Taxing the Mind; Concluding the Latest in Series of Expert Insight Articles Exploring How the Region's Businesses Can Exploit Opportunities in Brazil, India and Russia, the ERDF-Funded, NECC's Access Programme Leader NYNZI MAUNG Calls on Expert Insight to Shed Light on Taxation Issues for North East Businesses Considering Trading with India

The Journal (Newcastle, England), April 14, 2014 | Go to article overview

Taxing the Mind; Concluding the Latest in Series of Expert Insight Articles Exploring How the Region's Businesses Can Exploit Opportunities in Brazil, India and Russia, the ERDF-Funded, NECC's Access Programme Leader NYNZI MAUNG Calls on Expert Insight to Shed Light on Taxation Issues for North East Businesses Considering Trading with India


Byline: NYNZI MAUNG

NYNZI explains: "On a recent market visit to India, the news and my discussions with Indian business people was dominated with the current general elections - who will win? What impact will that have on the economy and trade generally?'' I was assured that whomever wins will be very conscious of the vital importance of Foreign Direct Investment (FDI) and trade to the growth and strengthening of the Indian economy. The strategy to ease up bureaucracy - originally pursued but recently calcified in recent years under Prime Minister Manmohan Singh - will be recharged as the Indian business community presses for reform and revitalisation of the economy. Understanding your taxation liabilities when exporting needn't be a complete foreign language. The following observations from Nicholas Parkinson and Anjul Mathur, from the UK and Indian respective affiliates of leading tax and advisory firm Grant Thornton, highlight that India continues to be an attractive investment destination.

They said: "India's attractiveness as an investment destination hasn't waned on account of its large consumer and human capital base. If anything it has created an opportunity for foreign players looking for a greater role in the Indian market. Investing in India doesn't have to be complex or taxing. The Indian government is taking various steps for liberalising the regulatory framework and formulating a robust tax regime.

"It has also embarked on liberalising the Foreign Direct Investment (FDI) by opening up more sectors and making the process investorfriendly and welcoming overseas foreign investment.

"FDI is permitted by all categories of investors in almost all sectors, excluding those of national importance, such as atomic energy and railways etc. Investment in sectors in which FDI is permitted can be made either under approval route or under automatic route i.e. without any prior approval of Reserve Bank of India. A foreign company looking to set up operations in India can consider the option of operating either as an Indian entity (e.g. wholly owned subsidiary, Joint Venture with an Indian Partner, Limited Liability Partnership) or as a foreign entity (liaison office, project office, branch office). The decision between the options has to be made keeping in mind varying compliances and tax requirements.

Repatriation of profits / cash "Dividends are freely repatriable post payment of dividend distribution tax by the Indian company declaring the dividend. Statutory permissions are not necessary for dividend pay-outs, subject to satisfaction of specified compliance requirements. Foreign capital invested in India is also generally repatriable along with capital appreciation, if any, after payment of taxes due. …

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Taxing the Mind; Concluding the Latest in Series of Expert Insight Articles Exploring How the Region's Businesses Can Exploit Opportunities in Brazil, India and Russia, the ERDF-Funded, NECC's Access Programme Leader NYNZI MAUNG Calls on Expert Insight to Shed Light on Taxation Issues for North East Businesses Considering Trading with India
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