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    Introduction:     

    Transactions involving acquisition and transfer of immovable properties in India by non-residents are governed by Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018, which were issued vide Notification No. 21(R)/2019-RB, dated March 26, 2018 (“Immovable Property in India Regulations”).   

    Similarly, transactions involving acquisition and transfer of immovable properties outside India by persons resident in India are governed by Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015 which were issued vide Notification No. 7(R) / 2015-RB, dated January 21, 2016. 

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    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.

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    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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    • INTRODUCTION

    “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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