Latest Blogs from SBS and Company LLP

    An Analysis of Section 2(22)(e)

    In this piece of write-up, we aim to analyse the concept of ‘deemed dividend’, under the income tax laws right from the Income Tax Act, 1922 to current provisions. The said analysis is done with the support of various judgments at various forums on the said aspect. After a detailed deliberation, we wish to conclude with our views on the said concept.

    Before understanding the said aspect in detail, a few basic concepts about taxability of dividend under the income tax laws would garner interest for the reader. The tax on any amounts which are declared, distributed or paid whether out of current or accumulated profits are to be paid by the company as per Section 115 O of Income Tax Act, 1961 (for brevity ‘Act’). This is normally known as Dividend Distribution Tax (DDT). This is in addition to the normal income tax payable by the company and not a substitute for the normal tax.


    In this edition, we bring to you certain important articles on various aspects.

    The article on ‘Immovable Properties vis-à-vis FEMA Regulations’ is a need of hour where many were being questioned by Enforcement Directorate regarding the purchase of immovable properties in the name of non-resident by residents. This article will help the reader to understand who is eligible to purchase or inherit the immovable properties in India.

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    Reporting of Foreign Investment under FEMA, 1999

    An Indian Entity (Company or LLP) receiving foreign investment has to report the same to Reserve Bank of India (RBI) through Authorised Dealer (AD) Category-I Banks. Reporting of Foreign Investment under FEMA, 1999 is governed Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations (“FEMA FDI Regulations, 2017”) dated November 07, 2017 and Part-IV of Master Direction No-18/2015-16 dated 1st January 2016, as amended from time to time. Non-compliance with the reporting of foreign investment provisions shall be reckoned as contraventions under FEMA, 1999 and could attract penal provisions.



    In General terms, Outsourcing is contracting of any task, operation, job or process that was originally performed by employees within the entity to a third party. About 40% to 50% of the Fortune 500 Companies in the world is leveraging on outsourcing for most of their business process, which demonstrates the importance and gamut of the outsourcing process. 

    India, China and the Philippines are major powerhouses in the industry. In 2017, in India the BPO industry generated US$30 billion in revenue according to the national industry association. 

    The objective of this article is to outline the significance of Outsourcing in a Manufacturing Sector and Risks and Rewards associated with it



    “Equalise" is to make something equal or distribute evenly and “Levy” is to impose or charge, thus Equalisation Levy creates a level playing field.

    Under the existing rules of International Taxation, the Country of Source (“COS”) can tax a non-resident, carrying Business through electronic means, without any physical presence, only if the non-resident has a permanent establishment (“PE”) in the COS. E-commerce companies do not need PE in any COS. They can set up the companies in tax havens and avoid tax in Country of Residence (“COR”) hereby avoiding payment of taxes in both the countries.

    E.g. Indian Company is receiving advertisement services from US Company. Here, COS is the Indian Company and COR is the US Company.

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