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.


Municipality of Mumbai Taxation Policy

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.