Washington, Jul 12 (PTI) The US-India Strategic Partnership Forum has urged Union Finance Minister Nirmala Sitharaman to ensure a stable and predictable tax environment as she prepares for her annual budget later this month.
The US-India Tax Forum, a dedicated Tax Policy Forum of the US-India Strategic Partnership Forum (USISPF), said this in a set of recommendations to Sitharaman.
In a press release by USISPF, the tax forum said that a stable and predictable tax environment is imperative to boost investment sentiment across sectors.
“The industry eagerly anticipates the Union Budget 2024-25, the first budget of the re-elected Government, which is expected to introduce measures that will stimulate growth across sectors,” it said.
Asserting that an investment-led growth strategy is essential to support India’s economy, it said measures are needed to enhance the ease of doing business, rationalise the cost of doing business, and simplify tax rates and tariffs.
The business community looks forward to tax efficiency measures and clarifications that will address transactional issues around the tax legislation, unlocking growth and investment opportunities, USISPF said.
Observing that rationalisation of corporate tax rates has long been an ask for companies across sectors, the US-India Tax Forum suggested bringing parity in tax payable by domestic and foreign players in multiple sectors.
“This would ensure a level playing field in sectors such as banking where foreign banks’ branches pay high taxes in India. Acknowledging the global developments around the minimum tax deal, the Tax Forum has highlighted the need to rationalise corporate tax rates,” the press release said.
The forum also suggested significant reforms in the capital gains tax structure, which it said is “currently complex”.
It underscored the need to bring parity among tax rates and holding periods for investments across equity, debt, and immovable property, calling its present form “fragmented”.
“This would lead to a simpler capital gains tax structure and reduce the compliance burden,” it said.
“The ensuing budget of the government is expected to build on the reforms previously implemented,” said Tarun Bajaj, chairperson of the US-India Tax Forum and former Revenue Secretary.
Bajaj said it is expected to introduce targeted reforms in direct taxes and customs policies to enhance India’s economic partnerships globally.
“The industry should anticipate measures to streamline corporate tax structures and transactions, incentivise investments, and simplify customs procedures to facilitate smoother trade flows,” he said.
“These initiatives are crucial for fostering a conducive business environment and strengthening bilateral economic ties, ensuring mutual prosperity and competitiveness in the global market. Additionally, they will further build on the ease of doing business for industries in India,” Bajaj said.
USISPF president and CEO Mukesh Aghi said multinational corporations anticipate Budget 2024-25 to prioritise stable tax policies, robust infrastructure investments, innovative incentives, and sustainable development initiatives, fostering a conducive business environment for growth and global competitiveness.
“Our recommendations are largely aligned towards these areas, seeking clarity and consistency in regulations,” he said.
Naveen Aggarwal, Partner-Tax, KPMG India, said India Inc’s expectations are bigger and bolder in the run-up to this budget as it awaits substantive proposals around long-standing requests — faster resolution of tax disputes, extension of lower tax regime to incentivise new manufacturing, rationalisation of capital gain and withholding tax regimes, amongst the prominent ones. “With more than 40 countries across the globe already working towards implementation of Pillar 2 GloBE rules, the need of the hour is for India to develop a comprehensive roadmap for implementing these global tax reforms. This would help ensure that India is on course to get its fair share of taxes. Clarity is also awaited on the future of India’s equalisation levy, the fate of which is intertwined with Pillar 1 Amount A MLC ratification,” Aggarwal said. PTI LKJ GRS AKJ GRS GRS
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