New Mandatory Taxation Policy in Mumbai
The municipality of Mumbai, the richest in India, issued a notice to warn tax debtors: If they do not pay the corresponding tax Money, their movable properties, valuable properties such as computers, sofas, and televisions will be forcibly confiscated.
How exactly does this new Mumbai policy force taxpayers to pay taxes?
The Mumbai Municipal Department (BMC) will give tax debtors a final deadline for payment. The tax collection department of BMC will issue a new property tax bill in May of each fiscal year. The relevant regulations this year are that tax debtors must pay 50% of the tax by August, and the remaining 50% can be paid by December. After the implementation of this policy, a fine was imposed on arrears. In response, the Mumbai High Court also heard a case concerning a property tax dispute. The case ruled that the Municipal Council cannot impose fines of the above-mentioned nature.
In response, the Municipal Council thought of another method to replace the previous fines. According to the new policy, BMC will cut off water for these tax debtors for three weeks to compel them to pay taxes, otherwise they will forcibly take away their furniture and other valuable movable properties, except for the gold necklace when women get married ).
Elevators, building materials and house entrances
may also be sealed to restrict access. In addition, BMC also has the right to
order banks to seize the accounts of taxpayers. In addition, if the tax is
still not paid, the property will be auctioned. If the auction price is less
than its market price, BMC will buy it at the market price and "take it as
its own" and write it on the ownership certificate Name yourself. (As
mentioned earlier, it is the richest municipal council)
This new policy can be described as exhausting all means to
enforce the collection of property taxes, because the people who owe the most
taxes reached 10 million rupees (about 1 million yuan), and at least 120 people
who owed high taxes like this people. The total tax owed amounts to Rs 524
crore.
The above are measures to impose taxes on Indian nationals,
but the government's attitude towards foreign investment is also the focus of
many investors. The Vodafone case in recent years may be a more intuitive
interpretation of the Indian government's attitude.
India Vodafone Overseas Indirect Equity Transfer Case
Vodafone is a multinational mobile phone operator
headquartered in the UK. It is currently one of the world's largest mobile
communication network companies. Hutchison Telecommunications International
Limited is a listed company registered in the Cayman Islands (a subsidiary of
Hutchison Whampoa) that specializes in the telecommunications industry. Later,
HTIL and Max entered the Indian telecommunications market as a joint venture
and changed its name to "Hutchison Aisha". The shares were held by
the CGP company established by HTIL in the Cayman Islands. In 2007, Vodafone
purchased 67% of the shares of "Hutchison Aisha" through its Dutch subsidiary
Vodafone International Holdings. On the surface, neither company was directly
involved in the transaction, and both were completed by its overseas
subsidiaries.
Soon after the completion of the transaction, the Indian tax authority issued a tax bill of 120 billion rupees (approximately RMB 12 billion) to the subsidiary of Vodafone in the Netherlands. The Indian tax authority stated that although the transaction was two non-Indian entities The transaction involves Indian assets, so Vodafone is obliged to withhold tax for it. Vodafone believes that India has no jurisdiction over this transaction and that this transaction does not need to pay taxes in India. In 2008, the Mumbai High Court issued a judgment in support of the tax authorities, stating that if a property or income comes from India, then the direct and indirect income generated by the property should be taxed according to the provisions of the income tax law.
Non-residents and India If there are enough connections between
them, then India’s income tax law applies. However, Vodafone did not pay the
tax. Instead, it appealed the case to the Supreme Court of India. In January
2012, the Supreme Court made a meaningful judgment on this case of concern:
Indian tax authorities have no right to transfer outside India Income from the
transfer of foreign company equity is taxed, even if the transaction involves
the indirect transfer of an Indian company.
The Vodafone case embodies the complex game between the government and enterprises. India is still working on attracting foreign investment. The Indian government's strong position on corporate income tax will directly affect the investment interest of many companies in India. Fortunately, Vodafone's victory in this lawsuit also highlights the importance of the Indian government to foreign investment. Otherwise, the risk of cross-border mergers and acquisitions will increase, forcing investors to weigh potential litigation and other costs will make investors lose confidence.
At
present, due to the differences and complexity of each country’s tax system, it
is generally through bilateral treaties to avoid double taxation and tax
evasion. An international taxation legal system needs to be established
urgently, but there is still a long way to go.
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