Skip to main content

Budget Must Ease Tax Rules

By
The global economic outlook seems uncertain. With oil prices tumbling, a slowdown in the Chinese economy and devaluation of yuan, a general question today is what might be the potential impact on India. With the current Indian demography and a stable government at the centre, India has the potential to capitalise on this opportunity. Budget 2016 needs to focus on simplifying tax regulations and provide for increasing the rural demand for goods and services, attracting foreign investment, facilitating Indian corporates in their expansion plan and lay the ground for an export conducive environment.
To start with we can expect a reduction in the corporate tax base rate of 30%. Earlier, the government had proposed to phase out the profit-linked incentives from April 2017.Given the need to attract foreign investment and push corporates towards expansion, the government may want to reconsider and defer this phase-out plan. Further, with the reducing difference between the base corporate tax rate and MAT base rate, such tax holidays may not be very attractive.
There is a need to streamline MAT regime. Next, the focus should be on simplifying the tax regime. Currently , taxation, with its many areas, is subject to multiple interpretations. There are many industry-wide tax issues wherein different officers in different jurisdictions have taken various positions.The government needs to set up a panel which would address specific industry issues. The government should consider the recommendations issued by the Easwar committee whose report suggests the simplificationdeletion of various provisions under the Indian tax law, namely provisions relating to definition of a capital asset, disallowances of expenses relating to exempt income, deferment of the Income Computation and Disclosure Standards (ICDS), resolving practical difficulties in obtaining a lower deduction under Section 197 of the Income-tax Act, grant of a timely refund with interest and so on. If these suggestions are implemented, it is expected to bring in certainty in the tax laws. Further, there is a need to increase the tax base.
Declaration under The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 saw a tepid response. An out-of-the-box approach is required for bringing this out of the books money under the tax net.
We also see a need to align to some global practices. Finalising the guidelines on the principles of determining the Place of Effective Management (POEM) of a company would be on radar.
The Economic Times, New Delhi, 20th February 2016 

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more