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Indian firms from overseas subsidiaries will continue to attract the concessional 15% dividend distribution tax without any terminal date for this benefit.
Gains on non-equity MFs held for more than 36 months will in the future attract a long term capital gains tax of 20% against the existing concessional 10% applied on such investments held for more than a year — the current definition of long term.
Manufacturing units that would invest Rs 25 crore or more in plant and machinery up to March 31, 2017, will need to pay corporate tax only on the remaining income after deducting a 15% investment allowance. New power production and distribution units that start operations up to March 31, 2017, will be able to claim a 10-year income tax holiday, while investment linked deductions will be available to pipelines carrying iron ore as well as to semi-conductor wafer fabrication units.
To encourage investments in the real estate sector, Jaitley also allowed pass through status to real estate investment trusts so that such investments do not face double taxation.
To reduce tax disputes, Jaitley proposed applying advance pricing agreements signed by MNCs for previous four years and introduction of range concept and use of multi-year data for determining arms length price of cross-border deals. “Use of multi-year data is allowed in many countries to take into account business cycles. This would help a lot of firms in avoiding litigation,” said Amit Maheshwari, partner, Askok Maheshwary & Associates.