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Mint
a day ago
- Business
- Mint
Lok Sabha panel backs taxpayer-friendly GAAR tweaks in Income Tax Bill review
New Delhi: A Lok Sabha panel reviewing the Income Tax Bill, 2025 is set to propose a more taxpayer-friendly approach to anti-avoidance provisions aimed at curbing aggressive tax planning. The government is likely to accept most of the Select Committee's 285 recommendations and plans to reintroduce a revised legislation in the monsoon session of Parliament starting Monday, according to three persons aware of the working of the panel and the thinking in the government. The Income Tax Bill, 2025, once approved by Parliament and assented to by the President, will become a law, replacing the Income Tax Act, 1961. The committee, led by the ruling Bharatiya Janata Party's Lok Sabha member Baijayant Panda, is set to recommend that India's General Anti-Avoidance Rules (GAAR) that disallow transactions mainly designed to avoid tax, should be assessed with regard to the specific context of each case. That would require restoring certain wordings in the provisions of the Income Tax Act, 1961 as they exist today, but were dropped as part of the effort to simplify the text in the draft bill, said one of the three persons cited earlier, all of whom spoke on the condition of anonymity. A Select Committee is an ad hoc or temporary parliamentary panel formed with the specific purpose of examining a particular bill. It is dissolved after the task is achieved. The idea is to balance strong enforcement of the anti-evasion provisions with tax payer protection. The existing Section 98 of the Income Tax Act, 1961 stipulates that if a transaction is found to be designed for tax avoidance, then the consequences including denial of tax benefit will be decided in an appropriate manner 'in the circumstances of the case.' The committee is set to recommend restoring these words referring to the specific circumstance of the case in the final form of the Bill that the government will introduce in Parliament, as these words act as a safeguard to ensure GAAR is reasonable and procedurally fair, the person added. The select committee endorsed the revised provision in the Bill with the modification that these words should be reinstated explicitly. This is expected to ensure a balance between deterrence against tax avoidance and taxpayer protection, the person said. Experts pointed out that this phrase makes sure that an assessment or conclusion made in the case of one transaction of a company is not blindly applied to another transaction of the same company or to a similar transaction by another company without looking into the specific circumstances of those transactions. 'The phrase 'in the circumstances of the case' is crucial because it ensures that tax authorities take into account the specific facts of each arrangement before applying harsh consequences and declaring any arrangement impermissible under GAAR. Although the likely intent to remove the phrase from draft Income Tax Bill 2025 was to simplify the language of provision, but absence of this phrase would have allowed tax officers to deny tax benefits in a broad and mechanical manner—even in genuine commercial transactions,' said Amit Maheshwari, tax partner, AKM Global, a tax and consulting firm. Experts believe dropping the phrase could lead to uncertainty and litigation and by recommending its reinstatement, the Select Committee has rightly moved to protect taxpayers from one-size-fits-all treatment and uphold fairness in tax system. The committee is tentatively scheduled to submit its report to the Lok Sabha on Monday. The finance ministry is preparing to rework the Bill based on the committee's report with a high degree of urgency in order to get the Bill passed in the current session to implement the new income tax law from 1 April, 2026. The ministry will seek the cabinet approval once the select committee gives its report next week, said the second person. The Select Committee's suggested changes to the Income Tax Bill, 2025 mainly address drafting anomalies as compared to language of the existing law and include updates from the Finance Act 2025, said Sameer Gupta, EY India tax leader, citing media reports. 'If there are any substantive changes, it will need to be evaluated after the (Select Committee's) Report and the amended Bill are tabled before the Parliament," Gupta added. According to Gupta, suggestions for more substantive reforms include further simplification and rationalisation of residency rules, TDS/TCS provisions, deductibility of certain expenses which are currently prone to litigation, etc. "If they are not addressed in the amended Bill, they will need to be taken up as part of subsequent Budget exercise,' said Gupta.
Business Upturn
2 days ago
- Business
- Business Upturn
Vedanta shares in focus as Viceroy Research claims ₹2,500 crore sham at semiconductor arm
In a scathing report published on July 18, 2025, Viceroy Research has alleged that Vedanta Limited's (VEDL) subsidiary, Vedanta Semiconductors Private Limited (VSPL), is a sham operation set up to disguise a liquidity crisis and evade regulatory oversight. According to Viceroy, VSPL is not a semiconductor venture as claimed but rather a shell entity running a fabricated commodities trading operation. The report, titled 'Vedanta – Vedanta Semiconductor: ₹2,500 Crore Dhoke Ka Sammraajy' , argues that VSPL was designed to transfer funds offshore, repay brand fees to parent Vedanta Resources (VRL), and circumvent classification as a Non-Banking Financial Company (NBFC). Liquidity crisis and the creation of VSPL Viceroy asserts that in April 2024, Vedanta faced a severe liquidity crunch after Indian PSU banks allegedly stopped extending loans due to its precarious financial position. JPMorgan and others reportedly arranged debt, which Vedanta used to fund dividends rather than settling obligations. To manage the situation, Vedanta raised ₹2,454 crore through Non-Convertible Debentures (NCDs) in May 2024, secured against shares of Hindustan Zinc (HZL). These funds were channelled through VSPL under the guise of a commodities trading loan, carrying a 12% interest rate — significantly higher than the 10% NCD rate. Why Viceroy calls it a sham Viceroy's report details several red flags in VSPL's operations: VSPL showed ₹416 crore in revenue , ostensibly from trading copper, gold, and silver — at near-zero margins and with no inventory, logistics, or trade credit. The company's operations showed no hallmarks of genuine commodities trading, with assets such as furniture and equipment liquidated during FY25. VSPL's revenue reportedly skyrocketed 30,994% YoY, but employee and operating costs halved — consistent with a façade rather than an operating business. The semiconductor venture, originally planned with Foxconn in 2023, never materialized. After Foxconn's exit, there was no evidence of capex, permits, land acquisition, or R&D — elements essential to a fabrication unit. Governance and audit concerns Viceroy also criticized VSPL's governance structure: Its directors reportedly have close ties to the Agarwal family. Its auditors, MP Chitale & Co., have previously been associated with other controversial entities, including IL&FS subsidiaries. Regulatory risks flagged The report highlighted potential violations of Indian laws and regulations: Regulator / Law Potential Violation RBI / FEMA Disguising offshore borrowing to avoid end-use restrictions SEBI / LODR Inadequate disclosure of collateral & related-party transactions Income Tax General Anti-Avoidance Rules (GAAR) risks PMLA Layered funds & sham trades NFRA Audit quality issues DIPAM / Govt. of India Pledging HZL shares without transparency Semiconductor dream, or mirage? VSPL was announced as a ₹1.66 lakh crore ($19.5B) semiconductor project with Foxconn in 2023. Foxconn walked away after disagreements, leaving VSPL to continue presenting itself as a semiconductor company despite no evidence of progress. 'VSPL is a regulatory decoy system reliant on fabricated activity for recovery,' the report said. Viceroy's conclusion Comparing Vedanta's structure to past corporate failures such as Satyam, Enron, and Kingfisher, Viceroy concluded that VSPL is a shell operation designed to 'extract value to offshore entities while maintaining the illusion of business activity.' The report warned that regulators should act before further damage is done to public investors and national resources. 'Anil Agarwal, ever the non-resident nationalist, chased the semiconductor spotlight, eager to cast himself as the next champion of Indian industry. Instead, he built another channel to extract value to offshore entities.' Call to whistleblowers Viceroy invited whistleblowers within Vedanta or related entities to share more information about internal misconduct, promising anonymity. Disclaimer: All statements, allegations, and quotes mentioned in this article are solely based on the report published by Viceroy Research on July 18, 2025. Business Upturn and/or the author are not responsible for the accuracy, completeness, or veracity of the claims made in the report and shall not be held liable for any actions taken based on this information. Readers are advised to exercise their own judgment and verify independently. Ahmedabad Plane Crash Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
Economic Times
3 days ago
- Business
- Economic Times
Parliamentary panel proposal on dividend in IT bill may bring relief to India Inc
A parliamentary panel that reviewed the Income Tax Bill 2025 has recommended that a provision dealing with the deduction available for inter-corporate dividends be restored, a significant relief for India Inc, said people familiar with the parliamentary select committee unanimously adopted its report on Wednesday, recommending over 285 tweaks, which have been accepted by the government, they said. This means that the biggest revamp of the six-decade-old income tax law is expected to pass quickly in the upcoming monsoon session of Parliament. Industry had made a strong pitch to the government and the parliamentary panel to restore Section 80M, reasoning that its omission would result in cascading and double taxation in multi-tier structures. The section allows Indian companies to deduct from taxable income dividends they get from another corporate entity. It helps avoid double taxation on the same dividend income. The bill had removed the provision for companies availing of the 22% corporate tax slab. Indian companies have the option to pay 22% income tax if they don't avail of any exemptions and incentives since panel, headed by Baijayant Panda, will present its report to the Lok Sabha on the first day of the monsoon session of parliament on government has accepted most of the changes proposed by the committee, one of the persons told ET. The government has already listed the bill for consideration and passage in the upcoming key suggestion by the committee was the restoration of the language relating to residency for those going overseas to work. The previous wording — 'for the purpose of employment'— has been retained to clear up any ambiguity, the person said. Besides, the provision dealing with the issuance of a nil withholding the tax certificate by tax department in respect of certain payments has been panel has further simplified the language of a number of provisions to remove any lack of clarity, one of the persons said, adding that no substantive changes had been panel held 36 sittings and dealt with all 536 sections.'Maximum deliberations and discussions were on around Section 247(1), which deals with searches and seizure, but no major changes or amendments in the section were suggested,' the person of those who appeared before the panel raised concerns about faceless assessment and sought a reduction in the number of rates for tax deducted at source and further simplification of the regime, the person minister Nirmala Sitharaman had on February 13 introduced the Income Tax Bill 2025 to replace the old law with a simple, easy-to-understand one that aimed to reduce ambiguity and bill had introduced presumptive taxation for non-residents, revised treatment for business and professional income, and strengthened General Anti-Avoidance Rules (GAAR), while streamlining the penalty and compliance framework. It also clubbed the tabulation of deductions from salaries, such as standard deduction and gratuity, in one experts said that the select committee discussed recommendations made by various sections of society. 'As the select committee has had the unique opportunity of receiving many salutary suggestions concerning major overhaul of many existing provisions in the tax law, it is hoped that finance ministry will give due consideration to these suggestions as well and bring about these far-reaching changes in due course through its Budget presentations,' said Sudhir Kapadia, senior advisor, the remit of the select committee was restricted to further clarifying or improving the language of the bill, as opposed to suggesting fundamental changes in provisions, it is expected that the changes suggested in their report will only address any inadvertent omissions or lack of clarity in language, he said.
Economic Times
11-07-2025
- Business
- Economic Times
Income Tax department mulls probe into Jane Street after SEBI allegations of market manipulation
Following SEBI's allegations of market manipulation against Jane Street, the Income Tax department is considering a probe into potential violations. The investigation will focus on General Anti-Avoidance Rules (GAAR) and permanent establishment norms, examining the firm's structure involving Indian and offshore entities. Authorities suspect profits booked in Singapore may be reattributed to India, leading to significant tax implications. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai | Delhi: US-headquartered proprietary trading firm Jane Street , barred by the Securities and Exchange Board of India ( Sebi ) over allegations of market manipulation , could also come under the income tax scanner. The department is considering a probe into potential violations of provisions related to the General Anti-Avoidance Rules (GAAR) framework and permanent establishment norms, people familiar with the matter to Sebi's findings, Jane Street's Indian entity engaged in intraday trades in the cash segment, while its offshore entities, based in Singapore and Hong Kong, booked substantial profits through index option trades. This arrangement has raised concerns about the possible breach of certain tax provisions, said the people provisions pertain to the creation of permanent establishment, besides GAAR, according to the people. I-T department and Sebi officials have held informal discussions on the issue, they be clear, the income tax department has not sent any formal communication or notice to Jane Street on the issue so Street didn't respond to queries."At this point in time, Sebi's interim order is being studied to look specifically for income tax violations," said an official, adding that the closer examination of documents and accounts will take time. "In the course of the examination, if any explanation is required from the entities, they would be communicated about the same."Tax experts are of the view that Jane Street's structure may lack commercial substance, which means that GAAR provisions would apply. These allow the tax department to reattribute profits earned by overseas entities to Indian ones, subjecting them to taxation at rates up to 38.22%. This could have significant implications for Jane Street's tax liabilities in Street's group structure involved four core entities, said Sandeep Sehgal, partner, tax, AKM Global, a tax and consulting firm. Two are Indian--JSI Investments and JSI2 Investments. The others are foreign portfolio investors (FPIs) based in Singapore and Hong Kong, he said."The Indian entities were engaged in intraday trades on the cash and futures segments of Indian stock exchanges, while the offshore FPIs booked significant gains through index option trades," he said. "Notably, the profits were largely recorded in Singapore, benefiting from the India-Singapore tax treaty where derivatives gains are not taxable in Singapore... Jane Street's use of Indian entities to route intraday trades while booking large profits offshore, especially in Singapore, raises significant red flags under India's GAAR framework."Under GAAR, any setup that lacks "commercial substance" or exists mainly to evade taxes can be reversed by the tax department.
Time of India
11-07-2025
- Business
- Time of India
Income Tax department mulls probe into Jane Street after SEBI allegations of market manipulation
Mumbai | Delhi: US-headquartered proprietary trading firm Jane Street , barred by the Securities and Exchange Board of India ( Sebi ) over allegations of market manipulation , could also come under the income tax scanner. The department is considering a probe into potential violations of provisions related to the General Anti-Avoidance Rules (GAAR) framework and permanent establishment norms, people familiar with the matter said. According to Sebi's findings, Jane Street's Indian entity engaged in intraday trades in the cash segment, while its offshore entities, based in Singapore and Hong Kong, booked substantial profits through index option trades. This arrangement has raised concerns about the possible breach of certain tax provisions, said the people cited. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like If you have a mouse, this game will keep you up all night. No Install. Play for free. Navy Quest Undo Agencies Significant Implications for Tax Liabilities These provisions pertain to the creation of permanent establishment, besides GAAR, according to the people. I-T department and Sebi officials have held informal discussions on the issue, they added. To be clear, the income tax department has not sent any formal communication or notice to Jane Street on the issue so far. Live Events Jane Street didn't respond to queries. "At this point in time, Sebi's interim order is being studied to look specifically for income tax violations," said an official, adding that the closer examination of documents and accounts will take time. "In the course of the examination, if any explanation is required from the entities, they would be communicated about the same." Tax experts are of the view that Jane Street's structure may lack commercial substance, which means that GAAR provisions would apply. These allow the tax department to reattribute profits earned by overseas entities to Indian ones, subjecting them to taxation at rates up to 38.22%. This could have significant implications for Jane Street's tax liabilities in India. Jane Street's group structure involved four core entities, said Sandeep Sehgal, partner, tax, AKM Global, a tax and consulting firm. Two are Indian--JSI Investments and JSI2 Investments. The others are foreign portfolio investors (FPIs) based in Singapore and Hong Kong, he said. "The Indian entities were engaged in intraday trades on the cash and futures segments of Indian stock exchanges, while the offshore FPIs booked significant gains through index option trades," he said. "Notably, the profits were largely recorded in Singapore, benefiting from the India-Singapore tax treaty where derivatives gains are not taxable in Singapore... Jane Street's use of Indian entities to route intraday trades while booking large profits offshore, especially in Singapore, raises significant red flags under India's GAAR framework." Under GAAR, any setup that lacks "commercial substance" or exists mainly to evade taxes can be reversed by the tax department.
