Draft Notification (CBDT)- Conversion of Indian branch of Foreign company into an Indian SUBSIDIARY

Draft Notification - Some major takeaways/ Notes (for quick reference)::::

1- Covering matter related to CONVERSION of an Indian branch of FOREIGN BANK into a SUBSIDIARY,

2- Conditions have been defined by using this notification in order NOT TO GET ANY CAPITAL GAIN TAX on such CONVERSION,

3- A Foreign COMPANY (engaged in BANKING business) covert its BRANCH in India as SUBSIDIARY,

Conditions:

     

a- All ASSETS/ LIABILITIES will COVERT into this NEW SUBSIDIARY,

b- 100% SUBSIDIARY allowed by using this notification,

c- ONLY share ALLOTMENT is allowed as CONSIDERATION - No other consideration can be given,

d- Sec 32 related DEPRECIATION applicable to assets will be ALLOWED to this NEW SUBSIDIARY only proportionate BASIS for PY and FULL thereafter,

e- Accumulated losses/ UN-Absorbed dep. upto the CONVERSION DATE by INDIAN BRANCH will become applicable to this NEW SUBSIDIARY , however        SPECULATIVE BUSINESS LOSSES ARE NOT ALLOWED TO BE TAKEN OVER,

f- Sec 43(1) related actual cost for the NEW SUBSIDIARY will be W.D.V. of INDIAN BRANCH on DATE OF CONVERSION,

g- Actual cost covered u/s 35AD will be taken as NIL,

h- TAX credit of INDIAN BRANCH will be taken over for this NEW SUBSIDIARY,

i- Cost of capital assets for the purpose of calculating CG for NEW SUBSIDIARY will be cost to the INDIAN BRANCH,

j- Credit balance of prov of doubtful debts u/s 36(1) of INDIAN BRANCH will become CREDIT BALANCE for NEW SUBSIDIARY,

    

For reading full text of the notification please refer link - http://www.incometaxindia.gov.in/news/draft-notification-115jg-1-it-act-1961-17-11-2017.pdf  

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