Budget 2018: On February 1, Finance Minister Arun Jaitley will present Modi government's last full budget of its tenure. This union budget holds utmost importance as it will be presented after the much talked about tax-reform GST.
Budget 2018: On February 1, Finance Minister Arun Jaitley will present Modi government’s last full budget of its tenure. This union budget holds utmost importance as it will be presented after the much talked about tax-reform GST or Goods and Services Tax. Since all the major taxation of the country has been brought under one umbrella, corporates, especially from the US have urged FM Jaitley to make changes in tax. Ahead of the Union Budget 2018, corporate America has urged Finance Minister Arun Jaitley for further reduction in tax uncertainty for multinational companies and institutional investors. This step is expected to attract more foreign direct investments to India.
US—India Business Council (USIBC) president Nisha Desai Biswal said: “A significant positive step toward improving the investment climate would be to further reduce tax uncertainty for multinational companies and institutional investors in India.”
USIBC in its pre-budget memorandum recommends the government of India to repeal the 2012 legislation on retrospective taxation and adopt international norms or find another mechanism to resolve the outstanding legacy cases. In the Budget 2016-2017, USIBC stated that the tariffs on a number of ICT products were significantly raised, which for the most part remain in force. USIBC urges the Modi government to remove the ICT tariff increases from the 2016—2017 budget, unequivocably comply with its ITA I commitments and consider taking a digital leadership position by reconsidering support for the ITA II agreement.
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Nisha Desai Biswal said global businesses allocate investments where post-tax returns for a given risk profile are highest. When tax costs are uncertain, particularly in a foreign country, investors normally provide for them on a most conservative basis, she observed.
Nisha Desai Biswal said, “Therefore, tax uncertainty results in an increase of risk when investing in any given project drives investors to either withhold investments or require a higher rate of return to account for this risk, thus raising the cost of capital in the uncertain market.” Biswal was the Obama administration’s point person for South and Central Asia.
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USIBC welcomed Prime Minister Narendra Modi’s plans to “transform” India’s economy and his efforts to promote India as a global investment destination, the USIBC said for India to be successful in attracting the international investors, it needs to create a more stable and predictable fiscal regime and address retrospective taxation and legacy cases that remain open.