—Whichever is lower<\/strong><\/span><\/p>\n

This interest can be computed in several ways as suggested by the BEPS report (fixed ratio rule, Group ratio rule, Carry forward rule or the de minimis monetary threshold). India has adopted a fixed ratio rule <\/strong>and therefore a ratio of 30% has been fixed taking into consideration the economic conditions in India.<\/span><\/p>\n

These provisions shall allow for carry forward of disallowed interest expense to eight assessment years immediately succeeding the assessment year for which the disallowance was first made and deduction against the income computed under the head “Profits and gains of business or profession to the extent of maximum allowable interest expenditure.
\n<\/strong><\/span><\/p>\n

III Definitions [Section 94B (5) of the Act]<\/strong><\/span><\/h3>\n

\u00a0For the purposes of this section, the expressions\u2014<\/span><\/p>\n\n\n\n\n\n

\u00d8\u00a0 “associated enterprise” shall have the meaning assigned to it in sub-section (1) and sub-section (2) of section 92A;<\/span><\/td>\n<\/tr>\n

\u00d8\u00a0 “debt” means any loan, financial instrument, finance lease, financial derivative, or any arrangement that gives rise to interest, discounts or other finance charges that are deductible in the computation of income chargeable under the head “Profits and gains of business or profession”;<\/span><\/td>\n<\/tr>\n

\u00d8\u00a0 “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.’<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Conclusion<\/span><\/h3>\n Introduction of section 94B brings about a significant change in the Indian Tax regime. It also portrays India\u2019s active participation in OECD and its will to align the domestic laws with the recommendations of the BEPS report. This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years. However, the ambiguity in interpretation of this section can lead to increasing litigation in the future unless clarity has been provided by the tax authorities.<\/span><\/p>\n <\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Introduction \u201cArise,\u00a0awake, and\u00a0stop not\u00a0till the goal is reached\u201d said by Swami Vivekanada seems to be the motto of the Indian government which is relentlessly working on bringing India at Global footing as far as the taxation laws are concerned. Along with India many other nations have joined hands to develop and strengthen the anti- tax … Read more<\/a><\/p>\n","protected":false},"author":132,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4],"tags":[477],"class_list":["post-4106","post","type-post","status-publish","format-standard","hentry","category-income-tax","tag-transfer-pricing"],"yoast_head":"\n