Navigating Tax Regulations

Cross-Border WFH & Permanent Establishment: What the 2025's OECD Update Says OECD has published the 2025 update to the OECD Model Tax Convention, approved by the Committee on Fiscal Affairs on 13 October 2025 and by the OECD Council on 18 November 2025. A key highlight: important clarifications in Article 5 Commentary on when an individual’s home can become a “place of business” of the enterprise. Here’s a simplified take: a. Not every home office = PE An employee working from home in another country does not automatically create a Permanent Establishment. b. Key tests still apply: Permanence - Is the place used regularly and continuously? Business use - Is the home truly functioning as a place of business? Nature of activities - Are they core, or merely preparatory/auxiliary? c. 50% Working-Time Guideline If the employee works less than 50% of their total time from the overseas location in a 12-month period - generally no PE. If 50% or more, then a deeper factual review is needed. - The “Commercial Reason” Test – the critical determinant PE risk increases if the employee's presence facilitates business in that country, such as: meeting customers or suppliers, building/servicing a local client base, managing vendor relationships, sourcing or developing business opportunities If the WFH arrangement exists only due to employee preference or cost-saving, not business need - No PE. - Intermittent / incidental interactions: occasional meetings or light-touch activity in that country are not enough to trigger a PE. Bottom Line: The 2025 OECD Update makes one thing clear: Cross-border WFH does not automatically create a tax presence - but sustained, business-driven, on-ground activity can. A timely reminder for multinationals to revisit their remote work, global mobility, and PE risk frameworks. #OECD #OECD2025Update #ModelTaxConvention #PermanentEstablishment #Article5 #CrossBorderWork #RemoteWorkTax #GlobalMobility #InternationalTax #TaxPolicy #TransferPricing #BEPS #GlobalTax #CorporateTax #TaxUpdates #WFHCompliance

🎭 GST 2.0 & ITC Blockage: The Great Credit Vanishing Act You bought goods at 28% or 18% or 12% GST, stocked them like a squirrel prepping for winter. GST 2.0 arrives, and those goods are now taxed at 5% or exempt. You expect a refund of ITC. But the government says: “Nice try. No refund for you.” Why? Because Circular No. 135/05/2020-GST says: “Same goods, lower rate? Not inverted duty. No ITC refund.” Even if your ledger is sobbing with unused credit, the law says: “Absorb it. Or reverse it. Or cry softly into your GSTR-3B.” 🧾 What the Circular Says It clarifies that rate reduction on the same goods doesn’t qualify as an inverted duty structure under Section 54(3) of the CGST Act. So, no refund of accumulated ITC. 🧠 Legal Experts: “Wait a Minute…” Section 54(3)(ii) allows refund when input tax > output tax, without requiring different goods. Delhi HC in Pitambra Books Pvt Ltd said: “Circulars can clarify, not contradict the law.” Translation: “Dear CBIC, you can’t make up new rules just because you had a bad day.” 🚗 Cess Credit: The Forgotten Cousin Auto dealers paid Compensation Cess on luxury vehicles. GST 2.0 says: “No more cess!” But the credit? Stuck. Like that one sock in your washing machine. Unless allowed to transfer to CGST/IGST, it’s non-refundable and non-usable. 📊 Business Impact: What You Need to Do -Reverse ITC on exempted goods (even capital goods). -Update pricing and invoicing before Sept 22. -Reflect rate changes in invoices (no new e-way bills needed). -Brace for litigation—many are challenging the circular. 🤹♀️ Funny But True: GST 2.0 Is a Magic Show You see ITC in your ledger. You expect a refund. The government pulls out Circular 135/2020 and says: “Abracadabra! It’s gone.” 💸 Will Consumers Benefit? In theory: Yes. In practice: Not always. Why? -No ITC refund = higher cost retention. -Inventory bought at 18% sold at 5% = margin squeeze. -No anti-profiteering enforcement = no legal push to reduce prices. So, while the government hopes for price drops, the market may respond with stagnation or marginal cuts, especially in FMCG, auto, and durables. Faced ITC blockage or pricing dilemmas post-GST 2.0? Let’s discuss. #GST2.0 #Circular135 #ITCBlockage #CessCredit #TaxReform #IndirectTax #ICAI

Don't blindly trust your HR with your Form 16. You might be missing out on benefits you’ve already earned. Form 16 isn’t just a formality. It’s a map of your money, and this year, a few critical changes could affect your take-home, deductions, and tax refunds. Here’s what’s new (and what you need to do about it): 👉 Standard Deduction Hike (₹75,000 in new regime) What it means: If your employer defaulted you into the new tax regime, you’re now eligible for a higher standard deduction. What you should do: Check if your Form 16 shows this. If not, flag it. You might be overpaying tax without knowing it. 👉 TDS & Perks Are Now More Transparent What it means: ESOPs, leave travel allowance, employer NPS contributions—all are being reported in detail. What you should do: Review the 'Part B' of your Form 16. If something’s missing or misreported, your tax return might trigger a mismatch. Don’t wait for a notice to care. 👉 New Regime vs Old Regime Visibility What it means: Employers can show which regime you’re under, but they don’t decide what’s best for you. What you should do: Use your Form 16 to compare both regimes. If you’re better off under the old one, opt for it while filing ITR even if your salary was taxed under the new. 👉 Mismatch Risk with AIS/26AS What it means: Form 16 shows what your employer declared. But the Income Tax portal sees everything. What you should do: Before filing, match your Form 16 numbers with your AIS (Annual Info Statement). Mismatches can lead to notices or delays in refunds. Bottom line is: don’t blindly forward your Form 16 this year. Read it. Question it. Take ownership of it. Because your money deserves more than a quick email forward. Have you reviewed your Form 16 yet, or are you trusting that someone else got it right?

🚨 The Income Tax Act, 1961, is HISTORY! 🚨 After 60+ years, India's tax laws are getting a massive transformation! The Income Tax Bill 2025 brings clarity, simplifies compliance, and encourages digital adoption. Here’s what you MUST know: ✅ 1️⃣ No More AY & PY Confusion! – Say hello to "Tax Year" instead of the complicated Assessment Year & Previous Year system! ✅ 2️⃣ Higher Limits for Businesses & Professionals 📈 44AD (Business): ₹2 Cr ➡ ₹3 Cr 📈 44ADA (Professionals): ₹50 Lakh ➡ ₹75 Lakh ✅ 3️⃣ Housing Loan & Rental Income Updates 🏡 Interest on Housing Loan – Can only be set off against rental income 🏡 Self-Occupied Property – No deduction for housing loan interest 🏡 Loss from Rental Property – Can be adjusted against other rental income but not carried forward ✅ 4️⃣ Exemptions & Allowances Tweaked 💼 HRA (House Rent Allowance) – No exemption allowed! ✈️ Travel & Daily Allowance – Still allowed for official tours/trips 📉 Standard Deduction: ₹75,000 🏦 Employer Contributions (Deduction Eligibility) – 🔹 NPS: Up to 14% of basic salary 🔹 EPF: Up to 12% of basic salary ✅ 5️⃣ Tax Filing Due Dates Extended 🗓️ Tax Audit Filing: Sept 30 ➡ Oct 31 🗓️ ITR Filing: Oct 31 ➡ Nov 30 ✅ 6️⃣ No Change in Capital Gains Tax – LTCG & STCG rates remain unchanged! ✅ 7️⃣ Digital Push for MSMEs – Businesses with up to ₹10 Cr turnover via digital transactions get audit relief! ✅ 8️⃣ CA Exclusive Audit Rights – Despite speculations, only Chartered Accountants can conduct tax audits. Relief for CAs! ✅ 9️⃣ More Sections, Less Complexity – The new law has 536 sections, 23 chapters, and 16 schedules – structured better for easier interpretation! ✅ 🔟 Fewer Pages, More Clarity – From 823 pages (old Act) ➡ 622 pages (new Bill). More concise, yet comprehensive! 💬 Are these changes truly simplifying taxation, or just a rework? Let's discuss! Share your thoughts below! ⬇️ For more insights, follow Pushti Shah #IncomeTaxBill2025 #Finance #Taxation #NewTaxRegime #CharteredAccountants #TaxUpdates

Rob thought he had growing income but he really had growing liabilities. Here's where the confusion started: Rob has a event management company planning small and big events for corporate. government agencies and nonprofits. When he receives customer pre-payments, he had his bookkeeper tag it as income. But what he didn't realize is that it should not be recognized as income but as a liability until he actually earned it by completing the work. One of the biggest mistakes I see in service-based businesses is not tracking customer prepayments properly. Here’s why this can be dangerous: When all your money sits in one bank account, it’s easy to assume that every dollar belongs to you. But often, a portion of that cash is actually customer prepayments — money you’ve received before delivering the service. That cash isn’t income yet. It’s a liability, known as Deferred Revenue. If you’re holding six figures (or even millions) in customer prepayments, it’s smart to keep those funds in a separate bank account from your operating account. This gives you a clearer picture of what cash actually belongs to your business — and what still belongs to your clients until you’ve earned it. From an accounting standpoint: ➡️ Deferred revenue should be reflected on your balance sheet and updated regularly by your bookkeeper. ➡️ Any prepayments from clients are not your money until the work is complete. On the flip side, if you’ve done the work but haven’t yet invoiced your client, that’s where accrued revenue comes in. Accrued revenue allows you to show the income you’ve earned (even if payment hasn’t hit the bank yet). This nuance matters — especially if you’re seeking investors, lenders, or simply trying to understand the real financial health of your business. 💭 Bottom line: Managing deferred and accrued revenue correctly protects your cash flow, strengthens your balance sheet, and ensures you’re making decisions based on reality — not illusion. 👉 I’m curious — do you separate customer prepayments from your operating cash, or is it all sitting in one account right now? Comment below — I’d love to hear how you’re managing it. #entrepreneurship #smallbusinessfinance #financialtip #smallbusiness #fractionalcfo

The new income tax bill will be in effect from April 1, 2026. It introduces several changes aimed at simplifying tax compliance. One of the biggest shifts is the introduction of the Tax Year, replacing the often confusing terms Assessment Year (AY) and Previous Year (PY).  So, what does this change mean?  The Tax Year will now align with the financial year, beginning April 1 and ending March 31. For businesses or new sources of income that start mid-year, the tax year will begin from their inception date and end on March 31 of that financial year.  But that’s not the only major update. The bill also brings:   → No more entertainment allowance deduction for government employees – A benefit once exclusive to government employees is now being removed.  → Clarity on tax-free gifts – Gifts from maternal and paternal lineal ascendants or descendants (including those of a spouse) will continue to remain tax-exempt.  → Stricter penalties under Section 276CCC – Failure to file income tax returns in search cases could now result in a minimum of 6 months to 7 years of imprisonment with a fine for repeat offenses.  → Greater powers to CBDT – The Central Board of Direct Taxes can now define conditions for mandatory return filing, including requiring details on credit card usage, expenses exceeding thresholds, and more.  These changes show a push towards greater clarity, compliance and enforcement in India’s taxation system. But as with any new tax policy, the real impact will be seen in its implementation.  Will these changes make tax compliance easier or more complex? #taxes #planning

“You live in Kenya. You work for a German firm. You’re paid in euros. So why is the Kenya Revenue Authority asking for your PIN?” Because in 2024, “remote” doesn’t mean invisible — at least not to the taxman. Kenya is now home to over 100,000 expatriates — many of whom are paid abroad, work online, and live in Nairobi, Naivasha, or Nakuru. But here’s the thing: If you spend 183+ days in Kenya, you’re considered a tax resident. If you're working for a Kenyan company (even while abroad), you need a KRA PIN. And if you're hiring remote Kenyan talent from overseas, you could trigger corporate tax liabilities without realising it. This isn’t just about income. It’s about compliance, cost, and consequences. We just released a sharp, simplified guide: 👉🏾 “Am I Being Taxed Twice?” – The Expat & Remote Worker Survival Kit for Kenya. The newsletter is attached and can be shared. It unpacks: ✅ How double taxation actually works ✅ Whether you're protected under a DTA ✅ What “permanent establishment” means for remote employers ✅ Why failing to register for a KRA PIN could block your salary, your lease—or worse This is for expats, global employers, and anyone who’s ever wondered: “How can I work in one country… and get taxed in two?” 💬 Questions after reading? We’re helping clients across the globe navigate this new reality. Because in the age of digital work, compliance is no longer a location—it's a strategy. #DoubleTaxation #RemoteWork #ExpatriatesInKenya #KRA #TaxCompliance #MMWAdvocates #CrossBorderLaw #TaxStrategy #LegalWithPerspective

The OECD has released its latest update to the Model Convention. One aspect that particularly caught my attention relates to Switzerland’s long-standing position on CFC rules. Traditionally, Switzerland observed that depending on their design, CFC regimes could conflict with tax treaty obligations. Interestingly, this observation has now been deleted in the newest commentary update. One might speculate why. Perhaps it is difficult to insist on such an observation while simultaneously implementing the IIR, which is the broadest form of a CFC rule 😉 But this raises an important intertemporal question: what does the updated commentary mean for existing tax treaties? Personally, I remain convinced that an update to the OECD MC — or its commentary — does not change the content or interpretation of existing treaties. Bilateral treaties stand as they were negotiated, unless formally amended or modified. That said, it will be interesting to see whether courts might use this development e contrario: If negotiators felt it necessary to amend the commentary, does that imply that existing treaties were not fully compatible with the IIR? We might not know before 2029/2030. It will take time until the first IIR case will (eventually) make it to the Supreme Court.

Big Change in Capital Gains Taxation! The new Income Tax Bill 2025 has made a crucial amendment by replacing "long-term capital asset" with "long-term capital gain" in Section 85 (previously Section 54EC). This has major implications for taxpayers! ✅ Key Change: Earlier, as per the landmark ruling in CIT v. Dempo Company Ltd (2016), even short-term capital gains from depreciable assets (held for over 36 months) were eligible for exemption under Section 54EC. ⛔ What’s Different Now? The new provision restricts the exemption strictly to long-term capital gains, effectively overriding the Dempo judgment. This means: 🔹 No more exemptions for short-term capital gains from depreciable assets, even if held for more than 36 months. 🔹 The amendment closes a key tax loophole, ensuring that only genuine long-term gains qualify for the exemption. 📌 Impact on Taxpayers: 🚫 Businesses & individuals selling depreciable assets will face higher tax liabilities. 📉 No more tax planning based on the Dempo ruling! This is a game-changer for tax planning and compliance. Stay informed & consult your tax advisor to navigate these changes effectively! #IncomeTax #Budget2025 #TaxReforms #CapitalGains #LongTermCapitalGain #TaxPlanning #Section54EC #Finance #TaxCompliance #IndianTaxLaws #IncomeTaxBill2025 #Directtax

The most critical time of the year is coming close. With the financial year of 2024 closing soon, this is when you should be analysing your finances and investing time in tax planning. Unlike traditional real estate, self-businesses come with unique complexities and how you deal with them can make a huge impact on your bottom line. With the March 31st deadline approaching, now is the time to optimize deductions, reduce liabilities and ensure your business is financially strong for the year ahead. Here is how you can maximize your savings and reinvest in your business: → Go beyond the basics and analyze your balance sheet, cash flow and expenses. Spot red flags like rising costs or underperforming assets and make adjustments before tax season comes in. → From property maintenance and insurance to utilities and office supplies, claim every eligible business expense. Take full advantage of depreciation, especially on buildings and equipment to spread costs over time and lower taxable income. → If your FY 2024 earnings were higher than expected, consider prepaying expenses (e.g., maintenance, upgrades) to reduce taxable income. Conversely, if revenue is lower, delay some expenses to the next financial year. → Beyond deductions, explore tax credits like - Work Opportunity Tax Credit (for hiring from eligible groups) and Energy Efficiency Credits (for solar panels, LED lighting, HVAC upgrades) → If your revenue fluctuates seasonally, review and adjust your estimated tax payments to avoid underpayment penalties. Proactive tax planning prevents financial surprises. With weeks left in FY 2024, organize your tax paperwork and only make necessary last-minute purchases. How are you preparing your business for the new financial year? #finances #moneymanagement