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Showing posts from November 24, 2015

Why 25% is actually more than 33% in case of corporate tax

Companies operating across more than 35 industries pay taxes at an effective rate of less than 25% and large companies pay taxes at a lower rate compared to smaller firms. In addition, the overall effective tax rate is only around 23.2% against the statutory tax rate of 32-34%. These are some of the reasons why the government is eager to phase out exemptions. Indeed, this will mean that despite a reduction in tax rates to 25%, its tax revenue will see an increase. In line with the budget announcement by finance minister Arun Jaitley of gradually reducing corporate tax rates to 25% from 30%, the government on Friday released a draft roadmap for phasing out corporate tax exemptions in the next two years. The phasing out of these exemptions is expected to impact fresh investments into SEZs, research and development as well as hit profit of companies operating in sectors such as infrastructure, IT, natural gas explorers and pharmaceuticals. All such investments currently get tax sops or ince…

Subramanian Panel may Suggest 18% GST Rate

Low rate likely to be acceptable to all, ensure compliance A key panel on goods and services tax is likely to recommend a revenue-neutral rate of about 18%. The group, headed by Chief Economic Adviser Arvind Subramanian, has zeroed in on the rate after considering various scenarios, brightening the chances for this important reform as the low rate should be acceptable to everyone. “It has worked out to about 18%,“ a government official privy to discussions said. Another official said the range for the tax could be 16-18%. GST, which seeks to replace a host of central and state indirect taxes on goods along with services tax, will create a pan-India market and is expected to help lift the country's gross domestic product (GDP) by 1-2%. A revenue-neutral rate means a rate at which there would be no revenue loss to the Centre or states under GST compared with current collections Low rate will help boost compliance and also cut the pain from increase in tax rate on services, which is at …

Land Bill Panel to seek extension

At a meeting of the joint committee of Parliament examining the land acquisition Bill, Opposition members of the panel on Monday demanded the Bill be withdrawn now that the ordinance, which was identical to the Bill, has lapsed. They also demanded that Prime Minister Narendra Modi appear before the panel to explain the Bill. Bharatiya Janata Party and Shiv Sena members of the committee opposed both demands. Business Stnadard, New Delhi, 24th Nov. 2015

Trade Transfer Pricing Norms Set for Recast

Govt proposes clean-up of rules that govern the prices of imports by related parties to reduce delays and disputes India proposes a major clean-up of decade-and-a-halfold rules that govern the prices of imports by related parties ­ such as arms of multinationals from their parent in an attempt to reduce delays and disputes and make it easier to do business. The finance ministry is not just looking at changing the rules but also the process itself, which is riddled with delays and cumbersome paperwork. “There is a need for a fresh look at these rules...A lot of water has flowed over 14 years,“ a finance ministry official told ET. With `ease of doing business' the guiding principle, the government now proposes to make the process swifter and introduce an electronic interface. One option is to link valuations to audits, a procedure that's considered more sound and thorough and followed internationally. Transactions between related parties usually do not follow normal business dynamics…

Investors Sell `Old' Tax-Free Bonds to Put Money in New

New issues likely to offer 7.25-7.5%, against 6.85-7.1% yield on old bonds Many investors are keeping their gunpowder dry these days by selling their taxfree bond units subscribed in 2012-2014. These investors are gearing up for the large taxfree bond issuances from National Highways Authority of India (NHAI) and Indian Railway Finance Corporation (IRFC) totaling around ` . 16,500 crore that are likely to hit the market in mid-December. These bonds are likely to be offered at higher yields than the existing ones that are traded on the bourses. These investors -both high networth and retail -will use the cash generated from the sale to apply for the forthcoming issues. The new tax-free bonds are likely to offer investors anywhere between 7.25 and 7.5%, while yields on old tax-free bonds are around 6.85-7.1%. The arbitrage will help investors make about 50 basis points. For example, the 8.3% NHAI bond issued in 2012 and maturing in January 2027, trades at Rs.1,119 in the secondary market,t…