BMR Webinar on Decoding the Thin Capitalization Norms

Armed with the recommendations made by the OECD in its final report on Action 4, Limiting Base Erosion Involving Interest Deductions and Other Financial Payments (BEPS Action Plan), the Finance Minister, has proposed the introduction of the Limitation of Interest deduction concept by insertion of Section 94B to the Income-tax Act, 1961. While this was not an unexpected outcome, the proposed section is likely to have significant impact on MNEs, especially for those in capital intensive sectors such as infrastructure, real estate, private equity, manufacturing, etc. This game-changing provision will redefine the industry’s approach to deal making and can potentially expose existing transaction structures to tax as well as commercial risks. Interestingly, this provision will find place in the tax code along with the General Anti-Avoidance Rules (GAAR) which come into effect from April 1, 2017, thereby causing considerable change in the decision making process.

BMR Advisors, organized a webinar to decode section 94B of the Act, specifically covering the following:

• Analysis of the provisions
• Inter-play with TP and GAAR
• Practical issues and challenges
• Open issues that need to be clarified