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Nokia's efforts to sell its Chennai plant face another setback as tax authorities have insisted the company provide a guarantee of up to Rs 3,500 crore over an ongoing dispute before a freeze is lifted on assets. 
 The Finnish company has called on the <keyword id="71" type="POSITION" weightage="80" keywordseo="Prime-Minister">Prime Minister</keyword>'s Office to help resolve the issue reported The Economic Times. 
 The income-tax department filed the affidavit in the <keyword id="6355014" type="ORGANIZATION" weightage="80" keywordseo="Delhi-High-Court">Delhi High Court</keyword> a few days ago, said people with knowledge of the matter. The step effectively goes against an agreement between the two that proceeds from the factory's sale would go into an escrow account pending a decision on the Rs 21,153-crore tax row. 
 
A Nokia spokesperson and a company lawyer confirmed to ET that such an affidavit had been filed. 
 
The pact between the two sides was to be presented in the court on April 6, when the matter would come up for hearing. But I-T department's affidavit seems to run counter to this accord. 
 
The move comes as the government has been saying that all efforts were being made to get the factory sold. 
 "We have started efforts in this direction. The Nokia plant should start functioning again and people will get employment," Prime Minister <keyword id="6354477" type="PERSON" weightage="80" keywordseo="Narendra-Modi">Narendra Modi</keyword> said in the Rajya Sabha on March 3. 
 The move could undermine the government's push to revive India's image among investors globally by putting a stable, nonadversarial tax regime in place. However, it's also not possible for the government to give up on tax proceedings based on retrospective amendments made in 2012 that has led to high-profile disputes with companies such as Vodafone, Cairn India and others, ET reported. "Our main focus at the moment is what we have consistently said since October: with production at Chennai suspended, we call on the government to lift the asset freeze imposed by the tax authorities so we can explore potential opportunities for a sale to a suitable buyer," the Nokia spokesperson said. "The approach of the government will lead to the perception that India is continuing with aggressive tax policies," said <keyword id="173502" type="PERSON" weightage="80" keywordseo="Dinesh-Kanabar">Dinesh Kanabar</keyword>, chief executive of tax advisory firm Dhruva Advisors and former KPMG India deputy CEO. "When the government decided not to go to the <keyword id="6354977" type="ORGANIZATION" weightage="80" keywordseo="Supreme-Court">Supreme Court</keyword> on the Vodafone tax case, it sent a very positive signal to the international community, and one would wish that government would be pragmatic. Likewise, in the Nokia case, asking for payment of huge demands which are yet to fructify, will not stand India in a good stead." 
 
Seeking PMO's intervention 
 Nokia has sought the PMO's "immediate intervention" in resolving the asset freeze issue before the case comes up for hearing next week as "efforts to revive manufacturing operations are in imminent danger of irretrievable break-down", the company said in a letter. The "shocking" approach of the income-tax department will effectively block Nokia India from selling the factory and "we would reach a deadlock", Barry French, head of marketing and corporate affairs at <keyword id="59633" type="COMPANY" weightage="80" keywordseo="Nokia-Corp">Nokia Corp</keyword>, said in the note. ET has reviewed a copy of the letter. "We strongly believe that such an undertaking demand is counter to the spirit of cooperation which has been arrived at under your guidance," Nokia said in the letter. 
 <keyword id="6425677" type="CITY" weightage="80" keywordseo="Essar-Group">Essar Group</keyword> Chairman <keyword id="2791886" type="UNKNOWN" weightage="80" keywordseo="Shashikant-Ruia">Shashikant Ruia</keyword> said on Wednesday that the group was evaluating the Nokia factory, confirming the conglomerate's interest as reported by ET on March 18. Nokia, which was once the largest handset maker in the world, said, "Discussions with a prospective buyer are at an advanced stage, and any delays would have the inevitable effect of scaring away the prospective buyer, apart from creating further negative sentiment in the broader investor community." 
 The letter, which has been copied to several departments, added that the deadlock will further devalue the asset — currently pegged at Rs 350-450 crore — and slash eventual revenue for the government. Nokia Corp is not a guarantor for <keyword id="1633700" type="COMPANY" weightage="80" keywordseo="Nokia-India-Pvt-Ltd">Nokia India Pvt Ltd</keyword>'s liabilities and is not in a position to accept becoming one as a consequence of this transaction, the Helsinkibased-firm said. 
 The company said the tax department's guarantee demand is the same one that forced Nokia to keep it out of the $7.5-billion global sale of its devices business to <keyword id="10387" type="CITY" weightage="80" keywordseo="Microsoft">Microsoft</keyword> in April 2014. This led to the closure of the plant and rendered about 8,000 direct employees and thousands of indirect workers jobless.

Know how the Income Tax authorities are creating an obstacle in its bid to sell its Tamil Nadu plant

<ul><li>India’s Income Tax (IT) Department is reportedly mulling over imposing a 2% equalisation levy on <keyword id="2721952" type="PERSON" weightage="20" keywordseo="crypto">crypto</keyword> trading on exchanges based outside the country.</li><li>The equalisation levy usually applies to foreign companies operating in India.</li><li>It’s unclear how a tax usually meant for corporations will apply to traders and individuals buying crypto.</li><li>The equalisation levy may also become a bone of contention between India and G7 countries.</li></ul>Trading on <keyword id="6422582" type="UNKNOWN" weightage="20" keywordseo="Crypto-Exchanges">crypto exchanges</keyword> that aren’t based in India may get more expensive with the country’s regulator mulling over a 2% equalisation levy on crypto transactions. The new equalisation levy — a tax that India imposes on foreign companies — would apply to Bitcoins and other cryptocurrencies bought off exchanges that aren’t based in India, according to the <a href="https://economictimes.indiatimes.com/markets/cryptocurrency/equalisation-levy-could-make-life-more-taxing-for-cryptocurrency-buyers/articleshow/83733902.cms">Economic Times</a>. “The tax department is now looking into whether the 2% levy is applicable on crypto assets bought online by Indians from overseas exchanges,” the report said. <div type="Article" hostid="261" msid="83742929" title="There’s a new Indian crypto lobby in the making and Zebpay has confirmed its participation" mstype="2" mssubtype="0"></div> How will crypto traders be affected by the new tax? It is unclear why <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=microsite">cryptocurrency</a> traders will be affected by this. "The way the new equalisation levy is worded and defined, it appears that it will also be applicable on <keyword id="6357017" type="DEFINITION" weightage="20" keywordseo="cryptocurrency">cryptocurrency</keyword> bought from an exchange not based in India," Girish Vanvari, founder of tax advisory firm Transaction Square, told The Economic Times. However, this doesn't clarify why a tax meant for companies will mean for individuals with cryptocurrency holdings. It is also unclear as to whether cryptocurrencies can be categorised as goods, services or commodities. At the moment, individuals in India don’t pay tax on incomes from crypto trading unless they have converted Bitcoins, Ethers and respective tokens into the Indian rupee. What is an equalisation levy? The equalisation levy, which is often called the ‘Google Tax’, was originally directed towards foreign tech companies doing business in India but not paying their equivalent share of taxes because its headquarters weren’t local. There has been fierce opposition by technology giants like Google and Twitter, which may have to pay <a href="https://www.moneycontrol.com/news/business/twitter-facebook-google-may-have-to-pay-higher-taxes-in-india-report-7062031.html">as much as</a> 25% more tax in the country. Some have also alleged that the tax could be against international trade laws. “The US is trying to protect its own tax base. Countries like India are not likely to accept this as being sufficient to substitute allocation of profit with the existing equalisation levy – this is minuscule compared to what we have,” Dinesh Kanabar, CEO of tax advisory firm Dhruva Advisors, <a href="https://www.moneycontrol.com/news/business/economy/india-may-not-accept-g7-digital-tax-proposal-as-equalisation-levy-generates-larger-share-of-profit-experts-say-7015881.html">told</a> Moneycontrol. The equalisation levy could also become a bone of contention between India and G7 countries. The grouping of countries has its own new digital tax that it wants to put into place. It also requires tech giants like Google, Facebook, Twitter and others to pay tax in the countries where they operate, but India’s equalisation levy would earn the country higher revenues. It has been just under two months since almost every <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=microsite">crypto trader</a> in India had to stop making deposits to exchanges in Indian rupee. But most in the industry expect those issues to pass soon enough. However, even if they do, users in India may have to rethink their crypto-trading strategies with this new equalisation levy coming into play. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/citymall-a-startup-that-helps-budding-entrepreneurs-start-their-ventures-on-whatsapp-has-raised-over-22-million/articleshow/83741383.cms">CityMall, a startup that helps budding entrepreneurs start their ventures on WhatsApp, has raised over $22 million</a> <a href="https://www.businessinsider.in/cryptocurrency/news/investments-in-crypto-hit-17-billion-in-the-first-six-months-of-2021/articleshow/83740327.cms">Investments in crypto hit a new record of $17 billion, but Indian funds are yet to jump on the bandwagon</a> <a href="https://www.businessinsider.in/business/ecommerce/news/flipkart-and-amazon-may-not-be-able-to-do-flash-sales/articleshow/83737670.cms">Amazon, Flipkart and other e-commerce platforms may not be able to do flash sales any more, if Indian government has its way</a>

India is reportedly mulling over a new crypto tax which could make trading on foreign exchanges more expensive

New Delhi, Apr 21 () The coronavirus pandemic is having a "deep impact" on Indian businesses and has already caused an unprecedented collapse in economic activities over the last few weeks, says an industry survey released on Tuesday. The survey, jointly conducted by industry body Ficci and tax consultancy Dhruva Advisors by seeking responses from about 380 companies across sectors, also said that businesses are grappling with "tremendous uncertainty" about their future. Almost 72 per cent of the respondents said that the present situation is having a "high to very high" level of impact on their business. Jobs are also at risk over the coming months as nearly three-fourths of the surveyed firms said they may look at some reduction in manpower in their respective companies, the survey noted.A substantial majority of the respondents do not foresee a positive demand outlook for their business in this fiscal, with 70 per cent of the surveyed firms expecting a degrowth in sales in the fiscal year 2020-21. Moreover, a vast majority of companies also foresee a reduction in their business cashflows and company's order book. "The survey clearly highlights that unless a substantive economic package is announced by the government immediately, we could see a permanent impairment of a large section of industry, which may lose the opportunity to come back to life again," Ficci said in a statement. The industry body further stated that the COVID-19 pandemic is having a deep impact on the Indian economy and members of Indian industry. The magnitude and speed of collapse in economic activity that India has seen over the last few weeks is unprecedented and there is tremendous uncertainty about what the future holds for businesses and enterprises, Ficci said.Sangita Reddy, President, Ficci, said, "The Covid-19 pandemic is causing deep economic harm and could reverse the gains made in the industrial economy over many decades. There is a need to render immediate and sizable support to industry to protect people, jobs and enterprises." "Industry members are reeling under severe financial stress and are in urgent need of ample liquidity to ensure business continuity. We are hopeful that the government will introduce a series of measures in quick succession to support demand ensure business continuity. This would be a confidence booster and we hope sentiment will improve following the economic package."Dinesh Kanabar, CEO, Dhruva Advisors, said there is a significant expectation from the government for a financial stimulus and providing liquidity, including by way of tax refunds and cheaper credit, so that the economy returns to normalcy faster.The survey also found that in respect of approved expansion plans, 61 per cent of the respondents expect to defer such expansions for a period upto 6 or 12 months, while 33 per cent expect to defer approved expansion plans for more than 12 months. Further, while 60 per cent of the surveyed firms have deferred their fund-raising plans for the next 6-12 months, nearly 25 per cent of the firms have shelved the same.Besides, while 43 per cent of the surveyed firms reported that they do not foresee an impact on exports, nearly 34 per cent said that exports would take a hit by more than 10 per cent. RSN MKJ

Economy suffers 'unprecedented collapse' due to COVID-19: Survey

<keyword id="2552407" type="ORGANIZATION" weightage="80" keywordseo="The-Central-Board-of-Direct-Taxes">The Central Board of Direct Taxes</keyword> (<keyword id="128665" type="ORGANIZATION" weightage="100" keywordseo="CBDT">CBDT</keyword>) has said that now companies can transfer up to 50% of their manpower from existing units to new ones in special economic zones (SEZs) without losing any tax benefits. This follows intense lobbying by the industry. 
 “It has now been decided that the new transfer or re-deployment of technical manpower from existing unit(s) to a new unit located in <keyword id="45393" type="ORGANIZATION" weightage="80" keywordseo="SEZ">SEZ</keyword>, in the first year of commencement of business, shall not be construed as splitting up or reconstruction of an existing business, provided the number of technical manpower so transferred as at the end of the financial year does not exceed 50% of the total technical manpower actually engaged in development of software or IT enabled products in the new unit,” a CBDT circular said. The earlier limit was 20%. 
 
The CBDT increased the limit following intense lobbying by the industry. The industry had been demanding to enhance the limit in line with the recommendations of the Rangachary Committee, which was constituted to review the taxation of the IT sector. 
 
Welcoming the move, Dinesh Kanabar, deputy CEO, KPMG, said, "It is consistent with the stated policy of the government of removing tax aggression because it specifically provides that past assessments will not be reopened."

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Know how the Income Tax authorities are creating an obstacle in its bid to sell its Tamil Nadu plant

BI India Bureau

India is reportedly mulling over a new crypto tax which could make trading on foreign exchanges more expensive

BI India Bureau

Economy suffers 'unprecedented collapse' due to COVID-19: Survey

PTI

Companies Allowed To Transfer Manpower To SEZs Without Compromising On Tax Benefits

BI India Bureau

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