Government notifies fair market value rules for Indian concerns

The government has notified rules for fair market value and reporting requirement for Indian concerns, specifically with regard to indirect transfer provisions as prescribed in Section 9(1) of the Income-tax Act, 1961.

A Central Board of Direct Taxes (CBDT) release said on Thursday that under Section 9 of the Income Tax Act, 1961, any income arising from transfer of any share of or interest in a foreign company or entity that derives its value substantially from the assets located in India, is deemed to accrue or arise in India.

The release listed the information/rules required, whic were as follows:

• the manner of computation of fair market value (FMV) of Indian and global assets of the foreign company or entity,

• determination of income attributable to assets situated in India, and

• information or documents required to be maintained and furnished by the Indian concern under section 285 of the Act.

The CBDT release said that the draft rules in this regard were formulated and placed in public domain on May 23, 2016 for comments from stakeholders and general public.

After due consideration of the comments received, it said that the government has notified the Rules vide S.O. No. 2226 (E) dated 28.06.2016.

The release said these rules will be applicable from the date of publication in the Official Gazette, i.e.; 28.06.2016.

The CBDT said the rules and formulation thereof are a part of the government's continuing effort at providing predictable, transparent and fair tax regime.