India released the Finance Bill, 2016 (FB 2016) for financial year April 1, 2016 to March 31, 2017 on February 29. The FB 2016 introduces a number of proposals influenced by the Organisation for Economic Co-operation and Development's Base Erosion and Profit Shifting (BEPS) initiative. These include implementation of Master File and Country-by-Country (CbC) reporting, introduction of a withholding tax on certain specified digital services, and a "Patent Box" tax regime for royalty income. Other significant proposals include, but are not limited to: a one-year deferral of the applicability of place of effective management test in determining corporate residency status, certain exemptions of income of a foreign corporation, exemption from dividend distribution tax for companies with units in an International Financial Service Centre, reduction in corporate tax rates and a broader application of buyback tax. Unless otherwise specified, the proposals generally apply to a tax year beginning on or after April 1, 2016.

A Tax Alert prepared by Ernst & Young's Indian Tax Desk in New York, and attached below, provides additional details.

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