Finance minister Arun Jaitley is likely to give clarifications on the minimum alternate taxation of foreign portfolio investors (FPIs), RBI’s role in managing government debt, new income tax return forms and the measures being taken to curb black money when Finance Bill 2015 would come up for discussion and passage in the Lok Sabha on Wednesday.
Sugar mill owners are expecting Jaitley to raise import duty on sugar to at least 40% from 25% in a bid to check cheap imports. Government sources, however, sounded not much in favour of a steep hike although they did not rule out a moderate increase in duty.
The Lower House is also likely to consider for discussion the Constitution (122nd) Amendment Bill laying the legislative foundation of GST on Wednesday.
Senior functionaries in the finance ministry have already made it clear that FPIs can make use of tax treaty provisions to rebut any MAT demand, wherever applicable. However, the tax treaties India has with countries like UK and US, from where a large chunk of portfolio investments come, offer little relief on taxation of capital gains tax in India. One clarification that investors expect, which would bring relief to all FPIs, is that MAT would apply only on domestic companies. That will, in one stroke, uphold the existing capital gains tax regime as well as treaty benefits that FPIs have so far been enjoying. In fact, many in the government pointed out that MAT was introduced only to tax domestic companies the tax outgo of which fell way below the corporate tax rate.
Jaitley is also likely to clarify that in spite of the proposed monetary policy framework agreement, RBI could continue to regulate government debt, though not actually manage it.
Jaitley may also clarify on certain punitive provisions proposed in the Undisclosed Foreign Income and Assets Bill, 2015, which many have described as too harsh. There is also the view that the Bill, which provides for rigorous imprisonment for not disclosing foreign income and assets, may not be very effective in preventing generation and transfer of unaccounted wealth across borders.