CBDT invites comments of stakeholders for conversion of Indian branches of foreign banks to Indian subsidiary company
By TIOL News Service
NEW DELHI, NOV 17, 2017: THE Reserve Bank of India (RBI) had released the 'Scheme for setting up of wholly owned subsidiaries (WOS) by foreign bank in India' on November 6, 2013. The Scheme, provided the procedure for conversion of existing branches of foreign bank in WOS. A foreign bank would be required to set up a WOS in India and the Indian branch would amalgamate with WOS as per the amalgamation scheme approved by the shareholder of foreign bank and WOS which is sanctioned by the RBI.
The Finance Act, 2012 had inserted a new Chapter XIIBB, consisting of section 115JG in the Income Tax Act, 1961 containing 'Special provisions relating to conver sion of Indian Branch of a foreign bank into a subsidiary company'. Section 115JG provides that in case the conversion of Indian Branch of foreign bank fulfils the conditions notified by the Central Government, the capital gains arising from such conversion would not be chargeable to tax and the provision relating to unabsorbed depreciation, set off or carry forward and set off of losses, tax credit in respect of tax paid on deemed income relating to certain companies and the comput ation of income in case of foreign company and Indian subsidiary would apply with such modification, exception as would be specified in the notification.
In light of the above, a notification was proposed to be issued u/s 115JG(1) of the Income Tax Act, 1961 specifying the conditions to be fulfilled by the conversion and also specifying modifications, exceptions, in applicability of certain provisions of the Act to such conversion. So as to secure wider consultations in this matter, the draft of proposed notification was uploaded on the website www.incometaxindia.gov.in. The stakeholders are requested to send their comments or suggestions on the draft notification by 30.11.2017 to the email address dirtpl2@nic.in .
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