Budget 2023: US Industry Urges Sitharaman To Simplify Taxes
It has also suggested tax incentives to specific sectors like renewable energy and R&D investment in the health sector.
Ahead of the annual budget presentation, an India-centric top U.S. strategic and business advocacy group has urged Union Finance Minister Nirmala Sitharaman to simplify and rationalise direct and indirect taxation systems in India, a move it believes will increase the confidence of global investors and yield greater foreign direct investment.
Direct taxes can be in the form of income tax, capital gains tax or securities transaction tax, while indirect taxes, such as good and servies tax, customs duty or value added tax are levied on all end consumers to buy any goods or services.
"Rationalise corporate tax rates for foreign companies," said the U.S.-India Strategic and Partnership Forum in its submission to the Ministry Of Finance ahead of the annual budget presentations on Feb. 1. It said that the rate for foreign companies, including banks, be reduced to bring parity and sought to rationalise tax for new manufacturing companies.
Urging India to simplify capital gains tax reforms, the USISPF sought harmonising holding periods and rates of different instruments.
"Reiterate India’s commitment to the global tax deal," it said and urged the finance minister to extend the concessional tax regime to the foreign portfolio investment from investment in securities.
The USISPF has also suggested tax incentives to specific sectors like renewable energy and R&D investment in the health sector.
Among the forum's recommendations include advocating for a stable and predictable tax environment, improving the ease of doing business environment, rationalisation of the cost of doing business, and rationalisation of tax rates and tariffs.
On indirect taxes, the USISPF sought clarification on customs duty exemptions provided to oil and natural gas companies, reduction in customs duty rates for X-ray machines from 10% to 7.5% and providing customs duty exemption on all items imported by specified research and development units.
The USISPF urged the finance minister to roll back the customs duty increase on nutritional products considering the importance and significance of the product and encourage the availability of scientifically designed nutritional food in India.
Among its recommendations on customs tariffs and duties and customs, processes include addressing ambiguities in the Customs Tariff Act on telecom products, an extension of concessional customs duty to advanced biofuel projects and strengthening the process on the ground with respect to trade facilitation schemes like the Customs Administration of Rules of Origin under Trade Agreements Rules and the Faceless Assessment.