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“LOB” Clause agreed between India and Mauritius

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LOB” Clause agreed between India and Mauritius

December 9, 2013

Mauritius and India agreed on the principle of including a Limitation Of Benefit (LOB) or anti-treaty shopping law clause in the revised tax treaty to ring-fence its jurisdiction from any attempts of round-tripping and money laundering activities.

The LOB clause limits treaty benefits to those who meet certain conditions including those related to business, residency and investment commitments of the entity seeking benefit of a Double Taxation Avoidance Agreement (DTAA).

What is Limitation Of Benefit (LOB) provision ?


  • An anti-abuse provision that sets out where residents of the Contracting States are entitled to the treaty’s benefits

  • Purpose : Aimed at preventing ‘treaty shopping’ or inappropriate use of tax pacts by third-country investors.

  • To limit the ability of third country residents to obtain benefits under the said treaty.

  • India’s desire is to discourage ‘Treaty shopping’ by the ‘LOB’ policy.
What is ‘Treaty shopping’  ?

The practice of structuring a multinational business in order to take advantage of more favorable tax treaties available in certain jurisdictions.  A business that resides in a home country and not having a tax treaty with the source country (from which it receives income), can establish an operation in a second source country having a favorable tax treaty, in order to minimize its tax liability with the home country.

Investment corpus of pensions sector to reach above $1 trillion by 2025: Report

December 10, 2013

As per the report jointly prepared by the Confederation of Indian Industry (CII) and global professional services firm Ernst & Young (EY), after the passage of thePension Fund Regulatory and Development Authority (PFRDA) Act 2013,investment corpus in the Indian pensions sector is likely to cross $1 trillion by 2025 as the sector moves forward to realize its full growth potential.

As per CII-CY report:

  • Pensions business offers a promising opportunity because of India’s changing demographics, an insufficient government-funded pensions system and the presence of a vivacious insurance and funds management sector.

  • By 2030, 180 million Indians or 12% of the population will be in the age bracket of 60-plus.

  • Pensions systems play a major role for the infrastructure sector, providing stability in capital markets.

  • The government has set a funding target of $1 trillion for the infrastructure sector for the 12th Plan (2012-16) period, while it expects the private sector to contribute 45% of the targeted investment.

  • Private pension funds are likely to provide 24% of the total corpus by 2025, while pensions and annuity products offered by life insurance companies are expected to contribute around 16%.

Current Status:

At present, the retirement funds corpus is in range of Rs.12-15 trillion, of which the Employees Provident Fund (EPF) holds one-third of the total, while the Public Provident Fund (PPF) and NPS account for about 2.5% each.

Telugu film industry suffered 300 crores losses in 2013

December 10, 2013

Year 2013 proved ominous for Telugu film industry as among 170-odd films released till December 7, 2013, only 12 to 14 films were either blockbusters, hits and average grossers, while more than 140-odd films were disasters and left more than 70-odd producers battling for existence. The downslide caused the Telugu cinema industry hefty losses of around Rs 300 crore.

While films like ‘Atharintiki Daredi’ bagged the spot of being most successful this year with 85-crore plus, other films that touched 40 crore mark were-Mirchi, Badshah, Nayak, Seethamma Vakitlo, whereas Gundejari Gallanthaiyinde and Balupu crossed 22 crores, while Prema Katha Chitram, grossed 15 crores and films like Tadaka, touched 10 crore mark and even small movies like ‘Swamy Ra Ra’ ( 7 crores) ‘Anthakamundhu Aa Tharvatha’ and Adda ( 3 to 4 crores) but industry sank deeply under the heap of 100-odd flops.
However, dreary performance of few star films jolted the industry since their films could not even fetch their production cost by a big margin- ‘Ramayya Vasthavayya ( 19 crores out of 35 crores), Shadow ( 12 crores out of 30 crores), Greekuveerudu (10 out of 22 crores), Iddarammayilitho (22 out of 33 crores), Toofan (10 out of 60 crores), Masala (10 out of 24 crores), Bhai (12 cores out of 25 crores) Sahasam (5 out of 11 crores) and the list goes on.

Major factors behind the debacle:
The failure of films and heavy losses can in 2013 can be attributed to certain factors like poor scripts, surging salaries of stars, technicians and rampant piracy and most significantly Telugu audience are not willing to digest crap in the name of star movies and rejected new-age small movies, if they lacked novelty and even the 60-days bandh in Seemandhra added to producer’s woes as it hampered collections of many films.

Investments by FIIs’ in stock market cross Rs 1 lakh crore mark in 2013

December 10, 2013

Foreign Institutional Investors (FIIs) equity investments in the Indian stock market have crossed Rs 1 lakh crore so far in 2013, while inflows are likely to boost up further after state assembly poll results have improved the probability of a BJP-led government at the Centre.

As per SEBI information, FIIs, key investors in the Indian stock market, were gross buyers of shares worth Rs 7,46,334 crore and sellers of equities worth Rs 6,45,757 crore till December 6, 2013. This translates into a net inflow of Rs1,00,577 crore ($18 billion). 

Since FIIs entry into the country’s capital markets in 1992-93, net inflows have exceeded Rs 1 lakh crore only in 2010 and 2012. The overseas investors had net invested Rs 1,28,360 crore in 2012, while in 2010, they made a record net inflow of Rs 1,33,266 crore.

As per experts, fund inflow by FIIs will step up further in the coming months as a major win for Bharatiya Janata Party (BJP) in assembly elections has improved the likelihood of the party coming to power at the Centre in 2014.

Noticeably, of the total net inflow, around Rs 37,000 crore flowed in during the last 3 months, following the steps taken by the RBI to resurrect the weakening rupee and revive economic growth.

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