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  1. Union Budget 2017: Modi government needs to do more to enable more investment into India, says Prashant Kapoor of KPMG

Union Budget 2017: Modi government needs to do more to enable more investment into India, says Prashant Kapoor of KPMG

For corporates, Budget 2017 is critical not just from the GST, corporate tax perspective.

By: | Updated: February 1, 2017 8:30 AM
Union Budget 2017, Budget 2017 “The government has done a lot over the last two years, but needs to do more on the tax front to enable more investment into India”

For corporates, Budget 2017 is critical not just from the GST, corporate tax perspective. With the government’s focus on curbing tax evasion and tax avoidance – demonetisation being one such step – it is expected that the Modi government would take decisive steps or announce a very definitive road-map for other initiatives like GAAR (General Anti-Avoidance Rule) and POEM (Place of Effective Management). The govt also needs a transparent & clear regime around mergers & acquisitions to enable corporate India and foreign investors.

Speaking to FE online, Prashant Kapoor – Partner, Deal Advisory, M&A Tax, KPMG in India, said that the interplay of GAAR with various international treaties, its interplay with Base Erosion & Profit Sharing (BEPs), a roadmap & guidelines relating to SAAR vs GAAR would be welcome in the forthcoming budget to be presented by foreign minister Arun Jaitley on February 1. ‘’The government has done a lot over the last two years, but needs to do more on the tax front to enable more investment into India’’, he said.

He also said that overall rate of tax has to be far more lucrative for foreign investors – both in terms of corporate tax and dividend distribution tax if India has to attract more investment in the country. These rates, he felt, are currently very high. PEs, FIIs need comfort that they will not be doubly taxed, he said.

Other similar emerging economies have lower taxes, he pointed out. Commenting on POEM or Place of Effective Management (POEM) provisions, he said that more clarity is needed around the Interplay of CFC and POEM. “For the whole Make In India story there has to be thrust on startups. Any tax regime to give them incentive or gestation for a given period would be welcome’’, he said.

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