In order to encourage trading of rough diamonds in India, a Special Notified Zone has been created which would permit leading mining companies across the world to trade in India.
However, as per the existing provisions of Section 5 & Section 9, pursuant to trading, displaying of uncut diamonds by foreign companies creates Business Connection in India with potential tax exposure which discourages the foreign mining companies to have business dealings in India.
Thus, it is proposed to amend Section 9 to provide that in case foreign company is engaged in business of mining of diamonds, no income shall be deemed to accrue or arise in India through or from activities which are in relation to display of uncut and un-assorted diamonds in Special Zone notified by Central Government in this regard.
The amendment is effective retrospectively from 1st April 2016 (applicable for FY 15 -16).
