Jv With Welly Investments: December 2009

JV with Welly Investments Proposed Indian Operations – Overview of Indian Tax and Regulatory Framework

December 2009

Overview • Our Understanding • Overview of Indian taxes - Direct Tax - Indirect Tax • Why NMA • Our Team

NMA

December 2009 Slide 2

Our Understanding

NMA

December 2009 Slide 3

Our Understanding • India Company (Mr. Mehra and Mr. Rama being shareholders) to initially set up factory in Pollachi for manufacturing ‘coir fibre bales’ and trade them entirely in the international market • Indian Company to subsequently enter into a JV with Welly Investment Ltd, Hongkong (‘Welly’) • Welly to take approx 70% stake: - Total investment to be around $350,000 - Welly to invest $250,000 and balance $100,000 to be contributed by the Indian promoters NMA

December 2009 Slide 4

Overview of Indian taxes

NMA

December 2009 Slide 5

Direct Tax – Bird’s eye view • Income tax a central law in India • Uniform tax year for all tax payers (Tax year April 1 ~ March 31) • Detailed transfer pricing regulations • Advance Rulings permissible in case of non-residents • Carry forward of tax loss for 8 years; tax depreciation for indefinite period • Aggressive interpretation of Permanent Establishment (PE) by Indian tax authorities

NMA

December 2009 Slide 6

Indirect Tax – Bird’s eye view Customs Duty

Transaction Taxes

• Peak rate of customs duty -10%

• No Transaction tax on import of goods • Service Tax (10.3%) - tax on provision/acquisition of specified services

• Effective rate of customs duty – 24.42%

• CENVAT (8.24%) - tax on manufacture of goods

• Tax on import of goods

• Central Sales Tax (2%) – tax on inter-State sale of goods • State Value Added Tax (4% to 12.5%) - tax on intra-State sale of goods • Entry Tax - tax on entry of goods into a State • Other local levies

India moving towards unified GST regime by April 2010 NMA

December 2009 Slide 7

Investment Strategy • Review of the Master Circular 2009 issued by RBI to check the approval route for investing in the JV • To check whether the proposed industry falls under the Small Scale Industry (SSI) status • Review the Press Note 1, 2005 Series to check whether the proposed investor holds any other JV stake in India

NMA

December 2009 Slide 8

About RSM

Why NMA • NMA

is a boutique chartered accountancy firm engaged in providing auditing tax and accounting services to large corporations

New Delhi

• NMA is a leading firm providing

  

Audit services; Accounting support; Taxation & business advisory.

• NMA has been in the practice for around 7 years and currently has offices in Delhi, Kolkatta and Chennai with a mix of chartered accountants, company secretaries and lawyers

Kolkatta

• We constantly aim to provide highquality and efficient services to our clients at the optimum economic value Chennai

NMA

December 2009 Slide 9

Our Range of Services . . .

Our Range of Services

Transaction Support Services

Indirect Tax Services Tax & Business Advisory Transfer Pricing Services

NMA

Attest & Risk Consulting Services

December 2009 Slide 10

What NMA can offer.. • Assistance in initial set-up and incorporation of the Indian Company (including assistance in

opening Indian bank account) • Assistance in incorporation of the JV and the investment route • Structuring of transactions from a tax optimal perspective • Assistance in setting-up of the production facility • Assistance in initial registrations such as:

•

Permanent Account No (PAN), Tax Account No (TAN),Directors Identification No (DIN),

•

Import-Export Code (IEC), Excise registration, Service tax registration and VAT/CST registrations

• Assurance and audit related functions • Assistance in formulating finance and operational policies and procedures • Outsourcing of routine finance, accounting and regulatory/tax functions (wherever required)

Thank you