Move to end corporate tax exemptions
New Delhi, July 1: The government will come out with a road map to eliminate corporate tax exemptions and incentives within 45 days as a prelude to lowering the tax rate to 25 per cent by 2019.
“In the next 45 days or so, we will be spelling out the road map for removal of exemptions and incentives,” said revenue secretary Shaktikanta Das at an event organised by the Indian Venture Capital Association.
The secretary said the tax cut could only be done over a few years as the government needed to manage the fiscal deficit before taking a plunge at reducing taxes.
“The fiscal deficit is sacrosanct and cannot be compromised, so there is the whole issue of affordability in a single year. You cannot reduce the tax from 30 per cent to 25 per cent (in one go),” Das said.
Shifting base
The government will also come up with a circular allowing foreign private equity and venture capital investors to shift base to India without any adverse tax consequences, minister of state for finance Jayant Sinha said at the same event.
The aim of the changes to be notified will be to give them a zero tax regime.
“We are in the process of receiving inputs from industry and then we will issue a circular. We will make sure that all investors get a safe harbour with respect to permanent establishment,” Sinha said.
“We will make sure that if you as an investment manager based in India are managing offshore funds, your tax incidence in respect to these funds is going to be zero.
“We want to make sure that people who are managing funds in Singapore, Dubai or London are here in India,” the minister said.
“We want to make sure that the tax and regulatory regime is the best in the world.”
Finance minister Arun Jaitley had said in his budget that the government would modify permanent establishment norms to make it attractive for offshore fund managers to operate from India.
