Policy Advocacy


  

NASSCOM’s submission to CBDT on PE attribution approach

NASSCOM’s has submitted suggestions to Central Board of Direct Taxes (‘CBDT’) on the report of proposed ‘Amendment of rules for profit attribution to Permanent Establishment’ The proposed changes to the rules have been made by a Committee constituted by the CBDT with a mandate to: Examine the existing scheme of profit attribution to PE under the Double Taxation Avoidance Agreements. Examine the contribution of demand side and supply side factors in profit attribution. Recommend the changes needed in rule 10 of Income-tax Rules to provide specific rules on how profits are to be attributed to a non-resident person having PE in India. Context: Taxation of profits attributable to a Permanent Establishment (‘PE’) is a matter of global concern.  In India’s case, lack of definitive rules under th...

NASSCOM recommendation to TRAI to abolish OSP registration

NASSCOM recently made its submission on the TRAI Consultation Paper on the review of terms and conditions for  registration of Other Service Providers (OSPs) recommending it to abolish the OSP regime as it has serve its purpose. In our submission, we have discussed the relevance of the objectives OSP Regulations in 2019. Providing special dispensation to the BPM Industry: The OSP Regulations when introduced were a means for BPO units, which required large amounts of telecom resources to obtain what was then a scarce and expensive resource. Given the scarcity and price of bandwidth, such a regulation was required to enable genuine users to obtain resources to conduct legitimate businesses. However, we’ve come a long way since the time when people had to queue up for telephone registrations ...

Member Consultation: Generation of Electronic Invoice on GST Portal

The GST Council has formally constituted a Committee of Officers on ‘generation of electronic invoice through the GST portal’.  This seems to be a clear action step post representation by the industry.  The committee is required to submit the report within 3 weeks. NASSCOM plans to file the representation to the Committee. As the timelines are short, members are requested to review the attached set of issues identified by us and provide your views on the same and any other suggestion, latest by 17th May 2019 (Friday) to Tejasvi Gupta at tejasvi@nasscom.in  

Discussion Points on CBDT’s proposal for Amendment of Rules for Profit Attribution to Permanent Establishments (PEs)

Objective The purpose of this document is to discuss the draft report (Report) of the Committee constituted by the Central Board of Direct Taxes (CBDT) on ‘Amendment of rules for profit attribution to Permanent Establishment’. The Report has been issued by the Committee in view of the significance of issues relating to profit attribution to a PE as well as the need to bring greater clarity and predictability in the applicable tax regime. Background and position under the current law Taxation of profits attributable to a Permanent Establishment (PE) is a matter of global concern, including in India.  Lack of definitive rules under the Income Tax Act, 1961 (IT Act) and inconsistent allocation by the courts in different case laws has led to a lot of uncertainty in taxation for non-residents. ...

SEBI’s circular on reporting for AI and ML applications and systems offered and used by mutual funds

Policy Update 10.05.2019 SEBI’s circular on reporting for AI and ML applications and systems offered and used by mutual funds   Background The Securities and Exchange Board of India (SEBI) has asked all mutual funds companies in India to report Artificial Intelligence (AI) and Machine Learning (ML) applications and systems offered to investors (individuals and institutions) or used internally by it to facilitate investing and trading or for any other purpose. The move is aimed at conducting a survey for creating an inventory of the AI / ML landscape in the Indian financial markets to gain an in-depth understanding of the adoption of such technologies in the markets and to ensure preparedness for any AI / ML policies that may arise in the future. “As most AI / ML systems are black boxes and...

NASSCOM’s feedback to the Reserve Bank of India on the Draft Enabling Framework for Regulatory Sandbox

Feedback on the Draft Enabling Framework for Regulatory Sandbox At the outset we would like to congratulate the Reserve Bank of India (RBI) for taking this positive step towards enabling a regulatory sandbox and seeking public comments on the proposed framework.[1] As the representative of the information technology industry, we also thank RBI for this opportunity to present our views and suggestions on the draft Enabling Framework for Regulatory Sandbox which will allow start-ups to test new products, services or business models with customers in a live environment, subject to certain safeguards and oversight. This will serve as an important tool of financial inclusion in the country. Based on inputs from our members and other stakeholders, we have prepared our response which reviews the ...

Emerging Technologies: Leading the next wave of IP Creation for India

India is on course to become one of the leading hubs for innovation, research and development. The intellectual property industry is also assessed to have a huge growth potential in the current Indian and Global context. With regards to this, the National Association of Software and Services Companies (NASSCOM) today, unveiled its report titled ‘Emerging Technologies: Leading the next wave of IP Creation for India’. The report showcases how companies in India are creating IP assets in the US, which is one of the most favored destination for filing patents. Key findings: Some key statistics include: Over 4600 patents filed in the US over the period 2015 -2018 from Indian domiciled companies (this is as per published patents and the numbers will increase as there is an 18 month lag). 40% of ...

Policy Brief:RBI’s draft enabling framework for regulatory sandbox

NASSCOM Policy Brief   24.04.2019  The Reserve Bank of India’s draft enabling framework for regulatory sandbox   Context In a move to promote technological innovations aimed at financial inclusion, the Reserve Bank of India (RBI) has proposed to set up regulatory sandboxes where startups can test new products, services or business models with customers in a live environment, subject to certain safeguards and oversight. According to the draft consultation paper released by the central bank last week, the focus of these sandboxes will be to encourage innovations where there is absence of governing regulations; there is a need to temporarily ease regulations for enabling the proposed innovation; and the proposed innovation shows promise of easing/effecting delivery of financial services in a ...

Inviting comments on draft regulatory sandbox framework by RBI

The Reserve Bank of India (RBI) has proposed to set up regulatory sandboxes where startups can test new products, services or business models with customers in a live environment, subject to certain safeguards and oversight. According to the draft consultation paper released by the central bank last week, the focus of these sandboxes will be to encourage innovations where there is absence of governing regulations; there is a need to temporarily ease regulations for enabling the proposed innovation; and the proposed innovation shows promise of easing/effecting delivery of financial services in a significant way. While these sandboxes have been mandated to focus on thematic cohorts such as financial inclusion, payments and lending, digital KYC; any product/services which have been banned by ...

Member consultation: CBDT’s draft rules on attribution of profits to PEs

The CBDT has on 18.04.19 released draft rules (available here) on attribution of profits to permanent establishments. These would have widespread ramifications for multinational companies that are having sales in India or users in India.  The rules appear to be timed with a view to pre-empt the discussions on the digital economy at the OECD/ G20 and could also be a harbinger of the significant economic presence criteria.  The proposed rules give a go-by to transfer pricing principles based on functional analysis and bench-marking, preferring to adopt fractional formulary allocation for attribution of profits to the PE. Key observations from the report of the constituted Committee: The Committee explains its rationale for not adopting the OECD guidance that gives primacy to the Functions, A...

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