Sumit Bansal

Capital Reduction, simply put, refers to the technique of reducing a company’s share capital in any form. It is a usually adopted mechanism by the companies for re-modelling their capital structure, amongst other means (viz., buy-back of shares and redemption of the preference share capital). Depending upon the objectives and attendant circumstances, a company can undertake capital reduction either with or without making any payment to its shareholders. This note discusses the tax implications that may arise in the hands of the company undertaking such capital reduction and its shareholders under different situations.

Secondment of employees, as an approach, has become a common practice followed by multinationals to utilize their skilled resources with an ambition of geographical expansion. The tax implications at the time of re-imbursement of salary costs to secondees under a secondment arrangement has been a controversial issue which has led to protracted litigation between the tax authorities and the assessees. The courts have delivered plethora of judgements over the past many years depending upon the facts and circumstances of each case. This note discusses the principles emerged from various judicial precedents.

In the last few years, many Indian businesses “flipped” their shareholding structure by setting up a holding company in offshore jurisdictions. This was driven by several factors, including commercial, tax and regulatory considerations. However, this trend has reversed in recent times and the notion of “reverse-flipping” has picked up momentum. One objective of reverse flips has been to achieve a public listing in India. This note explores reverse flips and potential mechanisms to achieve them.