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14/04/2018

Latest post from our transfer pricing expert:

The has published new country profiles for additional 14 countries including Australia, China (People’s Republic of), and India. The country profiles are now available for 44 countries.

These new profiles reflect the current transfer pricing legislation and practices of each country. It provides interesting insights about the approach of each jurisdiction pertaining to approach towards OECD TP Guidelines applicability, use of secret comparables, methods of determining arm's length price, etc.

These country profiles focus on countries' domestic legislation regarding key transfer pricing principles, including the arm's length principle, transfer pricing methods, comparability analysis, intangible property, intra-group services, cost contribution agreements, transfer pricing documentation,....

12/04/2018

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Are you playing online card games? is getting real popular among the professional Poker players.

We bring to you an analysis of the tax positions for your online winnings.

Query 1 - If you can set-off the buy in token amount or subsequent losses from your earlier winnings, i.e. Is it legally allowed to pay taxes on net-winnings in case of an online card game professional stint.

Our answer:

We would like to inform that the online Poker winnings are taxable as Income from other sources under section 56 of the Income Tax Act 1961. These winnings can not be said to be a part of a business or profession, as they are explicitly mentioned as Income from Other Sources in Indian Tax legislation.

The section 58(4) further disallows any expenditure claims from the gross winning. Hence, if you win 3L after paying a buy in token of say 5K and subsequently loose 1L on a bad day, then your net income would be 3L - 5K - 1L = 1.95L. However, you are not allowed deduction of 1L and 5K as per section 58(4). The taxes would be charged on gross winning amount, which is 3L in the instant example.

Also, as per section 115BB, any such income from online card games is not allowed to have benefit of the tax slab rates. Such income is taxed at a higher standard rate of 30%. As an example, you currently have a slab rate of 0% taxes on first 2.5L, 10% taxes on 2.5L to 5L, 20% taxes on 5L to 10L, and 30% on income more than 10L. Say you made a gross winnings of 6L in an online poker session. Utilizing the tax slab benefit, your taxes would be calculated as 0 on first 2.5L, 10% on next 2.5L and 20% on next 1L i.e. a total amount of 45K. However, this slab benefit is not available for winnings from online Poker game. Hence, your taxes would be calculated as flat 30% of 6L gross winnings, i.e. 6L x 30% = 1.8L.

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Query 2 - TDS provisions applicable for online poker game winnings

Our answer:

The TDS provisions for winnings from online Poker games are present in section 194B of Income Tax Act 1961. The TDS is applicable at 30% rate. However, this is only to be deducted by the payer at the time of paying the money to you. So while you win in Poker games and keep the money in your online Poker website account only, then no TDS shall be deducted, unless you take the money out. Let me give an example here; Say you won 5L and subsequently you lost 3L. Now you withdraw 2L balance in to your bank account. Then TDS to be deducted by the poker hosting website would be 30% of 2L only. They would not deduct the TDS on gross winnings of 5L. However, you would be under a liability to pay taxes on balance 3L of your gross winning at the time you file your tax return.

Also, there is a threshold limit of 10K. In case you withdraw an amount upto 10K only, there shall be no TDS deducted. However, you would still remain liable to settle your taxes at 30% of amount withdrawn (i.e. 10K) at the time of filing your tax return.

Now comes the part of Indian tax law, which is open to different interpretations. Most of the tax experts, including us, interpret the 10k limit on a per year basis. However, we have noticed that the online poker hosting websites follow a different interpretation of TDS deduction. They offer you 10K withdrawals for each day without any TDS being deducted. Although the limit of 10K is per year, however, the websites are interpreting this provision differently and are allowing remittance of amount - without any TDS deductions to players who withdraw only 10K per day.

It may be noted, that the liability to deduct TDS is on the poker hosting website and if they fail to do so, it is of no harm to you personally. Indian tax authorities can not hold you liable for non deduction of TDS by the poker hosting websites. You would anyways be paying taxes at 30% directly to Income tax department upon filing of your tax return. So you can take this benefit until the games' servers have an altered interpretation and start deducting TDS for any withdrawals more than 10K on per year basis.

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07/04/2018

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02/04/2018

Transfer Pricing tax litigation makes to the front page headlines, every now and then. Vodafone and Shell TP cases are well known to everyone. Let's understand the basic provisions of Transfer Pricing Audit in India in this blog post by our Transfer Pricing Expert Mr. Rahul Chawla (FCA, ACMA, CPA, LL.B).

India is one of the top contenders in Tax Litigation charts world wide. Transfer pricing is one of the key topic making headlines in Indian financial dailies.

31/03/2018

What is this Form 3CEB - Accountant's report all about? Are there any Transfer Pricing compliances in India other than maintaining a contemporaneous TP documentation? Do I really need services of a Chartered Accountant to complete my TP compliances in India? - Refer this post from our TP Expert to get answers to all of these queries.

Every person entering into International transactions or specified domestic transactions has to file accountant's report in Form 3CEB before date of tax filings

25/02/2018

Let's understand the basic requirements for a Transfer Pricing documentation and Master File in India. This post from our Transfer Pricing Expert includes details from Section 92D and Rule 10D & 10DA.

Section 92D and Rule 10D & 10DA pertains to documentation required to be maintained for transfer Pricing compliance purpose in India.

08/02/2018

Peculiar manner of calculating 35percentile to 65percentile for Arm's Length Price determination in India. Read on the summary of Section 92C on our blog.

06/02/2018

Budget 2018 updates for Transfer Pricing in India

Do you know the updates to Indian Transfer Pricing legislation as introduced by Finance Bill 2018, i.e. Budget 2018 by the Finance Minister, Mr Arun Jaitely?

06/02/2018

Section 92B and 92BA pertaining to “Meaning of international transaction” and “Meaning of specified domestic transactions” respectively, are key sections determining the scope of TP legislation in Indian Tax Framework.

Another important criteria to determine applicability of Transfer Pricing provisions to your business transactions is given in Sec 92B & 92BA of Income Tax Act

06/02/2018

Section 92A pertaining to “Meaning of Associated Enterprises” is a key Section of TP legislation in Indian Tax Framework. This section, defines “Associated Enterprises”, i.e. the business entities upon whom the transfer pricing provisions in India are applicable.

To understand the applicability of Transfer Pricing to your business transactions, it is necessary to first ascertain the association of transacting entities.

06/02/2018

Transfer pricing provisions in India are having their basis of charge in Section 92 of Income Tax Act 1961. Let's understand what it lays in the Tax framework.

06/02/2018

Wondering what's Transfer Pricing, making news every week? Time to learn it from the beginning.

We bring to you our blog including posts written by Transfer Pricing practitioner, Mr Rahul Chawla. Visit our website and we would be glad to connect you to Experts for your Tax queries.

Let's understand the basic tax legislation structure encompassing transfer pricing provisions in India. Income Tax Act 1961 and related Rules.