Tax benefits, duty cuts top industry budget wish-lists

By: |
New Delhi | February 15, 2015 12:40 PM

As the Budget day approaches, various sectors are lobbying hard for tax benefits and duty cuts while a few others want...

Arun Jaitley, Union BudgetFinance minister Arun Jaitley is likely to indicate a roadmap for rolling out the ambitious Goods and Services Tax when he reads out the Budget for 2015-16. (PTI)

As the Budget day approaches, various sectors are lobbying hard for tax benefits and duty cuts while a few others want the government to ensure a stable and predictable taxation regime.

The groups and consultants lobbying for MNCs want the government, in the Union Budget on February 28, to bring in clarity on taxation in case of sale or indirect transfer of Indian operations.

Following the retrospective amendment to Income Tax Act in the wake of the Vodafone-Hutchison tax controversy, a company incorporated overseas is deemed to be situated in India only if it derives its “value substantially” from assets located within this country.

Tax experts want this term “value substantially” to be defined properly by putting in a threshold limit, preferably of 50 per cent to avoid uncertainty and litigation.

“One of the key concerns of the foreign investors in respect of indirect transfer of shares is the lack of clarity as to what constitutes substantial value of assets situated in India. Therefore, it is critical that government clarifies its position in this year’s Budget,” KPMG (India) Partner Tax Vikas Vasal said.

The uncertainty over threshold has impacted the global acquisitions and group restructuring transactions (involving merger, demergers, business sale etc) wherein the shares of Indian company are also involved, said Gokul Chaudhri Leader (Direct Tax) BMR & Associates.

On its part, the pharmaceutical sector wants Finance Minister Arun Jaitley to grant more tax incentives for research and development (R&D) activities.

In its Budget proposals, the Commerce Ministry has sought “weighted average tax benefit of 400 per cent for R&D activities for the sector”.

On the other hand, Internet and Mobile Association of India (IAMAI) is pitching for tax holidays like those available to the IT sector to help new-age digital companies and entrepreneurs expand their business and provide growth impetus to the fledgling industry.

The Software Technology Parks Of India (STPI) scheme for IT companies offered 100 per cent tax deduction on profits. The exemption was discontinued after March 2011. But, there is no income-tax holiday available under the I-T Act for digital companies.

Established in 2004, IAMAI has members like Amazon, eBay, Facebook, Flipkart, Google India, OLX, mydala and Itzcash.

The medical device manufacturers have sought import duty concessions in the next budget, while the Association of Indian Medical Device Industry (AIMED) is seeking a blanket ban on 100 per cent FDI in the brown-field projects.

Pitching for reforms in tax rules for investment trusts, industry body CII said the Union Budget should focus on stability and certainty in taxation for growth of these entities.

The first full budget of the new government should consider reforming taxation rules for effective functioning of Alternative Investment Funds (AIFs), Securitisation Trusts and Asset Reconstruction Companies (ARCs) Trusts, CII said.

Do you know What is India expected to grow 10 pc during current fiscal: NCAER Director General Poonam Gupt,FinMin releases Rs 9,871 cr grant to 17 state, Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Indian economy to see 10.5% or higher growth this fiscal: Niti Aayog Vice Chairman Rajiv Kumar
2With recovery widening, Icra sees Q2 GDP at 7.7 pc
3India poised to become USD 5-trillion economy by 2024-25: Union Minister Hardeep Singh Puri