INSPIRING CONFIDENCE, EMPOWERING CHANGE IN INDIA, SAYS KPMG

KPMG in India through its survey, has tried to understand the expectations of India Inc. on various parameters such as policy reforms, clarity on indirect transfer tax provisions, applicability of MAT on foreign companies, amendment in the tax regime for REITs/ InvITs, deductions allowed to individuals, etc. Over 200 senior professionals across sectors participated in the online survey held during January and early February 2015.

60% who expect the government to introduce/rationalise tax incentives to achieve the government’s vision.

On Saturday, 28 February 2015, Mr. Arun Jaitley will present the Union Budget in the Parliament. India Inc., the country at large, and the global economy keenly awaits this much anticipated budget particularly due to the current buoyant economic scenario and the positive investor sentiment prevailing in the country. Also, the pending tax and regulatory policy reforms, if undertaken, have the potential to increase investor confidence and put India on the growth pedestal as promised by the government. KPMG in through its survey, has tried to understand the expectations of India Inc. on various parameters such as policy reforms, clarity on indirect transfer tax provisions, applicability of MAT on foreign companies, amendment in the tax regime for REITs/ InvITs, deductions allowed to individuals, etc. Over 200 senior professionals across sectors participated in the online survey held during January and early February.

Policy reform expectations:In order to have a non adversarial and stable tax regime, there is an expectation that various policy reforms would be introduced or amended.

83% of respondents expect the Government to introduce various policy reforms to promote the ‘Make in India’ campaign a success and turn India into a global manufacturing hub.

As the Commerce Ministry wants the Finance Minister to discontinue minimum alternate tax (MAT) and dividend distribution tax (DDT) imposed on SEZ units, the respondents feel that MAT and DDT on SEZ may not be completely discontinued, however approximately 40-50% respondents expect the MAT and DDT rates to be reduced.

55% respondents are of the opinion, in line with the global benchmarking standards, multiple-year criteria for bench marking the transfer pricing transactions, would be introduced in the ensuing budget. About 42% respondents expect the government to partially suggest a roadmap for Base Erosion and Profit Shifting (BEPS) documentation rules.

यह भी पढ़ें: FM to reinforce govt focus on fiscal consolidation & growth
Indirect tax expectations:Goods and Services Tax Constitutional Bill (GST) is the most awaited reform in the Budget 2015. 75% responded positively to introduction of GST along with their expectation that the Budget will lay the road map for implementing the same. The introduction of GST will bring India at par with developed economies.

Foreign investor expectations:In line with Modi government’s emphasis on investment friendly environment to boost economic growth, approximately 45-50% are of the opinion that there will be clarificatory amendments on applicability of tax provisions on indirect transfer of capital assets located in India to cover only prospective transactions, on applicability of 10 per cent long-term capital gains tax rate to non-resident shareholders for exit from both Indian private and public companies and also on applicability of Minimum alternate tax (MAT) to foreign companies.

Further, 45% of the respondents are of the view that General Anti Avoidance Rules (GAAR) introduced in Budget 2012-13 to cover impermissible avoidance arrangement will be made applicable, however, in a phased manner.

Personal taxation expectations:On personal taxation front, there are 53% respondents who expect an increase in the maximum limit of income not to be considered taxable. Further, almost 70% respondents to the survey expect an increase in limit for deductions allowed under section 80C, thus increasing the amount of disposable income in the hands of individuals.

Real estate sector:Prime Minister, Mr. Narendra Modi’s promise of housing for all by 2022, has raised the common man’s expectations. There are 60% who expect the government to introduce/rationalise tax incentives to achieve the government’s vision.

यह भी पढ़ें: Focus on productive areas

Further, Real Estate Investment Trust (REITs) introduced recently to raise fund/capital by developers lack clarity on various aspects. In order to make REIT more attractive for sponsors and investors, 40% of the view that the ensuing budget will suitably amend the tax regime.

While the expectations of people have been summarised, the common hope is that an environment is created which attracts investment from various parts of the world by providing clarification and simplifying the current tax laws and at the same time to reduce the reliance placed on imports by incentivising companies to produce locally making the ‘Make in India’ campaign possible.

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