Category: P13
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Ambiguity with thin cap norms: Private credit players risk significant tax leakage
Accurate reading of thin capitalization norms is highly relevant to maximize IRRs, especially in asset heavy sectors Currently, norms interpreted such that sometimes the entire interest paid to foreign related parties is disallowed for the target (as expense)…
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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….
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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…
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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…