOs. Respondents felt that the process of determining the arms length

price by the TPO ended up becoming a purely mathematical exercise without due

consideration being given to the practical and functional aspects of business.

The challenge in transferpricing is the lack ofconsistency in the viewsof the Transfer PricingOfficers, which changeswith the change in theofficer.

Head of Tax of a multinational

company in the household, health

and personal care sector

TP Challenges


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16

On the issue of what steps needed to be taken to address the TP challenges faced

by them, respondents largely were in favour of adopting a composite strategy

which would encompass inter alia better documentation, proactive planning and

entering into dialogue with their foreign associated enterprises. Building robust

documentation and proactive TP planning emerged as the top two trends amongst

the respondents who chose to adopt a singular approach towards TP issues.

Despite the increasing popularity of APAs across the world, most respondents

reacted with cautious optimism to the proposed introduction of APAs in India (52percent). Many indicated that they would adopt a wait and watch approach. The

experience faced in the DRP process was cited as a factor by respondents who

were less enthusiastic about the APA regime.

The introduction of the APA is clearly a very significant and positive step. However,

the key will lie in its implementation.

There must be fairnessand transparency in themanner in which APAs areimplemented at the groundlevel.

Chief Financial Officer of a

multinational pharmaceutical

company


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Mergers and AcquisitionsWith the global economy facing signs of

an impending recession, a consolidation

of capacity is both imperative and

inevitable. An appropriate tax regime

will hold the key to how effectively

companies are able to deal with these

challenges.

Only 27 percent of respondents felt

that current provisions were conducive

to M&A activity. The balance remained

skeptical.

According to respondents, the biggest

challenge (53 percent) that warrants

Government intervention in the M&A

space is the uncertainty surrounding

the India-Mauritius DTAA. Procedural

issues like obtaining approvals came in

at second place.

Government shouldsmoothen out laws relating

to M & A. Further, rulesrelating to carry foward ofdepreciation and lossesshould be relaxed.

Senior Director of a

multinational telecom company

M&A Concerns


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Limited LiabilityPartnershipsThe LLP route was originally intended

as a form of entity for professionals.However, the Limited Liability

Partnership Act in 2009 provides all

entrepreneurs with a hybrid form

of business enterprise which while

providing the benefits of limited

liability, also allows the flexibility of a

partnership. The Government has also

issued guidelines opening up the LLP

route for FDI. However, clarifications

from the Reserve Bank of India in this

regard are still awaited.

Clearly, the LLP form offers many

advantages such as the non-applicabilityof DDT, and the absence of rules

requiring compulsory transfer of profits

to reserves. However, considering the

novelty of the LLP form and the lack of

clarity, not surprisingly, no more than a

third of respondents were bullish on the

LLP structure.

However, this perception could change

once clarifications from the RBI are

issued.

Taxation of expatriatesPredominantly, all respondents hadglobal manpower mobility and a good

majority (61 percent) among them faced

issues in this regard.

Issues highlighted by respondents

primarily included challenging of

the secondment agreement by tax

authorities, exposure to risk of PE,

challenges regarding Employee Stock

Option Plans and provident fund issues.

Respondents also believed that thegovernment could do well by providing

clarity on issues such as economic

employer, PE and service tax.

Most respondents (54 percent) also

faced issues regarding withholding

taxes in the case of deputation of

employees.

Tax laws in India are notaligned to global mobilityneeds.

Senior Vice President of a

leading Indian software company


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Sector specific issues

Technology, Media and Telecommunications

The services sector constitutes by farthe largest component of Indias GDP

and holds the key to the continued

growth and resilience of the Indian

economy.

The IT/ITeS sector in particular, plays

a key role in fuelling export growth

and job creation. While the need for

tax incentives to this sector may be

a debatable issue, the importance ofavoiding tax disincentives needs to be

hardly be emphasised.

The IT/ITeS Sector faces several

challenges on the tax front.

Respondents perception of some of

these challenges is captured below:

Foreign companies earning business

income from sale of software and not

having a PE in India were not liable to

pay tax in India as per the provisions of

the DTAA. However, once income of

companies is characterized as royalty,

then even in absence of PE, they are

liable to tax in India. The approach ofthe tax authorities on this issue is

at divergence with the OECD view

as well as with the views taken in

developed economies like the US. This

has led to protracted litigation, which

may eventually need resolution at the

Supreme Court.

Telecommunication contributes

significantly to the overall socio-

economic development of the

country. With the telecommunication

sector witnessing rapid growth in

India, there has been a spurt in the

requirement for network infrastructure

to serve a burgeoning rural population

having disposable income. While the

Government has taken steps towardspromoting local manufacture of network

equipment, still a majority of network

equipment is purchased from overseas.

Respodents identified the risk of PE and

AOP exposure as the top tax challenges

in connection with payments made to

foreign suppliers of network equipment.

Another issue faced by telecom

operators has been the withholding

tax requirements on inter-service

transactions such as interconnect

charges and use of passive

infrastructure. While respondents

expressed their concerns over the lack

of clarity on this issue, some said thatthey had mitigated the risk by entering

into net of tax arrangements with their

customers.


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20 | Challenges faced by British business in India

With global film studios eyeing the

Indian market, the future for the Media

and Entertainment Sector in India

looks promising. However, in order to

become high performance enterprises,

companies will need to evolve in a

manner such that they optimise taxcosts and adopt best compliance

practices.

When it comes to foreign media

houses, tax authorities it seems, replay

the episode of Agency PE. The down-

linking guidelines issued by the MIB

mandate that the applicant company

should either be the owner of the

channel or it should have exclusive

marketing / distribution rights for India.

Further, the applicant should alsohave authority to conclude contracts

for advertisements, subscription and

programme content. Approval from

the MIB cannot be obtained unless the

aforesaid conditions are complied with.

Accordingly, when these conditions are

met, the foreign company gets exposed

to the risk of Agency PE.

Our primary concernis regarding the AOPexposure in case ofconsortium contracts.

Head of Tax of a global

mobile phone manufacturer

Downlinking guidelines are leading to tax disputes. Inour view, it is unhealthy for business if taxes are merelybecause of certain regulations.

Director (Finance) of a global

news corporation


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Tax holiday period shouldbe extended beyond 2012,Profit linked incentivesshould continue.

Chief Financial Officer of

a private sector power

distribution company

Steps such as removalof MAT, clarity on Section14A, inclusion of allaccounting standards

under Section 145 wouldhelp in attracting moreinvestments.

General Manager (Tax) of a

leading oil and gas company

The sunset clause would have a significant impact ascertain projects would become unviable. Tax holidaysshould ideally be linked to date of award of contract.

Chief Financial Officer of a leading

infrastructure developer

Infrastructure, Government and Healthcare

The infrastructure sector is witnessing

a paradigm shift in its tax regime

with the sunset of tax holidays. Many

respondents feel that considering

the huge gap in Indias infrastructure

requirements, the phasing out of tax

holidays at this stage was premature.

They believed that it would have a

significant impact on Indias overall

economic growth.

While almost two-thirds of respondents

were the view that profit linked

incentives were better than investment

linked incentives, an overwhelming 92

percent of respondents believe that the

existing definition of infrastructure is

antiquated and needs to be re-defined.


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22 | Challenges faced by British business in India22 | Challenges faced by British business in India

When asked to list out the challenges

faced by them in respect of taxation of

investment trusts, apart from problems

in claiming credit for withholding taxes,

respondents highlighted the need for

greater simplification and clarity in the

assessment of trusts.

Almost all respondents welcomed the

idea of introduction of safe harbour

rules for foreign asset management

companies. The minority of respondents

opposed to this idea were unsure

whether they would be fairly

implemented in India.

MTM losses are disallowed in assessments despitetheir being favorable judicial interpretations.

Senior General Manager of a leading privatesector Indian bank

Financial Services Sector

While globally the financial services

sector has been witnessing some

tough times, in India this sector has

been relatively insulated due to robust

regulatory control. The experience of

respondents with regard to claiming a

deduction for MTM losses was mixed,

while some said that they had not faced

any problems on this front, others

vehemently spoke about the inflexibility

of tax authorities at lower levels.

Some even suggested that to prevent

litigation, the CBDT should consider

issuing a new circular to this effect.

While half of the respondents from the

insurance sector seemed unsure about the

documentation requirements prescribed in the

DTC, one-third were confident that their current

documentation would suffice even when DTC

would come into force.

Increase in compliance burden for Insurance companies under DTC


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Methodology


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24 | Challenges faced by British business in India24 | Challenges faced by British business in India

In a business environment which

is more turbulent than dynamic,

there arises a need to understand

developments, trends and the changing

role of business variables, especially

those as critical as tax. This survey

strives to achieve this objective.

Over 130 companies across industry

sectors participated in this survey.

This includes many large companies

including several with substantial

foreign investments. The aggregate

foreign investments made in companies

represented in the survey exceeded

USD 25 billion. Special care was taken

to ensure adequate representation from

all types of industries and businesses

to ensure balanced results. To preserve

confidentiality, no individual company

has been identified in this survey.

Data was gathered by conducting

personal interviews with individuals

entrusted with the overall responsibility

for tax strategy and decision-making.

This included primarily CEOs,CFOs and tax heads. The survey was

conducted in a span of three months

between August and October 2011.

Through this survey, we also seek to

equip policy makers with the views of

business leaders across industries on a

plethora of issues in the field of taxation

to enable them in framing constructive

policies.

Of the respondents havebeen present in India formore than 15 years

75%

Survey participation


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Way forward


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All over the world, tax and regulatory

changes have resulted in additional

costs. They have impacted business

strategies, systems, controls and

sometimes even resources. Transfer

pricing and income-tax challenges

were identified by several respondents

as being the most significant. Service

tax too seems to be fast becoming

a important area of concern. While

companies expressed their deep

concerns over unexpected and sudden

change in law by the Govt, more than50 percent of respondents expressed

their apprehension that DTC may add

to the complexity rather than bringing

certainty.

With the tax and regulatory landscape in

India all set to witness a major overhaul,

the time is right for businesses to re-

evaluate their level of preparedness

in light of these factors. For this,

businesses would need to re-familiarise

themselves objectively with the internal

reporting systems, documentation

policies, litigation history and positions

adopted before tax authorities.Towards

this end, businesses should consider

the following questions which

could help address potential hidden

inconsistencies or gaps in their overall

tax strategy.

1. Do we have a strategy in place to deal

with the changes proposed in the

new legislations?

2. Do we have a comprehensive

and periodic tax risk assessment

mechanism in place?

3. Have our IT systems been re-

configured to deal with the changes

proposed in GST?

4. Do we have the requisite skills and

resources to deal with new concepts?

5. Are we regularly monitoring the

positions adopted by tax authorities

on issues affecting our business?

6. Are we being appropriately

advised in respect of the plethora

of opportunities presented by

the existing tax and regulatory

framework?

7. Are we appropriately raising our

concerns before regulators and policy

makers?

The survey brings out some key

messages and trends. Ultimately, the

manner in which businesses approach

the new challenges and explore

opportunities accompanying these

challenges would largely dictate their

success.

We at KPMG view this Survey asa dialogue with the Government.

We will work with the Government

to help ensure that the feedback is

appropriately factored in the evolution of

future policies.

Uday VedHead of TaxKPMG in India


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Glossary

Abbreviation Full Form

AAR Authority for Advance Rulings

CBDT Central Board of Direct Taxes

CFC Controlled Foreign Company

DDT Dividend Distribution Tax

DRP Dispute Resolution Panel

DSIR Department of Scientific and Industrial Research

DTAA Double Taxation Avoidance Agreement

DTC Direct Taxes Code 2010

GAAR General Anti Avoidance Rules

GST Goods and Services Tax

ITAT Income-tax Appellate Tribunal

LLP Limited Liability Partnership

MAT Minimum Alternate Tax

PE Permanent Establishment

SEZ Special Economic Zone

STP Software Technology Park

TDS Tax Deducted at Source

TP Transfer Pricing

VAT Value Added Tax

AOP Association of Persons

APA Advance Pricing Agreement

GDP Gross Domestic Product

MIB Ministry of Information and Broadcasting

MTM Mark-to-market

OECD Organisation for Economic Co-operation and Development

PAN Permanent Account Number

TPO Transfer Pricing Officer


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About KPMG in India

KPMG is a global network of

professional firms providing Audit,

Tax and Advisory services. We

operate in 150 countries and

have 138,000 people working in

member firms around the world. The

independent member firms of the

KPMG network are affiliated with

KPMG International Cooperative

(KPMG International), a Swiss

entity. Each KPMG firm is a legally

distinct and separate entity and

describes itself as such.

Our Audit offering endeavors to

provide robust and risk based audit

services that address our firms

clients strategic priorities and

business processes.

KPMGs Tax services are designed

to reflect the unique needs and

objectives of each client, whether

we are dealing with the tax aspects

of a cross-border acquisition or

developing and helping to implementa global transfer pricing strategy. In

practical terms, that means KPMG

firms work with their clients to

assist them in achieving effective tax

compliance and managing tax risks,

while helping to control costs.

KPMGs Advisory professionals

provide advice and assistance toenable companies, intermediaries

and public sector bodies to mitigate

risk, improve performance, and

create value. KPMG firms provide a

wide range of Risk Consulting and

Management Consulting that can

help clients respond to immediate

needs as well as put in place the

strategies for the longer term.

In todays connected world, whereborders are just reduced to defining

geographies, businesses are looking

at expanding across countries

making the world smaller than ever

before. Our country corridors are

just the channel that businesses

need to grow beyond borders. We

offer customized advice around

market assessment, investment

strategy, location analysis, tax andregulatory structures, organization

and operations.

KPMG in India, a professional

services firm, is the Indian member

firm of KPMG International and was

established in September 1993. Our

professionals leverage the global

network of firms, providing detailed

knowledge of local laws, regulations,

markets and competition. We

provide services to over 5,000

international and national clients, in

India. KPMG has offices across India

in Bangalore, Delhi, Chandigarh,

Ahmedabad, Mumbai, Pune,

Chennai, Kochi, Hyderabad, and

Kolkata. The firm in India have accessto more than 5,000 Indian and

expatriate professionals, many of

whom are internationally trained. We

strive to provide rapid, performance-

based, industry-focused and

technology-enabled services, which

reflect a shared knowledge of

global and local industries and our

experience of the Indian business

environment.


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Contact us

Dinesh Kanabar

Dy. CEO & Chairman Tax

T: + 91 22 3090 1661

E: [email protected]

Uday Ved

Head of Tax

T: + 91 22 3090 2130

E: [email protected]

kpmg.com/in

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual

or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information

is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information

without appropriate professional advice after a thorough examination of the particular situation. The views and opinions expressed

herein as a part of the Survey are those of the survey respondents and do not necessarily represent the views and opinions of

KPMG in India

Documents

Tax Trends in Emerging India Survey