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Budget Expectations - Girish Vanvari, Partner & Co-head - Tax, KPMG in India


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Girish Vanvari, Partner & Co-head - Tax, KPMG in India shares his budget expectations

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Budget Expectations - Girish Vanvari, Partner & Co-head - Tax, KPMG in India

  1. 1. 1 Barboza, Melvin Sent: Tuesday, January 21, 2014 10:12 AM Subject: Budget Expectations - Girish Vanvari Budget Expectations - Girish Vanvari The key changes that the Finance Minister should consider in his upcoming budget are discussed below:    Reversing the retrospective amendment:  Change in the law to ensure a prospective application of the aforesaid amendments along with clarity on the manner of taxability  of  indirect  transfers  would  restore  investor confidence and undo the extensive litigation surrounding the issue.    Postpone implementation of GAAR:  Clear  dos  and  don’ts  to  tax  payers  and  tax  officers  with respect to GAAR would be a welcome step.    Incentivize Infrastructure growth:   Tax holidays have a sunset clause which leads to loss of tax incentives if the projects are completed beyond a particular date. Extension of such sunset clauses pragmatically would prove to be helpful.    Also,  the  DTC  proposes  to  substitute  all  ‘profit’  linked incentives  with  ‘investment’  linked  incentives,  wherein capital  expenditure  incurred  for  specified  business  will  be allowed as a deductible expenditure.    Clarity  on  the  manner  of  incentivizing  the  infrastructure sector going forward through tax sops would go a long way in promoting the sector.     Needless to say that any measures to be announced need to be  well  thought  out  and  consistent,  unlike  the  SEZ experiment  wherein  significant  incentives  were subsequently rolled back thereby unsettling the investors.     Minimum Alternate Tax (MAT) incentive  Levy  of  MAT  lowers  the  impact  of  tax  holidays.  The Government may consider non applicability of MAT or lower the  MAT  rate  for  identified  sectors  such  as  power, infrastructure etc. to attract investments.    Litigation and dispute resolution:   Dispute resolution methods need a complete review so that they  are  equipped,  efficient  and  facilitate  ease  of  doing business rather than create impediments and proving to be burdensome to all the stakeholders.     Also, the resolution of the present high profile and high value litigations on an immediate basis is extremely important to restore investor confidence back in the country.     Rollout the GST Road Map:  Government  should  reach  out  to  State  Governments  and come out with a plan of GST implementation at the earliest. Rolling out a draft legislative framework and placing it in  the public domain would assist the industry to gear up for a  smooth transition to the new system of taxation. Girish Vanvari Partner & Co-head-Tax KPMG in India © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.