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I-T department watchful of transactions with companies from tax havens

I-T department watchful of transactions with companies from tax havens

The income tax department will carry out additional due diligence on financial transactions that involve entities from countries or jurisdictions that are considered tax havens. The Central Board of Direct Taxes has sent out an advisory with a list of such regimes to field officials, asking them to remain extra watchful about such international transactions.

“The idea is to be vigilant towards such transactions,” said a department official. The department wants deeper enquiries into these transactions to ensure that businesses are not routing their dealings from these regimes to lower their tax outgo here.

Under the Base Erosion and Profit Sharing (BEPS) project at the Organisation for Economic Co-operation and Development, when tax jurisdictions offer a sharply low tax rate or zero tax rate to entities that have no ‘economic substance’ in that jurisdiction, it is considered a harmful tax practice.

 

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