In its pre-budget representation to the finance ministry, industry body CII has suggested halving long-term capital gains tax to 10% to attract domestic investments into start-ups to bring parity with non-resident investors. Currently, domestic venture capital and private equity investments being taxed at 20% for LTCG while LTCG earned by foreign investors attracts a concessional rate of 10%.
CII has urged the government to continue its investment focus and enhance capital expenditure in areas such as infrastructure to promote growth in the economy at a time when consumption demand has not picked up adequately.
On infrastructure, it has urged the government to consider replacing bank guarantees with surety bonds and to also develop the municipal bond market so that urban local bodies can raise funds. Clarification on the tax treatment for the Hybrid Annuity Model of construction contracts has also been sought.
It also suggested that all export products should be covered under RoDTEP and the said rates should be reviewed and enhanced, and should be commensurate with the actual embedded/unrefunded taxes and duties. RoDTEP benefits should also be provided to the SEZs.