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Voting Rights for NRIs
There are 25 million Indian citizens, who are living abroad and the vast majority of them aren’t registered to vote in the world’s largest democracy. Hardly surprising, given the fact that these so-called NRIs have to show up in person in their home constituency on polling day, if they want to take part in the democratic process.
However, now India is all set to streamline the voting process for those, living outside India. It is bound to be welcome news for more than 11 million NRIs across the world that the Supreme Court has approved e-ballot voting for the Indian passport holders abroad, as recommended by the Election Commission. The Apex Court has directed the government to amend laws to put the whole process in place.
In e-voting process, a blank postal ballot paper is emailed to the voter, which is to be filled by an NRI and post it to their constituency. Nevertheless, there is a little risk of manipulation, rigging or violation of secrecy in this system.
This decision also, historically, removes an “unreasonable restriction” posed by Section 20 (A) of the Representation of the People (Amendment) Act of 2010, which required the overseas electors to be physically present in their constituency to cast the vote.
Through this process, NRIs can realise their dream of redefining the political landscape by casting their ballots from where they are, instead of physically coming to India.
The NRI population is 25-million strong, the second largest Diaspora after the overseas Chinese. So far, only a miniscule number of NRIs came to India to cast their votes, considering the expense and time involved.
In a view, the government’s decision to allow NRIs to vote could set the stage for expatriates to emerge as a decisive force in the country’s electoral politics. These additional votes will play a crucial role in state and general elections.
Source:http://www.thehindu.com/news/national/nris-can-vote-through-postal-ballots/article6780906.ece
SMA Legal, empanelled as Legal Advisor to the Embassy of France in India
The Embassy of France in India, New Delhi on the 27thAugust, 2015 has appointed Advocate Shantanu Mohan Puri, Managing Partner of SMA Legal as Legal Advisor to the Embassy. Mr. Atul Srivastav, Social Attache, Embassy of France in a communication has conveyed that in his capacity as a Legal Advisor, Mr. Puri and SMA Legal would administer advice on judicial matters and also provide legal expertise besides representing the Embassy in disputes of judicial nature.
SMA Legal is a boutique Legal Advisory Firm that specializes in high profile cases involving large Indian corporations, International companies with business interests in India, distinguished individuals and country missions to India.
SMA Legal is also providing legal services to numerous other foreign missions including the missions of Portugal, Spain, Netherlands, Switzerland, Greece, United Kingdom, Canada, United States of America and Germany in New Delhi and other Metropolitan cities across India.
From ‘Direct’ to ‘Portfolio’- India opens a new way for Foreign Investors
India allows 100 per cent FDI in business-to-business (B2B) e-commerce through automatic route, but not in B2C companies selling directly to consumers.
With the introduction of a composite cap in foreign investment policy, portfolio investors can now park up to 49 per cent in multi-brand retail and online wholesale companies without government approval. Promising a simpler foreign investment regime, the government has introduced a concept of composite cap for all kinds of overseas inflows, including through Foreign Direct Investment (FDI), Foreign Institutional Investor (FII) and Non Resident Indians (NRI) routes.
Previously, portfolio investment was governed under different laws i.e. the SEBI (Foreign Institutional Investors) Regulations, 1995 (“FII Regulations”) for FIIs and their sub-accounts and SEBI circulars dated August 09, 2011 and January 13, 2012 governing QFIs, which are now repealed under the SEBI (Foreign Portfolio Investors) Regulations, 2014 (“FPI Regulations”) that govern FPIs. Essentially, foreign portfolio investment entails buying of securities, traded in another country, which are highly liquid in nature and, therefore, allow investors to make “quick money” through their frequent buying and selling. Such securities may include instruments like stocks and bonds, and unlike shares, they do not give managerial control to the investor in a company. To govern FPIs, SEBI introduced the FPI Regulations by a notification dated January 7, 2014.
Under FPI Regulations, the following three categories of FPIs have been created on the basis of associated risks -(a) Category I includes foreign investors related with the government such as central banks, government agencies, sovereign wealth funds; (b) Category II includes regulated entities like banks, assets management companies, investment managers etc. and broad-based funds, which may be regulated such as mutual funds, investment trusts etc. or non-regulated; and (c) Category III includes investors, which are not covered under categories I and II. FPIs registration is carried out by SEBI designated depository participants (“DDPs”) on permanent basis unless suspended or cancelled.
FPIs can invest in instruments such as listed or to be listed shares, government securities, units of mutual funds or collective investment schemes, treasury bills, corporate debt and Indian depository receipts. For foreign corporate and foreign individuals, the investment limit now stands increased from 5 to 10% of a company’s total issued capital. Also, investment in equity shares which was previously permissible up to 10% of a company’s total issued capital is now restricted to below 10%. FPI Regulations prohibit investments in unlisted equity shares of a company.Investment process for QFIs is easier under the FPI regulations as they can now, while operating as FPIs, issue investment instructions directly to their stockbrokers instead of doing it through qualified depository participants. They may also now invest in additional instruments such as derivatives. Now, only FPIs, which are regulated and also fall under Category I or II can issue Offshore Derivative Instruments (“ODIs”). ODIs are significant because they allow foreign investors, such as high net worth individuals and hedge funds based overseas, to invest in the Indian market without being registered with the SEBI.
Introduction of composite cap has opened the gates for portfolio investors (foreign institutional investors, foreign portfolio investors and qualified foreign investors) to pick up to 49 per cent in the sector without government’s nod.
However, there are a few exceptions: foreign investment above 49 percent in the retail sector will require approvals. And the changes to the composite caps do not include the banking and defence sectors, which have limits of 74 percent and 49 percent respectively. There will likely be further increased cap limits for some sectors, but those numbers are still on the table.
As for the taxation, the Central Board of Direct Taxes (“CBDT”) came out with a notification dated January 22, 2014 deeming FPIs registered under the FPI Regulations as FIIs for taxation purposes. The notification indicates that all investor classes forming the FPIs would be taxed similarly to FIIs.
Prepared By:
Mohita Jindal
Associate Lawyer & Company Secretary
SMA Legal
How NRIs can claim tax benefits under DTAA
Double Taxation Avoidance Agreement or DTAA is an agreement between two countries which aims to avoid taxation of the same income in both countries. India has comprehensive Double Taxation Avoidance Agreements (DTAA) with 88 (signed 88 DTAAs out of which 85 have entered into force) countries.
Under the Income Tax Act 1961 of India, there are two provisions, Section 90 and Section 91, which provide specific relief to taxpayers to save them from double taxation. Section 90 is for taxpayers who have paid the tax to a country with which India has signed DTAA, while Section 91 provides relief to tax payers who have paid tax to a country with which India has not signed a DTAA. Thus, India gives relief to both kind of taxpayer.
During assessment of an assessee to whom DTAA applies, the provisions of the Income Tax Act apply only to the extent they are more beneficial to the assessee. Provisions of the DTAA prevail over the statutory provisions. Non resident Indians residing in any of the DTAA countries can avail of tax benefits provided under DTAA by timely submission of the following documents.
Tax residency certificate
The Tax Residency Certificate (TRC) can be obtained from the government of the country in which the NRI resides. Certain information in the TRC is mandatory. They have to be furnished to make a valid submission of TRC to the Indian tax deductor.
Name, status (individual, company, firm etc), address, nationality, country, tax identification number of the person in that country, tax status, period for which the tax certificate is issued should all be mentioned in the TRC. The TRC containing details mentioned above should be duly verified by the government of the country or the specified territory of which the NRI claims to be a resident for the purposes of tax.
Self declaration-cum indemnity form
This form is to be submitted in the format prescribed by the particular bank. Information such as account number, country of residence, period for which TRC is submitted, tax rate applicable under DTAA needs to be mentioned in the form.
Other documents
The NRI is required to submit a self attested copy of PAN card and a self attested copy of his passport and visa. If the passport has been renewed during the financial year, a copy of PIO card will also have to be submitted.
Points to note
- The documents listed above must be furnished on an annual basis for claiming DTAA tax benefits each year.
- If the TRC is not submitted within the timelines required by the deductor, the deductor (e.g. Bank) will deduct tax on NRO deposits at the presently applicable rate of 30.9%.
Tips for NRI’s for filing tax returns
The income earned by Non-Resident Indians is not subject to tax in India. However, if their income in India crosses the basic exemption limit of Rs 2 lakh, they are required to file their returns. This income could be in the form of interest on deposits, rental income on property in India, etc.Also, if NRIs carry out transactions in securities like shares and mutual funds, the capital gains are liable to tax and, hence, an income tax return (ITR) must be filed( in India). The due date for filing ITR is usually the 31stJuly, every year.
However, there are certain things that NRIs must take into consideration while filing atax return. By considering the following practical scenarios, one can ease out his/her tax-return filing process in India.
- When to file
The returns have to be filed if the income exceeds the taxable limit, or to claim refund if the tax deducted at source (TDS) is more than the tax payable, or to claim the amount set off against capital losses.
- Documents that need to be submitted
The documents to be submitted includes the passport in order to show the number of days spent outside India to qualify as an NRI. Besides this, the NRIs need to provide the statements for the de-mat accounts, for the transactions and bank accounts held in India, as well as the TDS certificates received from the other parties.
- Exemptions
The NRIs can also claim exemptions available to the individuals under the Income Tax Act (unless specifically not applicable to NRIs), such as Section 80C, with respect to certain investments, payment of principal on housing loan, etc. The taxable income can be reduced by availing these exemptions.
- What should you do to claim a refund?
To expect a refund from the filed tax return, an NRI individual should ensure to put the exact bank details, which includes the account number and the branch MICR (Magnetic Ink Character Recognition)code. However, in case of an online filing of returns, the processing of the refund happens electronically. Therefore, precise bank account details are always helpful.
- Filing alternatives
The NRIs can file their tax returns online on the Income Tax Department e-filing portal. Alternatively, they can use other private, paid e-filing portals or even take the help of tax advisors.
- Points to note
It is not necessary for an NRI to file tax returns if the total income during the relevant financial year consists only of investment income or long-term capital gains, or both, and the tax has been deducted at source from such income.
For any further information please contact [email protected]
Nod to Composite Cap on Foreign Investment
From now, all FIIs (foreign institutional investors), NRIs (non-resident Indians) and other foreign investments will be clubbed. It will be constituted as a composite cap. The Cabinet allowed composite foreign investment caps, merging those on foreign direct investment and portfolio investment. The move will benefit companies in single-brand retail (sale of single brand in all outlets e.g. Reebok, Nike, etc.), credit information business (information about a person’s ability to lend money) and commodity and power exchanges (rules and procedures for the trading of commodities and related investments,); it is not applicable to banks and defence companies.
The Foreign Portfolio Investment (FPI) is entry of funds in a country where foreigners deposit money in a country’s bank or make purchases in the country’s stock and bond market, particularly for speculation. The Portfolio Investment up to an aggregate of 49 per cent be allowed without being subject to government approval and sectoral norms. The FPI cap would remain at 24 per cent in defence and 49 per cent in private sector banks. Subject to certain conditions, foreign investment may exceed 49 per cent in defence, with the approval of the Cabinet Committee on Security.
It would be possible to monitor FPI investments, as these would continue to be separate from foreign direct investment, though the limits would be merged.
Foreigners availing Research Visa to undergo strict scrutiny
The recent revelation by Amnesty International India researcher Christine Mehta that she was charged with ‘visa violations’ and deported from India in November 2014 for pursuing research on the violation of human rights in Jammu and Kashmir without securing clearance from the Ministry of Home Affairs is likely to herald a tightening of the restraints on foreigners keen to pursue research in India.
Foreigners intending to work in NGOs, carry out research work on human rights and environment issues will now have to face stricter scrutiny of their visa applications after detection of several incidents of alleged misuse of these provisions. Foreign nationals “whose research work involves visits to ‘Restricted’ or ‘Protected’ areas in India etc. or involves politically and socially sensitive subjects” must apply for, and come to India on, a research visa that the MHA and Ministry of External Affairs will vet to ensure the “national interest” will not be compromised by their topic or methodology.
The move came after Home Ministry found that Research Visas, given to professors, scholars and participants to do research work and attend research conferences, are being allegedly misused by several foreigners in recent past.
“All research visa applications will be thoroughly scrutinised. An applicant has to submit a brief note in advance about the project in which the research work will be conducted. If we find it appropriate, non-controversial and beneficial to India, then only the applicant will be given a visa,” a senior Home Ministry official said.
Christine Mehta, reportedly did not submit her research subject to the authorities beforehand. Unhappy over her work, government deported Mehta in November 2014.
Several foreigners had worked in NGOs, including Greenpeace India, and were alleged to have been involved in anti-government activities. Home Ministry has found that many of the foreigners come to India on Tourist Visa and later get involved in research works and NGOs dealing with environment and human rights issues.
“Such trends have to be stopped. We will not allow anyone misusing the tourist visa provisions too,” the official said.
However, genuine researchers will not have to face difficulty if the project is to be done under an Indian institution accredited by the University Grants Commission. Visa applications of foreign scholars who take scholarships from Indian Council for Cultural Relations (ICCR) for conducting research will also be processed without any difficulty. The ICCR offers scholarships namely General Cultural Scholarship Scheme, Silver Jubilee Nepali Scholarship, Africa Scholarships, Commonwealth Scholarship Scheme etc.
According to an estimate, around 42,000 foreign students study in India of which nearly 3,800 are research scholars. Most of the foreign students belong to Nepal, Bhutan, Afghanistan and Iran.
SOURCE: http://thewire.in/2015/07/06/strict-scrutiny-awaits-all-foreigners-wishing-to-do-research-in-india/
India Top as Investment Destination
A ranking of destinations for attractiveness to foreign investors has placed India at the top among 110 countries. China has secured the 65th position and the U.S. is at the 50th. In the 2014 index, India was at the sixth position and Hong Kong was number one.
The ranking is based on an index for baseline profitability that assumes that three factors affect the ultimate success of a foreign investment: how much the value of an asset grows; the preservation of that value while the asset is owned; and the ease of repatriation of proceeds from selling the asset. The index combines measures for each of these factors into a summary statistic that conveys a country’s basic attractiveness for investment.
“Where exactly should they [investors] put their money? The Baseline Profitability Index (BPI) is back for its third year with some answers, and Narendra Modi’s India is the place to start,” wrote Daniel Altman, creator of the index and an Adjunct Professor at New York University’s Stern School of Business, in the Foreign Policy magazine.
The big story in the BPI in 2015 is “India coming out on top, with growth forecasts up, perceptions of corruption down, and investors better protected following the election of a government led by Prime Minister Narendra Modi.”
India came first in the Baseline Profitability Index helped by its improved ranking in the Transparency International’s Corruption Perception Index — in 2014, the country was at the 85th position out of 175 countries as compared to its ranking of 94 out of 177 countries in 2013.
Source:
http://www.thehindu.com/business/Economy/india-ranked-best-for-investment/article7359257.ece
WE ARE BACK
It gives us immense pleasure to intimate that we are back in our re-designed, fully automated, brand new office at house number 686, sector 11-B, Chandigarh-160011. We are no longer at our temporary office at house number 17, sector 9-A, Chandigarh since the 1st of June 2015.
Kindly accept our thanks for your consistent faith in us which has enabled us to grow faster and reach the milestones set, sooner than anticipated.
We look forward to a renewed, brighter, stronger, healthier and successful association whilst of course, awaiting your visit to our new premises.
12 Things to know about the New Benami Bill
Benami transactions are transactions where the immovable property is held by or transferred to a person who becomes the ostensible owner thereof, but in reality the transaction is entered into on behalf of or in guise of some other person who is the real owner of the property, since he pays the amount of consideration for such property.
To curb the generation of domestic black money, the Benami Transactions (Prohibition) Amendment Bill, 2015 was introduced in Lok Sabha on May 13, 2015 by the Finance Minister, Mr. Arun Jaitley. The Bill seeks to amend the Benami Transactions Act, 1988. The Act prohibits Benami transactions and provides the ground for verification and confiscating the Benami land or property in India.
The Bill seeks to: (i) amend the definition of Benami transactions, (ii) establish adjudicating authorities and an Appellate Tribunal to deal with Benami transactions, and (iii) specify the penalty for entering into Benami transactions.
The proposed law is applicable to individuals, partnership firms, un-incorporated entities and companies.
Prepared by Aastha Salgotra
SMA Legal
