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If there's a dispute over taxes, there's now a way for a company to prevent its property being attached. It can give a bank guarantee to the tax officer to prevent property, such as a factory, from being attached during the course of a tax assessment. The Budget proposals provide that a tax official can revoke an order for provisional attachment of the property if the taxpayer furnishes a bank guarantee equal to the fair market value of the property, or of an amount sufficient to protect the interests of the revenue authorities. Within 15 days of receipt of the bank guarantee, or within 45 days if the case has been referred to a valuation officer, the order for attaching the property is to be revoked. This proposal will come in force from June 1, 2016. Business entities operating in India, often find that their property, such as an office or a factory building, is attached by the tax authorities during the course of assessment. For instance, operations froze at Nokia's man...

Govt Expands The Net By Plugging LoopholeNon-Compliance To Attract Stiff Penalties Professionals obtaining any sum of money under a non-compete agreement will now be subject to tax with the government having plugged a loophole in the Budget. Once non-compete agreements were largely restricted to the manufacturing arena.For instance, an outgoing employee would have to sign on the dotted line that he would not share knowhow or a patent that he had helped develop during his employment. Or if he was an inventor, he could be debarred under the non-compete agreement from starting a similar line of business for a certain period. The money received under such non-compete agreements was duly taxed. “There was no specific provisions to cover professionals who could argue that the sum of money received by hem under a non-compete agreement was not taxable,“ says Gautam Nayak, tax part ner, CNK & Associates. Now a wide gamut of pro essionals -such as those in he legal, medical, enginee ring or...

The Budget has introduced a special `royalty tax' which lowers the effective rate of tax on income earned from patents. The objective is to encourage indigenous research and development, and to make India an innovation hub. The benefit will be available across knowledge-based sectors of the economy , including pharmaceuticals. The FM proposed a special patent regime with a 10% rate of tax on income from worldwide commercialization of patents which are developed and registered in India. Usually, the domestic company which has commercialized the patent would be paying tax from income at the standard rate of 30% after deducting expense. With this proposal, the tax liability on income from commercialization of patents goes down, and thus would be beneficial for knowledge-based firms, experts say , adding that it would reduce the outflow of intellectual property from India. The aim of the `concessional taxation regime' extended across sectors, for income derived from patents, is to...

Govt Expands The Net By Plugging Loophole Non-Compliance To Attract Stiff Penalties Professionals obtaining any sum of money under a non-compete agreement will now be subject to tax with the government having plugged a loophole in the Budget. Once non-compete agreements were largely restricted to the manufacturing arena.For instance, an outgoing employee would have to sign on the dotted line that he would not share knowhow or a patent that he had helped develop during his employment. Or if he was an inventor, he could be debarred under the non-compete agreement from starting a similar line of business for a certain period. The money received under such non-compete agreements was duly taxed. “There was no specific provisions to cover professionals who could argue that the sum of money received by hem under a non-compete agreement was not taxable,“ says Gautam Nayak, tax part ner, CNK & Associates. Now a wide gamut of pro essionals -such as those in he legal, medical, enginee ring ...