Data privacy guaranteed in India's National Health Insurance Scheme

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Data privacy guaranteed in Indias National Health Insurance Scheme
All sensitive personal information will be protected, such as physical, physiological and mental health conditions as well as history and biometric information.

dubai - Controls are in place to protect the data of beneficiaries under the scheme

By N.R.I. Problems by H.P. Ranina

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Published: Sun 23 Sep 2018, 5:31 PM

Last updated: Sun 23 Sep 2018, 7:34 PM

Q: I want to enroll my mother and sister who live in India under the National Health Insurance Scheme announced by the government. However, I am worried that the personal data may not be protected in respect of the people who avail of the scheme. Do you think there will be enough data protection processes in place?

A: The National Health Agency has already put in place about hundred controls to protect the data of beneficiaries of the National Health Scheme. These controls will include authentication, authorisation, passwords, firewalls and data encryption. All sensitive personal information will be protected, such as physical, physiological and mental health conditions as well as history and biometric information.

Beneficiaries of the National Health Scheme will have the right to request access to copies of their personal data, information on the processing activities carried out and restrict access to such information. Such information will not be disclosed to insurance companies, their employees, human resource consultants and pharmaceutical companies. Appropriate technical measures will be implemented to ensure that personal data collected is minimal, relevant and limited to what is necessary in relation to the purposes for which such data is collected.
 
Q: My friends and I had invested in a scheme of a mutual fund. Some of us have suffered a loss on the amount invested in the scheme. Is it possible for us to take any legal action against the trustee directors of the fund?

A: The Securities and Exchange Board of India (Sebi) has expressed concern on the role of trustees/directors of mutual funds. Such persons are treated as being in a fiduciary capacity and, therefore, responsible to investors. Recently, the Calcutta High Court has held that directors of the trustee company of a mutual fund have to perform their duties diligently and if they don't do so, they would be liable for any losses suffered by investors.

The reason given is that investors rely on the Scheme Information Document (SID) prepared by the mutual fund. According to the Court, if the SID is issued after it is vetted and approved by the directors/trustees of a mutual fund, the liability for any loss suffered by investors would fall on them. The directors of the trustee company are responsible for any statements made in the SID. Hence, apart from the Sebi taking appropriate action against them, the directors/trustees may be held responsible and liable to reimburse losses to investors, depending on the facts and circumstances of each case.
 
Q: The company for which I am working in the Gulf is setting up a subsidiary company in India. This company proposes to enter into a management services agreement with an American company. Under the contract, the American company will provide management, financial, legal, treasury and risk management services. Would the fees earned by the American company be liable to tax in India and will tax be deductible at source when the Indian company remits such fees?

A: Under section 9(1)(vii) of the Income-tax Act, 1961, management and financial services are deemed to be consultancy services which are included in the definition of 'fees for technical services'. However, since the Indian company proposes to enter into a consultancy agreement with an American enterprise, the provisions of the Indo-US Double Tax Avoidance Agreement (DTAA) would apply. Under this DTAA, what would be liable to tax in India are 'fees for included services' (FIS).

In a recent decision, the Kerala High Court held that the definition of FIS as given in the treaty is narrower than the definition of 'fees for technical services' as given under the income-tax law. Therefore, under the DTAA, the mere fact that the provision of a service requires technical input by the service provider does not mean that the technical knowledge is made available to the person who avails of such services. Hence, Article 12 of the DTAA would not apply where the services are merely advisory in nature and there is no transfer of technology, plan or strategy. The mere provision of advisory services by a non-resident on matters relating to management, finance, treasury and risk management would not result in any income being earned in India and, therefore, no tax would be deductible at source when the fees are remitted by the Indian company.
 
The writer is a practising lawyer specialising in tax and exchange management laws of India. Views expressed are his own and do not reflect the newspaper's policy.


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