India issues Finance Bill 2013 [TAX ALERT]

March 26, 2013

The Finance Bill (FB) 2013 was presented as part of the Union Budget for 2013-14 by the Finance Minister on 28 February 2013.

This alert summarizes some key international tax proposals of the FB. This includes the deferral of the General Anti Avoidance Rule (GAAR) provisions by two years, the levy of additional income tax on the buyback of shares of an unlisted company, the increase in the tax rate to 25 percent for royalty and fees for technical services payments, and an assertion that the requirement of a tax residency certificate is necessary though not sufficient for claiming treaty benefits.

There has also been a small increase in the surcharge on foreign taxpayers from the existing 2% to 5% resulting in an effective corporate tax rate of 43.26% for foreign companies (earning income in excess of Indian Rupees 100 million, approximately US$1.8 million) for the tax year 2013-2014.

Further details are available from the Ernst & Young Tax Alert which can be accessed using the link below:

Questions or comments? Contact T Magazine and Ernst & Young

EY refers to one or more of the member firms of Ernst & Young Global Limited (EYG), a UK private company limited by guarantee. EYG is the principal governance entity of the global EY organization and does not provide any service to clients. Services are provided by EYG member firms. Each of EYG and its member firms is a separate legal entity and has no liability for another such entity's acts or omissions. Certain content on this site may have been prepared by one or more EYG member firms.