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TAXATION IN INDIA

In India the classical system of corporate taxation is followed.

• Indian Companies are permitted to deduct dividends received from other domestic companies in some specified cases

• Transactions between companies are allowed if negotiated

• Special proceedings govern venture companies

• Capital gains which accrue in the long run are taxed less

• Moderate deductions are permitted for exports and for setting up new industrial undertakings in certain specified cases.

• Corporate bodies engaged in developing and maintaining new infrastructure facilities and power generating units are taxed less in certain specific cases.

RECENT STEPS FOR THE IMPROVEMENTS OF MEDIA & ENTERTAINMENT INDUSTRY

• Allowing 49 per cent foreign holding in cable TV and DTH.

• The government has allowed 100 per cent FDI in fax editions of magazines and newspapers.

• Recently, the government has allowed companies with core business in news segment but hived off non-news business, to raise funds from overseas beyond the stipulated FDI limit of 26 per cent. Such companies can raise and route funds from overseas through its non-news arm, which will not be calculated as foreign investment.

• Permitting setting up of up linking hubs for satellite up linking by private TV broadcasters from Indian soil.

• Giving industry status to the films segment.

• Opening FM Radio operations to the private sector.

• The government has allotted US$ 50.13 million in the current Five-Year-Plan for various development projects of the film industry. The funds will be utilized to set up a centre for excellence in animation, gaming and visual effects among others.

FOREIGNERS ARE ENTITLED TO CERTAIN SPECIAL CONCESSIONS SUCH AS :

Any Foreigner receiving any payment from any foreign enterprise for any services provided in India will not be taxed under the Income Tax Act in the following three circumstances :

• The foreign enterprise does not carry out any trade in India

• The foreigner is not in India for more than 90 days in the year that he rendered his services in India

• The remuneration is not liable to be deducted from the employers taxable income in India

A foreigner (including a nonresident Indian) who was not resident in India in any of the four financial years immediately preceding the year of arrival in India is entitled to a special tax concession, if :

The foreigner has specialized knowledge and experience in construction or manufacturing operations, mining, generation of electricity or any other form of power, agriculture, animal husbandry, dairy farming, deep-sea fishing, shipbuilding, grading and evaluation of diamonds for diamond export or import trade, cookery, information technology (including computer architecture systems, platforms and associated technology), a software development process and tools, or such other fields as the central government may specify; and

The individual is employed in any business in India in a capacity in which specialized knowledge and experience are used. A foreign professor (teaching in an Indian university) may not have to pay any tax for a period of 36 months from the date of his arrival in India provided that he was not residing in India within the last four years preceding his employment in India. However before granting this benefit the contract of service of the Professor must first be approved by the Government.

Special exemptions under specified cases are available for the below mentioned circumstances :

• Any sum due from any foreign body or Government for research in approved scheme

• Any sum received as remuneration received by workers of a foreign government who are training as an Indian Government

• Any sum received by Non-resident expatriates while filming motion pictures by non residents producers.