RBI:
Reserve Bank India (RBI) has issued The Reserve Bank of India (Co-operative Banks – Interest Rate on Deposits) Directions, 2016. The provisions of these Directions shall apply to every co-operative Bank licensed or permitted to carry on banking business in India by the Reserve Bank of India. The direction requires a Co-operative Bank to pay interest on deposits of money (other than current account deposits) accepted by them or renewed by them in their Domestic, Ordinary Non-Resident (NRO), Non-Resident (External) Accounts (NRE) and Foreign Currency (Non-resident) Accounts (Banks) Scheme {FCNR(B)} deposit accounton certain prescribed terms. The direction prohibits the Co-operative banks to create any kind of lien, direct or indirect, against NRE savings deposits. This Direction shall come into effect from 12th May, 2016.
CBDT – DOUBLE TAXATION AGREEMENT:
Protocol for amendment of Convention for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital gains between India and Mauritius has been signed between both the countries on 10th May, 2016. This protocol enables India to levy Capital Gains Tax on alienation of shares in Indian companies which will be acquired on or after 1 April 2017. The Protocol contains a two-year transition period during which a reduced tax rate would apply for capital gains. The reduced tax rate will be limited to 50% of the domestic tax rate of India, subject to the fulfillment of the conditions prescribed. The major impact of the protocol is that, it will help to tackle the long pending issues of treaty abuse and streamline the flow of investment and stimulate the flow of exchange of information between India and Mauritius. It will improve transparency in tax matters and will help curb tax evasion and tax avoidance.
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