India: Double Taxation Relief for Companies, New Minimum Wage for Contract Workers
In a relief to companies and individuals having overseas income, the Central Board of Direct Taxes (CBDT) drafted a set of new rules to simplify the use of Foreign Tax Credits (FTC). The proposed framework will allow companies and individuals to claim credits on the taxes paid overseas.
As per the draft:
- Credit for foreign tax will be available against the amount of tax and surcharge payable under the Act but not in respect of any sum payable by way of interest, fee or penalty.
- No credit will be available if the foreign tax amount is disputed in any manner.
The tax credit, CBDT said:
- Will be the “aggregate of the amounts of credit computed separately for each source of income arising from a particular country or specified territory”.
- Will be available against minimum alternate tax (MAT) liability.
The entities claiming tax credit must submit proof of tax paid including certificate from the tax authority or a TDS certificate, online acknowledgement of foreign tax payment and a declaration that the amount being claimed is not under any dispute.
India Sets Minimum Wage for Contract Workers
India has set the minimum wage for contract workers at rupees 10,000 per month (approx. U.S. $150). The government took this decision through an executive order by the Indian Supreme Court, which proposed this minimum wage on the basis of Consumer Price Index (CPI) and variations in Dearness Allowance (DA).
The government plans to continue to make reforms in the labor laws. The Minister of State (MoS) of labor and employment, announced that after implementing a minimum wage for contract workers, the government is considering to give a universal minimum wage a priority.
This will be an important step in closing the widening gap between permanent and contracted employees.
India: New Directive on Merger of Private Banks and Non-Banking Financial Entities.
India’s federal bank (RBI) has issued a master directive for mergers of private sector banks, and between Non-Banking Financial Companies (NBFCs) and private banks.
- All voluntary mergers between private banks and NBFCs will become effective only after RBI’s approval.
- The decision to merge must be approved by the respective boards by two-third majorities.
- In case of banks merging with NBFC, all NBFC accounts must be Know-Your-Customer (KYC) compliant.
- RBI must approve all allotment of shares to investors if the proposed acquisition results in a total holding of 5 percent or more of the paid-up capital of the bank.
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