CA Online

Spooked by a recent breach of foreign ownership limit at HDFC Bank, regulators and intermediaries are grappling with the question of monitoring foreign investors in real time. Both held talks on exchange of data to track realtime behaviour of foreign investors.According to sources, the Securities and Exchange of India (Sebi) and the Reserve Bank of India (RBI) met last week to discuss the February breach at HDFC Bank.They also discussed whether new systems can installed to observe foreign shareholdings and prevent breaches of investment limits. At present, only the RBI monitors foreign investments daily. Its alarm goes off each time foreign ownership in a company breaches a certain limit, which is typically lower than the actual ceiling.However, that alarm goes off after market hours only; intraday, it never rings. Hence, the need for realtime monitoring. "There isa need for realtime data integration between depositories, custodians, and stock exchanges.If the stock exchange has ...

The government will consider the demands made by foreign retailers for allowing nonfood items such as home care products under the foreign direct investment (FDI) policy, Union minister Harsimrat Kaur Badal on Monday said. Last year, the government had allowed 100 per cent FDI in marketing of food products which are produced and manufactured in India. "Many big global retailers are keen to set up their stores in India after we allowed 100 per cent FDI in food processing sector. But they are demanding they should be allowed to sell nonfood items such as home care products," Badal told Press Trust of India. The minister on Monday heldameeting with representatives of 22 countries for inviting them to participate in World Food Fair to be organised in New Delhi in October. She said the representatives sought that foreign retailers be allowed to import food products for initial six to eight months to test these items in Indian market before establishing facilities in the country. ...

Exemptions, and the fact that farm income is outside the tax net, ensure that India´s tax GDP ratio stays low The view that Indians don´t pay their fair share of taxes resonates widely in public discourse.So much so that even Finance Minister Arun Jaitley presented figures in his recent Budget to buttress the claim of India being a tax non compliant society. But how accurate is this widely held view? Is tax compliance, especially on the personal income tax side, as poor as is being made out to be? The data points in both directions. Economists point to the Economic Survey (201516) which showed that the average tax GDP ratio for emerging economies is 21.4 per cent, while that for India is way lower at 16.6 per cent. The difference is largely on the direct tax side where India´s tax GDP ratio is at 5.6 per cent compared to the emerging market average of 7.4 per cent.On the indirect tax side, India´s tax GDP ratio of 10.1 per cent is only marginally lower than the emerging market average...

At an Indian multinational (MNC) that owns a foreign subsidiary through a company registered in Singapore, this is an unsettling time. Senior executives are preparing to visit the island country to attend a board meeting that's been organised outside India for the first time. In Bengaluru, senior executives at a prominent startup huddle together every week to discuss a potentially disruptive matter. In both the cases, the companies are staring at a likely tax liability in the coming year on account of a new regulation -Place of Effecti ve Management or PoEM. This is a framework to determine the tax payable by a foreign company that for all purposes is managed from India and yet does not pay tax domestically.  Many Indian companies that have traditionally used holding companies and subsidiaries overseas for various reasons are assessing how they may be affected and are racing to put new structures in place before they come under scrutiny from next year. “For instance, multinational...