Top India investment and restructuring strategies & Recent regulatory updates

November 2015

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© 2015 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.

Top India investment strategies and restructuring considerations

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© 2015 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.

A foreign company operating in India should be mindful of the following-

Indian tax implications and reporting requirements even if foreign company’s India sourced income is exempt under relevant treaty

Taxation of employees of foreign company sent to India on secondment

PE exposure on account of deputation of expatriates

Scope of Royalty/ Fee for technical services- Tax implications

Non-Compliance - not only attracts penalty, but may have prosecution exposure

Tax risk management- Long pending litigations- High litigation costs and negative impact on the brand value

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© 2015 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.

Important regulatory updates

Reduction in corporate tax rate over the next four years from 30

to 25 per cent

Advance Pricing Rulings in Transfer Pricing provided in few cases – APA’s for 5 years ahead

and 4 years roll-back can be obtained

Clarity on taxation of indirect transfer provisions

General Anti Avoidance Rules deferred till March 2017

Rate of tax on royalty and FTS payments to non-residents

reduced from 26 % to 10.5%

Stringent penalties on Directors /Key personnel on non –

compliance under the new Companies Act

Clarity on retrospective amendment - Vodafone

litigation settled

Spending on Corporate Social responsibility (CSR) – 2% of profits

Audit Rotation - Game changer for KPMG in India

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© 2015 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.

Important regulatory updates

Modi Government – Intent to minimize litigation – New AAR

benches, GAAR deferred, Internal mandates to expedite and close

litigations

10 Income Computation Disclosure Standards notified – Applicable

from FY 2015-16

Notices to FPIs requiring them to pay MAT which traditionally has not

been applied to foreign funds

Goods and Services Tax (‘GST’) – Lok Sabha passes constitutional

amendment bill for GST

New law to deal with Black money stashed by residents abroad

Increased focus of CBDT on non-compliances of return filing, tax

withholding and information collection for foreign remittances

FDI in LLP where 100% FDI is permitted under automatic route

and there are no FDI related conditions

ECB now permitted for working capital purposes under automatic

route subject to fulfilment of conditions

Modified Special Incentive Package Scheme to boost the ‘Electronic

System Design and Manufacturing’ sector

Thank You

Amit JainDirector, Deal Advisory, M&A (India Center of excellence)KPMG LLP | 3975 Freedom Circle drive I Santa Clara, California, USA 95054Direct: +1 (408) 367-4145 | Mobile: +1 (408) 930-5063| amitjain7@kpmg.com