The Indian economy is looking up and the investment scenario is improving. The new Government is committed to improving ease of doing business in India. There are lot of opportunities for Overseas Indians to do business with India. The Union Budget announced on Feb 28, 2015, makes investment prospects in India better and offers opportunities for Overseas Indians to forge stronger economic linkages with their motherland & be a part of the Indian growth story. OIFC's interactive webinar had a panel of subject matter experts from Deloitte and APJ-SLG Law Offices share an analysis of the impact of the budget on Overseas Indians and the investment opportunities that this budget opens up for the Indian diaspora.

1. India’s Budget 2015:
Impact Analysis – Overseas
Indians
4 March 2015

2. • State of Economy
• Proposals with direct impact
• Recent Updates (not forming part of the Budget)
• Proposals with impact on business set up in India
• Personal Taxation
Agenda

3. State of Economy
2014-15

4. In summary
Recent economic performance
• GDP growth
prospects improve
GDP growth at
7.4% in 2014-15
• Monetary policy turns
accommodative
Repo rate cut by
0.25% to 7.75%,
more cuts on the
horizon
• SENSEX has hit an all
time high
Recently crossed
the 29,000 mark
• Foreign fund inflows
have experienced a
surge
Net FII inflow of
US$ 38.4 billion in
2014-15 (Apr-Dec)
• Fiscal Deficit, a new
consolidation path
Fiscal deficit
meets FY’15
target of 4.1% of
GDP
• Inflation clearly on a
downtrend
CPI at 5.1% in
January expected
to remain ranged
• Rupee has been stable
Likely to hover
around ₹ 61 - 63 per
US$
• CAD contained within
the comfort zone
Contained at 1.3%
of GDP for 2014-15
4© 2015 Deloitte Touche Tohmatsu India Private Limited

5. Proposals with direct
impact

6. Key policy proposals
© 2015 Deloitte Touche Tohmatsu India Private Limited 12
Financial Market
• Proposal to amend Section 6 of FEMA to clearly provide that control on capital
flows as equity will be exercised by the Government, in consultation with the
RBI on the premise that capital account control is a policy rather than a
regulatory matter.
• Currently, Section 6 provides that RBI may in consultation with the Central
Government, specify:
– any class or classes of capital account transaction which are permissible
– the limit up to which foreign exchange shall be admissible for such
transactions
Monetising Gold
• Introduction of Gold Monetization Scheme to allow depositors of gold to earn
interest and jewelers to obtain loans in their metal accounts
• To introduce a Sovereign Gold Bond*, as an alternative to purchasing metal
gold
• Developing an Indian Gold coin
Infrastructure
• Public Private Partnership (PPP) mode of investment in infrastructure to be
revitalized
• Issuance of tax free infrastructure bonds* for the projects in rail, road and
irrigation sectors
* Currently, NRIs can invest in bonds issued by a public sector undertaking (PSU) in India We
have to wait for the fine prints of the Infrastructure Bond and Sovereign Gold Bond scheme to
analyze the permissibility of NRI investment in these Bonds.

7. Focus Sectors
Key policy proposals
© 2015 Deloitte Touche Tohmatsu India Private Limited 12
Banking & Investment
• Allowing foreign investment in Alternative Investment Funds
• Rationalization of foreign investments
– Distinction between different types of foreign investments, especially
between foreign portfolio investments and foreign direct investments to
be done away with
– Composite caps to be brought in
eBiz
• Appointment of Expert Committee to examine the possibility to replace
multiple prior permissions with a pre-existing regulatory mechanism
Others
• Proposal to set up GIFT as International Finance Centre (IFC) in Gujarat on
same lines as IFC in Singapore and Dubai
• Extension of visa on arrival facility from 43 countries to 150 countries, in
stages

8. Recent Updates (not
forming part of the
Budget)

9. Recent updates
© 2015 Deloitte Touche Tohmatsu India Private Limited 16
FDI cap in Insurance raised to 49%
• Composite cap of FDI in Insurance sector raised to 49% from 26% -
Investment beyond 26% would be under Government route
− Foreign Investment cap includes all kinds of foreign investment such as
FDI, FII, QFI, NRI, etc.
− Indian insurance company should be owned and controlled by resident
Indian entities at all times
− Foreign Investment in Indian insurance company shall be in terms of
pricing guidelines specified by RBI under FEMA
NRI non-repatriable funds - Proposal
• It is been recently reported in the media that DIPP is in the process of
seeking Cabinet approval to treat non-repatriable investment by NRI’s at par
with domestic investment and not as FDI

10. Proposals with impact on
business set up in India

11. Corporate tax rates
Corporate taxation
Corporate tax
• Proposed to reduce from 30% to 25% over next four years
• Reduction to be accompanied by rationalization and removal of various kinds of tax exemptions and incentives for
corporate taxpayers
• Changes to take effect from FY 2016-17; no change proposed in rate in FY 2015-16 (remains 30%)
• Additional surcharge of 2% for domestic companies in case taxable income exceeds ₹ 10 million
Minimum Alternate Tax (MAT)
• MAT rate to continue at 18.5% (plus applicable surcharge and cess)
• Additional surcharge of 2% for domestic companies in case taxable income exceeds ₹ 10 million
• Definition of Book profit proposed to be changed for FIIs
Dividend Distribution Tax (DDT)
• No change in DDT rates
• Surcharge increased by 2%
• Effective tax rate to be increased
− from 19.99% to 20.36% for companies in case taxable income exceeds ₹ 100 million
− from 19.09% to 19.45% for companies in case taxable income exceeds ₹ 10 million upto ₹ 100 million
© 2015 Deloitte Touche Tohmatsu India Private Limited
No change in tax rate of a foreign company (40%)
18

12. Corporate taxation
Existing provisions Proposed provisions under Finance Bill 2015
A company is said to be resident in India if
• It is an Indian company
• During that year, the control and management of
its affairs is situated wholly in India
A company is said to be resident in India if
• It is an Indian company;
• Its Place of Effective Management (PoEM), at any
time in that year, is in India
Residential status of companies – change in
definition
© 2015 Deloitte Touche Tohmatsu India Private Limited 12
PoEM has been defined in the Finance Bill, 2015 to mean a place where key management and commercial decisions
that are necessary for the conduct of the business of an entity as a whole are, in substance made

13. Alternate Investment Funds (AIFs)
Corporate taxation
• Investment in AIF Trust can be made by NRIs through FDI route with prior FIPB approval
• Pass through status has been granted to entire Category I and Category II AIFs registered with SEBI
• For AIFs
− Income other than business income to be exempt from tax
− Business income to be taxable at rates applicable depending on the form (company, trust, Limited Liability
Partnerships, etc.)
− Provisions relating to DDT (for companies) and tax on distributed income shall not apply
− Loss, if any, is not permitted to be passed on to the investors and is to be retained at the Investment Funds level
− Any income, other than business income, payable to unit holders, shall be subject to withholding tax @ 10%
− Mandatory filing requirements with tax authorities
• For Unit holders
− Income (other than business income) shall be chargeable to tax in the same manner as if the investments were
made directly
− Business income distributed by Investment Funds to unit holders shall be exempt (as the same is taxable at the
Investment Funds level)
© 2015 Deloitte Touche Tohmatsu India Private Limited 13

14. Indirect Transfer
• Transfer of shares of a foreign company deriving substantial value from India
• Taxation proposal -
Share or interest in a foreign company or entity deemed to derive its value substantially from assets (whether tangible or
intangible) located in India where value of Indian assets on the specified date:
− Exceeds ₹ 10 crore; and
− Represents at least 50% of the value of all the assets owned by the foreign company or entity
• Value of an asset to mean the fair market value of such asset (without reduction of liabilities in respect of the asset) as
on the specified date
− Manner of determination of fair market to be prescribed
• Taxation of gains to be on proportional basis – method to be prescribed
• Certain exemptions prescribed in case of direct holding company, in a scheme of amalgamation or demerger, etc.
subject to specified conditions
Corporate taxation
Key Proposals
© 2015 Deloitte Touche Tohmatsu India Private Limited 14

15. Fund managers – no business connection
• Fund management activity carried out through an Eligible Fund Manager (EFM) in India, acting on behalf of Eligible
Investment Fund (EIF) shall not constitute business connection in India
• EIF means a Fund established or incorporated or registered outside India, which collects funds from its members for
investing it for their benefit and satisfies the conditions specified
Taxation for REIT
• Sale of units of REIT and INVIT at the time of “offer for sale” / post listing of units shall be subject to payment of
Securities Transaction Tax (STT) and taxed as per the provisions applicable for STT paid securities
• Rental / leasing income on assets directly owned by REITs to be exempt from tax in its hands – Distribution of such
income to unit holders will be taxable in their hands and subject to withholding at 10% for residents and at applicable
rates for non-residents
Taxation of Royalty and Fees for Technical Services (FTS)
• Rate of tax is proposed to be reduced from the current 25% to 10% - Withholding tax rate to be 20% in the absence of
Permanent Account Number
Withholding tax
• Effective 1 June 2015, the withholding tax provisions are proposed to be amended to provide reporting requirement to
be applicable to any sum, whether chargeable to tax or not, to a non-resident in a form and manner to be prescribed
Corporate taxation
Key Proposals
© 2015 Deloitte Touche Tohmatsu India Private Limited 15

16. Key Proposals
Corporate taxation
Incentives for the States of Andhra Pradesh and Telangana
• An additional investment allowance is proposed for an amount equal to 15% of the cost of new asset acquired and
installed by a taxpayer subject to prescribed conditions
Additional depreciation for assets used for less than 180 days
• It is proposed to allow further depreciation of 10% for assets used for less than 180 days – this additional depreciation to
be allowed in the immediately succeeding financial year – Currently, only 10% (out of 20%) of additional depreciation is
allowed for such assets
Deduction in respect of employment of new workmen
• Benefit of the deduction of 30% of additional wages to new regular workmen extended to non corporate taxpayers
• Limit of 100 workmen reduced to 50
Transfer Pricing
• Specific Domestic Transfer Pricing threshold proposed to be increased from ₹ 50 million to ₹ 200 million
© 2015 Deloitte Touche Tohmatsu India Private Limited 16

17. Customs Duty
• General Customs Duty rate retained at 10%
• Standard ad-valorem rate of Countervailing Duty (CVD) increased from the existing rate of 12% to 12.5%
• Effective peak rate of Customs duty increased from 28.85% to 29.44%
Excise Duty
• Peak rate of Excise Duty increased from 12 to 12.5%
• Digital signing of invoices and records allowed
Service Tax
• Rate of Service Tax will be increased from 12.36% to 14%
• Swachh Bharat Cess at 2% on the value of taxable services proposed to be imposed
• Digital signing of invoices and documents allowed
• Concept of aggregator introduced - Aggregator located outside of India also made liable to pay service tax through a
representative in India (Aggregator is a person, who owns and manages a web based software application, to enable a
potential customer to connect with service providers of a particular kind under its own brand name or trade name)
Goods and Service Tax
• Constitution Amendment Bill already introduced in the Parliament
• Commitment towards introduction of GST by 1 April 2016
• GST is expected to put in place a state-of-the art Indirect Tax system
• Central Excise duty and Service Tax increased to facilitate a smooth transition to GST
Indirect taxes
Key Proposals
© 2015 Deloitte Touche Tohmatsu India Private Limited 17
Penalty provisions rationalised to encourage self compliance and end
protracted litigation

18. Personal Taxation

19. • Surcharge increased from 10 to 12% (on income exceeding ₹ 10 million)
• Education cess remains at 3%
• Additional deduction of ₹ 50,000 for contribution towards National Pension Scheme (NPS)
Personal taxation
Tax Rates
© 2015. For information, contact Deloitte Touche Tohmatsu Limited.
Tax Rates in respect of income earned during the period
1 April 2015 to 31 March 2016
Slab of Income (₹) Rate of Tax (%)
Up-to 250,000 Nil
250,001 - 500,000 10
20
30
500,001 – 1,000,000
1,000,001 and above
• No change in personal tax rates and income slab

20. Key Proposals
Personal taxation
20
Particulars
Proposed amendment
Abolishment of wealth
tax
• Statement of Assets required under the current Wealth tax form to be included in the new
Tax Return Form
TDS on withdrawal
from Employee
Provident Fund
Scheme
• TDS at 10% on taxable withdrawals
• No TDS if withdrawal is less than ₹ 30,000
• If no PAN, then TDS at maximum marginal rate
Residential Status
• Rules to be prescribed for calculating period of stay to determine the residential status of an
Indian citizen being a member of a crew of a foreign bound ship leaving India
Foreign tax credit • Central Board of Direct Taxes, apex tax body, to notify rules to determine FTC
Black Money Law • Announcement of new law to Curb Black Money
© 2015 Deloitte Touche Tohmatsu India Private Limited

21. Questions & Answers

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©2015 Deloitte Touche Tohmatsu India Private Limited. Member of Deloitte Touche Tohmatsu Limited