Neerajbhagat & Co-chartered Accounts in Delhi, Mumbai, Gurgoan Vikas Puri, Delhi

Permitted sectors As mentioned above, FDI is permissible in certain with a cap on the maximum permissible foreign holding. Details of same of the sectors in which FDI is subject to sectoral caps is available on following link : FDI Circular 2014 Other sector-specific conditions for some of the sectors FDI in various sectors is governed by conditions laid down by the DIPP. These include, among others, minimum capitalization in the case of non-banking finance companies, minimum projects size & capitalization for real estate companies. Discussed below are certain sectors in which FDI is permitted under the Automatic routeApproval Route subject to certain conditionsrestrictions. i. FDI in single-brand retail trading The government has now allowed FDI of up to 100 percent in the retail trade of single brand products, subjects to the prior approval of the FIPB and the compliance with the following conditions: The products to be sold are of a single brand. The products are sold under the same brand in India, and every other country in which the product is sold. Single brand product retailing only covers products that are branded during the manufacturing process. The foreign investor should own the brand or one non-resident entity, whether owner of the brand or otherwise, and shall be permitted to undertake single brand product retail trading for the specific brand through a legally tenable agreement, with the brand owner for the specific brand for which approval is being sought. If the proposal for FDI exceeds 51 percent of the total capital of the company, at least 30 percent of the products sold have to mandatorily be sourced from Indian small industries (where the total investment in plant and machinery does not exceed US$ 2 million at the time of installation), village and cottage industries, artisans and craftsmen.

Existence of Tax credits Indian tax law authorizes the Indian Government to enter into an agreement with the government of any other country to grant relief in respect of income on which taxes have been paid in both countries, to avoid double taxation of income, to exchange information for the prevention of evasion or avoidance of income tax and to recover income tax. The Finance Act 2006 introduced a new sec 90A, whereby any specified association in India may enter into agreement with their counterparts in the specified territory outside India and the Central Government may, by notification in the Official Gazette make such provision as may be necessary for adopting and implementing such agreement to grant relied in respect of income on which taxes have been paid in both countries, to avoid double taxation of Income, to exchange information for the prevention of evasion or avoidance of income tax and to recover income tax. Unilateral relief is also available, mainly to persons who are resident in India. The relied is allowed in respect of income which has accrued outside India where tax is payable both in the foreign country and in India. The foreign country must be one with which India has no tax treaty and the tax must actually have been paid in that country. Indian tax laws do not contain any provision for tax sparing. Double tax relief is granted but only with reference to tax actually paid. Likewise, tax treaties entered into by India usually do not provide for tax sparing.

Internal Audit is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization. It is an independent, objectives assurance and consulting activity designed to add value and improve an organization’s operations. It helps organization to accomplish objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and government process. 1. Scope and Objectives of Internal Audit As per AAS-6, Internal Control System refers to all the policies and procedures adopted by the management of the entity to assist in achieving management’s objectives ensuring the orderly conduct of the business, the accuracy and completeness of accounting records, the timely preparation of financial information, safeguarding of assets of enterprises and detection of fraud and errors in a timely manner. The internal audit function constitutes a separate component of internal control with the objective of determining whether other internal controls are well designed and properly evaluated.

Normally, a foreign citizen who visits India and renders services incurs tax liability on the income earned in India. When an expatriate works in India, their entire salary-related income is subject to tax, even if it is paid outside India. Expenses incurred by an employer in moving an expatriate to and from India and home-leave airfares are not considered taxable income in India. Similarly, payments made in an expatriate’s home country as retirements benefits are also not considered as income earned in India. For tax purposes, salary includes base salary, cost-of-living allowances, bonuses, ex-gratia, reimbursement of school fees, utilities, house rent, transportation, tax reimbursements and other payments the company makes on behalf of the employee. Certain in-kind benefits, such as company-lased accommodations, security guards, provision of car with driver, are all taxable on a concessional basis.