Follow us on   Twitter   Facebook   Explore Trade Now Feedback
Budget 2016 »Headlines»Headlines Details
Headlines Details

Top 5 tax reforms India Inc seeks from Budget 2016

Dev Chatterjee / Mumbai 29 Feb 16 | 07:22 AM
344 Replies

With Finance Minister Arun Jaitley all set to present the Budget next week, all eyes are now on the tax reforms promised by Prime Minister Narendra Modi and Jaitley during their interaction with India Inc leaders at the Make-In-India week. Here are some of the top tax reforms Jaitley can look at: 

1. Scrap Minimum Alternate Tax (MAT):  This will put significant cash flow in the hands of taxpayers to make much needed investments. Today, in view of the Dividend Distribution Tax (DDT), no dividends can be paid without tax of almost 21% by the companies.  If corporate tax rate is to be reduced to 25% over the next three years and the investment and profit linked exemptions and deductions are to be phased out, then there is a very good case to phase out the MAT and ultimately scrap it, say Khaitan & Co's Daksha Baxi and Raghav Bajaj.  With the rationalisation of deductions, exemptions and incentives should narrow the difference between taxable income and book profits. The difference between the basic tax rate and the effective MAT rate is likely to narrow and eventually lead to a phasing out of the MAT. 

2. Replace DDT with compulsory Dividend Withholding Tax: Regardless of the tax status of the recipient shareholder- except reduction in DWHT (dividend withholding tax)  due to the provision of applicable tax treaty. DDT is not available for credit to the investor in its home country against the local tax on the dividend received.  This results in high tax incidence for investing in India: Corporate income tax plus DDT plus tax on dividend in the home country. This encourages complex tax reduction structures, which no jurisdiction appreciates, as borne out by the BEPS (base erosion and profit shifting) action points. India can move to DWHT in place of DDT. This will reduce significant amount of tax litigation. 

Read our full coverage on Union Budget 2016

3. Restore Capital Gains Tax Treatment for buy-back of shares: The additional tax payable by companies upon buy-back of shares is on the amount which is the difference between the amounts paid by the company less what the company received from the shareholder.  Restoring the tax treatment to capital gains in the hands of the investor would remove this anomalous situation. 

4. Retro Tax:  Inspite of Modi government making repeated announcements that retro tax will not be implemented, the income tax department has continued to send notices to tax payers. This has created an image among investors abroad that the government and the tax department -- well known for chronic corruption -- are not in sync. Jaitley should bury the retrospective tax on old transactions once and for all, say tax lawyers.  

5. Clarify tax sops to SEZs: There is concern about the future of SEZs in the event tax incentives are phased out. SEZs have lost popularity since FY12, when a Minimum Alternate Tax (MAT) and a Dividend Distribution Tax (DDT) were implemented to prevent erosion of the tax base. Phasing out tax holidays could reduce investments in SEZs further amid sharply slowing exports, as per Stanchart. 

344 Replies


    26 Nov 20 at 11:51 PM
By: Faheem

The most interesting text on this interesting topic that can be found on the net ...

    26 Nov 20 at 02:54 AM
By: bllast

Following these sensitivities, we have decided to accurately accompany your users from zero to one hundred games. In this way, you will learn to choose the best explosive games site and go through the registration and training steps! It can be claimed that you can easily earn millions of tomans. So stay with us until the end of the article. ثبت نام بازی انفجار

    21 Nov 20 at 05:39 PM
By: Faheem

So lot to occur over your amazing blog. Your blog procures me a fantastic transaction of enjoyable.. Salubrious lot beside the scene. magazine

    19 Nov 20 at 10:37 PM
By: hhtyyjh

Useful information. Fortunately, I stumbled across your website, and I was amazed at why this twist of fate didn't happen beforehand. I bookmarked it. Please also visit my website.서울출장안마

    19 Nov 20 at 10:34 PM
By: fyyttghh

Thank you for posting the wonderful article! I was really having fun Reading it can make you a great writer. I Bookmark your blog and you'll come back later. I would also be grateful if you visit my website as well.출장마사지

    19 Nov 20 at 04:44 AM

Hello, I have read this post very carefully. It was a really helpful article. As a token of gratitude, I will simply leave a review and a link. 토토사이트

    15 Nov 20 at 10:39 PM
By: uribrotv

hello I read a good article well. It was a very interesting post. It impressed me a lot. I share this. I will also leave a link. 해외축구중계

    14 Nov 20 at 09:04 AM
By: besttoto365pro

I must say, as a lot as I enjoyed reading what you had to say, I couldnt help but lose interest after a while. 토토

    14 Nov 20 at 06:35 AM
By: pokero78

wow , Thanks For TheInfo.

    14 Nov 20 at 06:33 AM
By: casino

Wonderful blog post.This is absolute magic from you! I have never seen a more wonderful post than this one. You've really made my day today with this. I hope you keep this up! 바카라사이트

1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | | Next

Leave a reply

Email: * 
Comment: *
(Max. 1000 characters)
Word Verification: * 
Quick Jump

Budget Glossary

  • Appropriation Bill: It is presented to Parliament for its approval, so that the government can withdraw from the Consolidated Fund the amounts required for meeting the expenditure charged on the Consolidated Fund. No amount can be withdrawn from the Consolidated Fund till the Appropriation Bill is voted is enacted.

Budget Trivia

  • Pranab Mukherjee's first Budget in 1982 included one provision that set the stage for India Inc's most celebrated takeover battle.
Widgets Magazine