Private Credit: Interest on NCDs recharacterized as dividends 

  • Tax authorities recharacterized interest income on NCDs as dividends
  • Interest recharacterization has not taken place under GAAR
  • Investors can prevent such mischaracterization by demonstrating the nature of the underlying instrument, periodicity of payments, maturity date, management rights,
    etc….

    Denial of tax treaty benefits: Blueprinting defence strategies for PE funds – A tax litigation perspective

    • Revenue has issued reassessment orders to several global PE/VC funds denying
      tax treaty benefits to grandfathered investments alleging treaty shopping through Mauritius and Singapore between AY 2013-14 and 2015-16

    • Substantial tax, interest, and penalty has been levied invoking judicial anti-avoidance principles based on a supposed lack of commercial substance in these jurisdictions…

      Top 5 Tax Considerations When Structuring Debt Investments in India

      • Recent developments in the Indian tax regime have brought India closer to global
        norms though hybrid instruments that have come under increased scrutiny

      • GAAR provisions have enabled tax authorities to examine the commercial substance of transactions, underscoring the importance of purpose, pooling, and people…

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