April 2010, a finance deepshikha sikarwar economic times forex official told ET. The government is trying to put in the legal framework that will underpin the GST and the meeting of the empowered committee of state finance ministers with Union finance minister Pranab Mukherjee on October 30 will finalise the contours of the comprehensive value-added tax. Though the final shape of the proposed tax is not yet clear, the Centre is keen on moving the constitutional amendment legislation in the winter session.
But a number of stakeholders have expressed doubt about the government meeting the April 1, 2010, deadline. Some states, including Tamil Nadu, Madhya Pradesh and Chhattisgarh have cautioned against rushing into the new regime and suggested a roll-out only after full preparation. Centre compensating them for any revenue loss that they may incur in the process of a switch-over to the new tax regime. The Centre has also initiated discussions with some large IT companies to create the technology infrastructure for the new tax and is ready to provide funding to states. INDIA is reworking its tax treaty with Cyprus to check its abuse.
The tax treaty offers benefits, akin to India-Mauritius Double Taxation Avoidance Agreement, like exemption from capital gains tax. New Delhi has already initiated negotiations with Cyprus for bringing changes in the treaty. Cyprus is also considered a tax haven similar to Mauritius. Under the India-Cyprus tax treaty, capital gains arising in India are exempt from tax and dividend income from withholding tax.
Cyprus also does not levy any tax on capital gains. Under, the limitation of benefits clause, entities which are not eligible cannot get any benefit under the tax treaty. India has built in this provision in its treaty with Singapore and it is keen on bringing this provision in its treaty with Mauritius. Though this clause, the governments can deny benefits of the treaty if the affairs with a view to take advantage of the treaty. Listing on the stock exchange in any of the countries, a ceiling for turnover, a certain cap on expenditure on carrying the operations in one of the contracting states are some of the restrictions which could be brought in. Cyprus stems from alleged misuse of the treaty by companies that route their investments into the Indian securities market to get exemption from capital gains tax.
Preventing misuse of tax treaties has also been laid down in the National Common Minimum Programme of the UPA government. Whether a chain or independent restaurant, the NRAI is here to help every step of the way. The confusion arises as food, for instance, isn’t necessarily prepared onsite but supplied by a caterer. Industry has now made a representation to the finance ministry and the GST Council, seeking resolution of the issue.