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Addressing investors' concerns ahead of <keyword id="6533263" type="ORGANIZATION" weightage="100" keywordseo="GAAR">GAAR</keyword> implementation from April 1, the tax department today said it will not interplay with their right to choose a method of transaction and won't apply if routing of funds through a jurisdiction is "based on non-tax commercial considerations", according to a new agency report. 
 The <keyword id="974333" type="UNKNOWN" weightage="20" keywordseo="General-Anti-Avoidance-Rules">General Anti-Avoidance Rules</keyword> (GAAR), which seek to prevent companies from routing transactions through other countries to avoid taxes, can be invoked through a two-stage process involving a nod at the level of principal commissioner of income tax and a panel headed by a high court judge. 
 
 Seeking to assuage concerns of investors, <keyword id="128665" type="ORGANIZATION" weightage="20" keywordseo="CBDT">CBDT</keyword> said GAAR provisions shall be effective from the assessment year 2018-19 onwards and "shall not be invoked merely on the ground that the entity is located in a tax efficient jurisdiction". 
 "If the jurisdiction of <keyword id="725142" type="ORGANIZATION" weightage="20" keywordseo="FPI">FPI</keyword> is finalised based on non-tax commercial considerations and the main purpose of the arrangement is not to obtain tax benefit, GAAR will not apply. GAAR will not interplay with the right of the taxpayer to select or choose method of implementing a transaction," the CBDT said in a statement. 
 
In a clarification on implementation of GAAR, CBDT said the provisions will not apply if the tax benefits obtained are permissible under the limitation of benefits clause provided in tax treaties. 
 <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">Investments</keyword> made by way of convertible instruments, bonus issuances or split/consolidation of holdings prior to April 1 will be grandfathered, it said. 
 
CBDT said that adoption of anti-abuse rules in tax treaties may not be sufficient to address all tax avoidance strategies and they are required to be tackled through domestic anti-avoidance rules. 
 
"However, if a case of avoidance is sufficiently addressed by Limitation of Benefits (LoB) provisions in the tax treaty, there shall not be an occasion to invoke GAAR," it said. 
 
The proposal to apply GAAR will be vetted first by the Principal Commissioner of I-T/Commissioner of I-T and at the second stage by an Approving Panel headed by a judge of High Court. 
 
"The stakeholders have been assured that adequate procedural safeguards are in place to ensure that GAAR is invoked in a uniform, fair and rational manner," CBDT said, adding that the government is committed to providing certainty and clarity in tax rules.

Come April,
no companies can route transactions through other countries to avoid taxes

Requesting the BJP government to defer the implementation of general anti-avoidance rules (GAAR) in 2016-17, industry body <keyword id="6355988" type="CITY" weightage="20" keywordseo="Assocham">ASSOCHAM</keyword> has noted that both Indian economy as well as the tax authorities of the country is not mature enough to handle a sophisticated instrument. 
	 “If GAAR is introduced at this stage, it will only act as a handle for more harassment of taxpayers, thus making the tax administration even less conducive and more adversarial,” said <keyword id="547365" type="ORGANIZATION" weightage="20" keywordseo="DS-Rawat">DS Rawat</keyword>, general secretary of the chamber. 
	 He further added that the chamber has also requested the centre to delay the introduction of Direct Tax Code (<keyword id="46888" type="ORGANIZATION" weightage="20" keywordseo="DTC">DTC</keyword>) as fresh policies at this time could hurt the stability that the economy has achieved till now. 
	 
	“The introduction of a fresh law with new concepts and new thoughts in the form of DTC will only unsettle the situation as more time will be spent on understanding it and putting in place the mechanism to administer it. The DTC does not have any revolutionary idea that will either expand tax base to a great extent or help in scaling up revenue collection thus, introducing DTC in near future will entail more cost than benefit,” stated Rawat. 
	 
	The chamber has also suggested that the government should make Corporate Social Responsibility (CSR) 100% tax exempted as CSR activities have been made mandatory and companies incur additional expenses pertaining to their CSR. 
	 
	“Any expenditure incurred by a company relating to CSR referred to in Section 135 of the Companies Act 2013 is not deemed to be expenditure incurred for business and thus, is not allowed as deduction,” 
	 
	The chamber has also made recommendations to the government pertaining to minimum alternate tax (MAT) and dividend distribution tax (DDT) by players operating in the special economic zones (SEZs), tax deduction at source (TDS) among others.

Indian
Economy Not Mature Enough To Handle GAAR: ASSOCHAM

The country has woken up to a new budget, and a new way of doing things that we generally do with money. This would probably be a serious indicator of how things would progress for the next four years. The NDA government has its vision set pretty clear on how and when things would change, and also for whom. 
 
It takes more than just a cursory glance to read the budget between the lines and understand what it means to every section of the society. While some of the redundant and dormant schemes have got less money, and health didn’t get a major boost; the country seems to be getting ready to roll out red carpet for investors. The weatherman says India is getting ready to take a huge leap and these are small steps that can ensure that we have tested the waters before going for a long swim. 
 
For once, this budget presented a different way of doing things from what we have been used to, since the last so many decades. There are no big ticket schemes that are to be dreamt of, instead lots of indicators that are going to keep India motivated to walk the distance to find the light that’s been peering at the end of the tunnel. 
 
Read the fine print and you will understand when the wealth tax was removed this time, it was not to help the rich become richer and the poor remain poorer. Instead, a surcharge of 2% has been introduced to cover those who are earning more than Rs 1 crore per annum. And, mind you, the punishment for having avoided tax just got more stringent. Now that there has been a talk of black money, there is also a sop offered to those who have stashed money in the comfy environs of Swiss bank. It is to declare and bring back their money in a one-time-opportunity or, face jail with chances of spending the next 10 years in dark cells and bunkers if convicted of the offence. 
 
The budget is surely a game changer. Well-known economist and vice-chairman of NITI Ayog Arvind Panagariya said the budget had moved on, on a lot of important issues. According to him, salient features are the most prominent aspects of the budget, but these are missing from the popular list of discussions among commentators of economy. Bankruptcy law, for instance is a huge step forward, but this has not yet reached the discussion forums. A modern touch to this law can change a lot of things for the country and its people. 
 
Whether the budget boosts growth through consumption expenditure or investment rising is something that needs to be seen. Overall, there are aspects that are going to be the most impactful features of this year’s budget. Infrastructure is another major plank in the budget that would bring a relief to the workers in the organized sector. ESI and EPF will be major game changers which would play a major role in boosting the environment in organised sector. 
 Referring to the salient points of <keyword id="2549811" type="UNKNOWN" weightage="20" keywordseo="Budget-2015">Budget 2015</keyword>, <keyword id="245593" type="PERSON" weightage="20" keywordseo="Mukesh-Butani">Mukesh Butani</keyword>, Chairman, BMR Advisors says the budget seems as focused as it could be. 
“From a policy standpoint, the FM has engineered the Budget around the Prime Minister’s initiatives such as ‘Make in India’, ‘Swacch Bharat’, and ‘Skill in India’. The focus on black money and curing the economy off this menace seems to have taken centre stage. The impetus to Infrastructure, Agriculture and Education sectors is laudable though the much expected big bang reforms are yet in the waiting,” says Butani. 
 Budget may have raised heckles among the rich, but integrated middle class and senior citizens to some solace. “The tax policy messaging in the Budget is clear though the fine print would tell us more on what is proposed. Promoting foreign investment and assuring foreign investors of a stable and non-adversarial tax regime continues with proposals for rationalization of indirect transfers, non-applicability of MAT to FIIs, deferment of <keyword id="6533263" type="ORGANIZATION" weightage="20" keywordseo="GAAR">GAAR</keyword>, relaxation of sourcing rules on account of fund managers in India, and reduction in royalty and technical service fee rates. The Budget also contains many benefits to the elderly and the middle class, though the super-rich have some more reason to frown,” Butani adds. 
 He further says, “FM has been most conservative in tax collection targets. He has estimated tax buoyancy of 10, 12 % in corporate tax and individual tax collections. He has been most bullish on <keyword id="6355686" type="COMPANY" weightage="20" keywordseo="Service-tax">service tax</keyword> buoyancy at 24 % due to pruning of exceptions and raising the service tax rate to 14%. He has infact raised the effective revenue deficit target from 1.8% to 2 % before returning to effective revenue deficit of nil in 17-18. I think this is not just a rational tax collection targets, but it would relieve field revenues officers to not resort to coercive measures for tax collections or make high pitched assessments. I also feel that given the growth predictions, FM will collect more than what he has estimated and his revenue deficit target seems to be like under promise and over deliver.” 
 
If this anticipation turns out to be right, then Budget 2015 will have more red than blue in its cheer.

Budget 2015: Things are bright and the roadmap is clear

The implementation of general anti-avoidance rules (<keyword id="6533263" type="ORGANIZATION" weightage="20" keywordseo="GAAR">GAAR</keyword>) is likely to be put off by about two years in order to allow the business environment in India to improve. But it will have to be implemented at least partially by 2017 to ensure compliance with G20’s international framework on preventing treaty abuse, The Economic Times (ET) reported. 
 
India has shown keen interest in the Organisation for Economic Co-operation and Development’s (OECD) plan on Base Erosion on Profit Shifting (BEPS). "A holistic view will be taken on GAAR... There is a demand but a balance needs to be struck," ET quoted a government official as saying. 
 
According to the newspaper, industry would like GAAR to be done away with completely, but India will have to take action in this regard due to international commitments. In the run-up to the Budget, discussions were held on removing hurdles to investment. The issue of postponing GAAR had also come up in these talks. 
 
GAAR was earlier scheduled to be implemented from April 1, but the Narendra Modi-led government does not want to mar the investment sentiment in the early stage of implementation of its economic agenda. 
 "Deferment of GAAR would avoid any uncertainty that could creep into tax outcome due to subjectivity involved in GAAR. Our tax system should first be able to contain disputes on tax matters in the current regime before we think of GAAR," Rahul Garg, leader, <keyword id="45697" type="COMPANY" weightage="20" keywordseo="Direct-Tax">direct tax</keyword>, <keyword id="148915" type="COMPANY" weightage="20" keywordseo="PWC-India">PwC India</keyword>, told ET. 
Image: Thinkstock

GAAR likely to be put off
for two years to improve India’s business environment

After winning over thousands of Indian-Americans at the <keyword id="8953" type="UNKNOWN" weightage="20" keywordseo="Madison-Square-Garden">Madison Square Garden</keyword> (MSG), Indian Prime Minister <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> meets top American business big-wigs today in Washington to reposition India as the global brand. 
 
The world's largest democracy looks forward to attract more overseas investors in order to boost its economy and do away with the criticism that had mounted against it under the UPA regime. 
 A group of 11 CEOs– including Google's Eric Schmidt, Citigroup's Michael Corbat, <keyword id="44803" type="CITY" weightage="20" keywordseo="Carlyle-group">Carlyle Group</keyword> co-CEO David Rubenstein, Cargill CEO David MacLennan, Merck CEO Kenneth Frazier, Caterpillar CEO Dough Oberhelman, MasterCard CEO Ajay Banga and <keyword id="54572" type="CITY" weightage="20" keywordseo="PepsiCo">Pepsico</keyword> CEO Indra Nooyi– meets PM Modi over breakfast today. 
	 Six others, who have one-on-one appointment with Modi, include Goldman Sachs's Lloyd Blankfein, Boeing's James McNerney, BlackRock's Laurence Fink, IBM's Ginni Rometty, General Electric's Jeff Immelt and Kohlberg Kravis Roberts (KKR) co-Chairmen and CEOs Henry Kravis and George Roberts, updated <keyword id="882197" type="PERSON" weightage="20" keywordseo="Syed-Akbaruddin">Syed Akbaruddin</keyword>, Ministry of External Affairs (MEA) spokesperson. 
	 
	Here, at Business Insider India, we predict what the Prime Minister would talk about during this much-anticipated meet. 
	 
	1) Turn India into a global manufacturing hub 
	Business is NaMo’s mantra, and that is what we expect him to create in his meetings with global CEOs. We expect that Prime Minister Narendra Modi will try garnering support for his 'Make in India' campaign, which aims to turn the Indian sub-continent into a global manufacturing hub. The ambitious plan entails increasing the growth rate in the manufacturing sector to 10% per year and raising its share to 25%in the overall GDP. If the plan falls in place, it will create job opportunities for over 10 million people residing in the country. 
	 
	2) May lift FDI cap to woo overseas investors To turn 'Make in India' campaign into a grand success, India needs long-term foreign capital or foreign direct investment (FDI) in different sectors. In the last decade, gross FDI inflows into the nation have averaged less than 2% of GDP and the new government will have to up that figure considerably. However, it still remains to be seen how <keyword id="6360789" type="ORGANIZATION" weightage="20" keywordseo="Modi-Government">Modi government</keyword> would do that. Will it lift the FDI cap to woo investors? He surely can, but let’s see if he will. 
	 
	3) May try to bring clean energy in India 
	Modi might try to ensure gas supply from the US and seek aid in shale gas exploration. He might also try to bring in more investments in clean energy technology. India had recently done away with the anti-dumping duty on solar energy equipment to encourage the renewable energy sector, and now the focus is on tapping solar and wind energy. 
	 
	4) Could address taxation issues 
	The biggest task that Prime Minister Narendra Modi has at hand is to convince investors on India’s commitment to faster reforms, especially those related to labour laws, land acquisition and taxation. These taxation issues have been a sore point with global investors for long. The retrospective amendment, introduced in 2012, resulted in high-profile tax enforcement actions against global companies such as Vodafone. These episodes dented India’s appeal as an investment destination, contributing to an image of India as a country that pursues “tax terrorism”. 
	 
	5) Modi may clarify the new government's stand on <keyword id="6533263" type="ORGANIZATION" weightage="20" keywordseo="GAAR">GAAR</keyword> 
	To bring out the investor-friendly image of the ‘New India’ under the rule of the BJP government, Prime Minister Narendra Modi might use the opportunity to clarify the central government's stand on the General Anti-avoidance Rules (GAAR), which had sparked alarm among foreign investors. The provision included tightening rules on investments from countries that have double taxation treaties with India. 
	(Image: Press Information Bureau)

5 Things To Expect Out Of Modi’s Meeting With American Business Heads

<keyword id="6358777" type="General" weightage="20" keywordseo="new-delhi" source="Orion">New Delhi</keyword>, The <keyword id="65338" type="General" weightage="50" keywordseo="income-tax-department" source="Orion">Income Tax department</keyword> on Wednesday conducted a survey operation at some entities of the <keyword id="120582" type="General" weightage="100" keywordseo="hinduja-group" source="Orion">Hinduja Group</keyword> in Mumbai and some other cities, official sources said. The survey operation is being undertaken as part of a tax evasion investigation and offices in Mumbai and some other cities are being covered, they said. As per the I-T law for survey operations, only office premises are being covered. An email sent by PTI to the Hinduja Group did not elicit an immediate response. Sources said the <keyword id="6361558" type="General" weightage="50" keywordseo="tax-department" source="Orion">tax department</keyword> action is also linked to provisions of the General Anti-Avoidance Rules (GAAR). The Hinduja Group, which owns <keyword id="46717" type="General" weightage="50" keywordseo="indusind-bank" source="Orion">IndusInd Bank</keyword>, <keyword id="1374462" type="General" weightage="50" keywordseo="hinduja-leyland-finance" source="Orion">Hinduja Leyland Finance</keyword> and Hinduja Bank (Switzerland), is diversifying and has plans to get into the new tech, digital and fintech as part of its new phase of growth and fill gaps through acquisitions to have complete offerings in the BFSI sector.

I-T dept conducts survey at some entities of Hinduja Group

<ul><li>Corporate entities will not be able to reduce their tax burden by claiming input tax credit on corporate social responsibility activities.</li><li>This could also lead to confusion amongst corporate entities since AARs of different states have given contrary rulings in this regard.</li><li>Earlier, Uttar Pradesh AAR had allowed <keyword id="12201693" type="General" weightage="20" keywordseo="ITC-on-CSR" source="Orion">ITC on CSR</keyword> activities, while Kerala AAR took the contrary position.</li></ul>Input tax credit allows registered entities under <keyword id="6354679" type="General" weightage="20" keywordseo="GST" source="Orion">GST</keyword> to claim credit on the goods and services tax (GST) that they have paid while purchasing goods or services, which can be offset from the GST that they have to pay after making sales. However, input tax credit (ITC) can’t be claimed on expenses made towards corporate social responsibility (<keyword id="6354502" type="General" weightage="20" keywordseo="CSR" source="Orion">CSR</keyword>) activities, according to a new order from the Authority for Advance Rulings (AAR) ruling in Gujarat. There are two other rulings from the same authority and one of those allows the input tax credit on CSR. According to the provisions of Companies Act, 2013, companies with a net worth of ₹500 crore or more, or turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more, will have to mandatorily spend on CSR activities. The spend should be a minimum of 2% of the average net profit of the past three years. <cmsannotation type="cmsannotation" annotationid="The root of the problem" comment="subhead" text="The root of the problem">The root of the problem</cmsannotation> The primary issue here is whether CSR activities can be construed as “in course or furtherance of business”, that is, whether they are fundamental for a company to continue its business activities. However, the GST provisions do not define what exactly that would entail. For this purpose, the applicant in this case, Adama India Pvt. Ltd., relied on the provisions of Companies Act, 2013, to state that CSR activities are mandatory as per law, and not undertaking them would cause harm to the business. This, the applicant says, entitles it to take ITC on CSR activities. However, the Gujarat AAR referred to the Companies (CSR Policy) Rules, 2014, to state that CSR activities are not covered in activities “in the course or furtherance of business”. It also cited the provisions of Companies (CSR Policy) Amendment Rules, 2021, which provide a definition of CSR that excludes it from normal business activities. Essentially, the GAAR ruled that since CSR is specifically excluded from the scope of normal business activities, the applicant cannot take ITC on CSR activities. According to Ayush Mehrotra, one of the partners at Khaitan &amp; Co., this is likely to further increase litigation in GST. “The GST framework is wide enough to inter alia include activities without pecuniary benefits and those which are incidental or ancillary to main business. As such, the present ruling will only cause further litigation on GST which was otherwise expected to be a simpler and straightforward framework,” he told Business Insider. <cmsannotation type="cmsannotation" annotationid="Contrary AAR rulings put corporates in a bind" comment="subhead" text="Contrary AAR rulings put corporates in a bind">Contrary AAR rulings put corporates in a bind</cmsannotation> Gujarat AAR’s ruling is in contrast to that of the Uttar Pradesh AAR, which allowed the applicant to take the credit of Goods and Services Tax (GST) paid by the company while purchasing goods to be used for CSR activities. However, it is in line with the Kerala AAR, which passed a similar ruling in the matter of Polycab Wires donating flood relief items. “It is also noteworthy to highlight that since this ruling is in contradiction to prior rulings issued by competent authorities in other states, the urgent need for a national authority is once again being felt to ensure certainty of legal position,” Khaitan added further. The exclusion of ITC on CSR activities will mean that corporate entities will not be able to reduce their tax burden by claiming <keyword id="12201691" type="General" weightage="20" keywordseo="GST-input" source="Orion">GST input</keyword> credit. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/swiggy-tightens-focus-on-grocery-delivery-as-zomato-steps-out/articleshow/86582683.cms">Swiggy tightens focus on grocery delivery, as Zomato steps out</a> <a href="https://www.businessinsider.in/policy/legal/news/sc-landmark-ruling-in-the-samsung-heavy-industries-case-could-have-a-positive-effect-on-ease-of-doing-business-in-india/articleshow/77148341.cms">Supreme Court’s landmark ruling in the Samsung Heavy Industries case could have a positive effect on ease of doing business in India</a> <a href="https://www.businessinsider.in/policy/legal/news/these-are-the-common-laws-that-you-may-be-inadvertently-breaking-in-india/slidelist/76638782.cms">These are the common laws that you may be inadvertently breaking in India</a>

Can you claim input tax credit on CSR expense ⁠— three authorities have two different rulings

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Donald Trump's performance in the second presidential debate Sunday night was once again punctuated by apparent sniffling.&#xa0;Throughout the duration of the 90-minute town-hall style debate, the Republican presidential nominee could be&#xa0;seen and heard sniffling, much like he seemingly did during the first debate nearly two weeks ago.Following the first debate, Trump claimed was not actually sniffling, but <a href="http://www.businessinsider.com/trump-claims-defective-mic-debate-2016-9">defective audio due to a faulty microphone</a>.When he was pressed by "Fox and Friends" host Steve Doocy about the alleged sniffling, Trump <a href="http://www.businessinsider.com/was-donald-trump-sniffling-presidential-debate-2016-9">doubled down</a>, saying, "No, no sniffles, no."The Commission on Presidential Debates later <a href="http://www.businessinsider.com/debate-commission-trump-microphone-2016-9">confirmed</a> that Trump had audio issues during the first debate.However, the&#xa0;internet was quick to notice Trump's apparent sniffling this time around as well, with a number of users speculating about whether the billionaire would point to a faulty microphone as the cause again.&#xa0;<div></div>&#xa0;<div></div>&#xa0;<div></div>&#xa0;<div></div>&#xa0;<div></div>&#xa0;Trump and Clinton will face off in the third and final presidential debate on Wednesday, October 19. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/donald-trump-tweet-rips-miss-universe-contestant-alicia-machado-sex-tape-2016-9">'CHECK OUT SEX TAPE': Trump goes on raging tweetstorm ripping Miss Universe contestant</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="Yzanc2NjE6JNaVx2o5USHGlgNCUklDGi" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

Donald Trump's debate performance once again featured a bunch of apparent sniffling

The <a href="http://www.businessinsider.in/searchresult.cms?query=Finance+Ministry">Finance Ministry</a> has long acknowledged the significance of the <a href="http://www.businessinsider.in/searchresult.cms?query=telecom+sector">telecom sector</a> in the growth of the economy. However, many of the sector’s growth centric demands were clearly looked over in the Modi Government’s first full-fledged budget – the Budget 2015. 
 
As a recap, here’s what the Budget 2015 had for the sector - 
 
Direct Tax Highlights: 
· Tax on royalty and technical services payments made to non-resident parties down from 25% to 10% 
· General Anti Avoidance Rules ('GAAR') Extended to 2 years 
· Rationalization of indirect transfer tax provisions under section 9(1)(i) of the Income-tax Act 
· Corporate tax rates phased reduction over the next 4 years 
 
Indirect Tax Highlights: 
· Excise duty hike on mobile handsets up from 6% to 12.5%. Imports became 6.5% costlier. That helped Make in India. 
· Service tax hiked to 16%. Services got costlier for subscribers. 
· Exemption from Special Additional Duty ('SAD') 
 
While the <a href="http://www.businessinsider.in/searchresult.cms?query=direct+tax">direct tax</a> proposals helped, Budget 2015 failed to excite many Industry players. That’s because GST got delayed further, every remittance made to overseas parties still has to be reported and administrative hassles remain. 
 
Some of the key demands of the industry fell by the roadside amidst expectations soaring high. There were no specific incentives, and no rationalization of royalty provisions. Big telcos have been facing protracted litigation about the applicability of withholding tax provisions to margins allowed to independent distributors. 
 Amidst all the dark clouds the announcement to implement GST from April 1st, 2016 is a welcome step. Let’s hope <keyword id="2783177" type="UNKNOWN" weightage="80" keywordseo="Budget-2016">Budget 2016</keyword> offers some positive amendments for taxpayers and companies. 
 
 Image credits: Indiatimes

Did Budget 2015 help India’s incentive-starved
Telecom Sector?

PM <keyword id="6354642" type="PERSON" weightage="20" keywordseo="Modi">Modi</keyword>’s policy of demonetisation that scrapped off Rs 500 and Rs 1000 notes from circulation overnight has badly affected the businesses in India. <a href="http://www.businessinsider.in/you-may-have-to-pay-an-extra-tax-for-eating-pizza-and-burgersafter-budget-if-pm-modi-says-a-yes/articleshow/56736441.cms">FMCG category</a>, which relates to our daily consumption, has been badly hit. While the impact of a dip in sale in double in the urban markets as compared to the rural, date from <keyword id="4096912" type="UNKNOWN" weightage="20" keywordseo="brickworks-media">Brickworks Media</keyword> (a concern of Chrome DM), a research and data analytics company shows, tea has been the least affected item of demonetization at 10.77% and noodles ranks as the mostly affected at 33.23%. Even daily necessities like soaps and toothpaste saw a dip of <a href="http://www.businessinsider.in/you-may-have-to-pay-an-extra-tax-for-eating-pizza-and-burgersafter-budget-if-pm-modi-says-a-yes/articleshow/56736441.cms">16.17% and 18.5%</a> in the urban market respectively. <a href="http://www.businessinsider.in/you-may-have-to-pay-an-extra-tax-for-eating-pizza-and-burgersafter-budget-if-pm-modi-says-a-yes/articleshow/56736441.cms">ALSO READ: You may have to pay an extra tax for eating pizza and burgers after budget, if PM Modi says a yes</a> 
 With the annual <keyword id="25455" type="ORGANIZATION" weightage="20" keywordseo="finance">finance</keyword> budget been pre-poned this year, the <keyword id="34523" type="CITY" weightage="100" keywordseo="fmcg">FMCG</keyword> companies are pinning high hopes on a growth oriented budget this time. 
 
“We are expecting a growth-oriented Budget with various stimuli to revive<a href="http://www.businessinsider.in/you-may-have-to-pay-an-extra-tax-for-eating-pizza-and-burgersafter-budget-if-pm-modi-says-a-yes/articleshow/56736441.cms"> consumer confidence</a>… proactive reforms to stimulate demand by increasing the money in the hands of the emerging middle class and rural India, this will help bring FMCG growth back on track,” <keyword id="152630" type="COMPANY" weightage="20" keywordseo="Godrej-Consumer-Products-Ltd">Godrej Consumer Products Ltd</keyword> Managing Director <keyword id="218886" type="PERSON" weightage="20" keywordseo="Vivek-Gambhir">Vivek Gambhir</keyword> told the media. 
 With every other budget, restraining deficits and delivering higher growth is going to be a great challenge. <keyword id="40233" type="COMPANY" weightage="20" keywordseo="emami">Emami</keyword> group, leading FMCG brand in <keyword id="6354925" type="COMPANY" weightage="20" keywordseo="Kolkata">Kolkata</keyword> expects the budget to address issues related to GAAR, POEM, GST. Also a growth oriented budget is what they need at this hour to boost consumption, increase public investment, promote <a href="http://www.businessinsider.in/you-may-have-to-pay-an-extra-tax-for-eating-pizza-and-burgersafter-budget-if-pm-modi-says-a-yes/articleshow/56736441.cms">digitisation</a>, broaden tax base and lead higher growth”. <a href="http://www.businessinsider.in/statutorywarning-cigarettes-to-cost-more-after-budget/articleshow/56726842.cms">ALSO READ: Statutory Warning: Cigarettes to cost more after budget?</a> 
 
“While tax rates are expected to reduce with increased basic exemption limits, but taxpayers base is expected to broaden. Ease of doing business would be another focus area in currently subdued business environment. Agriculture, infrastructure and service sectors are also expected to get due attention and support,” said Emami CFO &amp; CEO Finance Strategy &amp; Business Development N. H Bhansali. 
 To believe an agency news report, the sales of <keyword id="6365619" type="CITY" weightage="20" keywordseo="Hindustan-UniLever">Hindustan Unilever</keyword> and <keyword id="127653" type="COMPANY" weightage="20" keywordseo="Jyothy-Laboratories">Jyothy Laboratories</keyword> have dipped quite during the year end months. The agency has learnt that they admitted the fact that ‘adverse liquidity’ in the market has affected them. 
 
 ​ “We are expecting an all-inclusive, progressive Budget to assist the sustainable economic growth of our country. In order to do so, it is essential for the government to focus on three crucial factors – boosting the rural sector and agricultural productivity, providing benefits to the salaried tax payers in order to increase disposable income in the urban markets, and encouraging private investment along with generation of employment because for the demographic dividend to be leveraged, job creation is very critical. These steps coupled with last year’s good monsoon will drive both urban and rural consumption,” said Saugata Gupta, MD &amp; CEO, Marico Limited.

These are major expectations in Budget 2017 from FMCG sector, the worst affected by demonetization

Tax proposals outlined in the Union Budget for 2015-16 presented by Finance minister Arun Jaitley has elicited mixed reactions from industry players and analysts. Broadly from a tax perspective, the decision to reduce corporate tax to 25% from 30% over four years, lay a road map to implement goods and services tax (GST) by April 2016, defer General Anti-Avoidance Rule (GAAR) by two years, cut tax on royalty/fee for technical services reduced to 10% from 25% and increase service tax to 14% from 12.36% are the key moves. 
 
“The finance minister has delivered on expectations in terms of bringing a much needed benign trend for corporate tax, reaffirmation of GST for coming financial year and deferral of General Anti Avoidance Regulations,” said Gokul Chaudhri, Leader, Direct Tax, BMR &amp; Associates LLP. 
 
Considering that the average corporate tax rate is around 23% globally, the cut in corporate tax will bring India at par with business destinations that are seen attractive. It will also help firms put in more money towards growth and investment besides boosting job creation. 
 
A section of industry players feel some tax measures will help do away with a few regulations that have been seen as unwanted. “Abolition of ineffective wealth tax and burial of the Direct Taxes Code removes needless regulations. The accompanying promises for implementation of the recommendation of the Tax Administrative Reforms Commission, cleaning up of the rules for sensible indirect transfer regulations, lowering of the royalty tax withholding rates to competitive levels and indicative clarification on dividend distribution taxes will bring clarity in the tax laws,” said Chaudhri. 
 
While the bunch of companies were anticipating to leverage the expected roll-out of GST in the near future is disappointed over further delay till April 2016, the deferral of the GAAR provision and the abolition of the Direct Tax Code is widely perceived to be beneficial to the industry and hence be applauded. 
 
“Overall, it is a positive set of proposals from an indirect tax standpoint with focus on the larger GST reform agenda and certain near term measures to address industry issues,” said Rajeev Dimri, Leader, Indirect Tax, BMR &amp; Associates LLP. 
 
In addition, the tax reduction on royalty fees for technical services is expected to make these services more cost-effective and enliven operations of tech-based firms. 
 
There has also been emphasis on multiple themes in the Budget speech like Make in India, ease of doing business, realignment of tax rates and cesses. “Near term measures to address issues around accumulation of tax credits, inverted duty structure, time limit for availing credits and maintenance of documentation online including digital invoices are steps in the right direction,” said Dimri. 
 
Besides, there is a welcome urgency and a roadmap for bringing back black money into the mainstream, thereby providing possible buoyancy to indirect tax revenue collections. While, the crackdown on illegal holding of assets and income outside India was expected, but the aggression with which the Finance Minister raised this issue is meant to convey the message that evaders will be dealt with strictly. 
 
The private equity and venture capital industry is one sector that stands to hugely benefit from a tax perspective. Tax pass-through for all Category I and Category II funds, and the ability to blend foreign capital in AIFs are expected to lend greater access to funds for the PE and VC industry. This is likely to drive annual deployment of funds by sector players from over $10 billion currently to $30 billion in three years. 
 
However, the hike in service tax, which will be transferred to the end-user, is expected to weaken consumer products sector’s revival (the sector grew about 7% in calendar 2014, its lowest in a decade, and is expected to rise 10% this year) and squeeze household budgets as consumers will have spend more on a range of categories including grocery shopping, eating out, movies, phone bills and grooming. The hike is excise duty on products including mineral water, aerated drinks and condensed milk will push prices up, squeezing households grocery spend. In fact, with falling prices of crude and palm oil, many consumer companies that use these commodities as raw materials were planning to cut prices to enliven demand which cannot be done now. 
 
Also, one must not forget that the devil is in the detail. “The fine print of the bill will be important to know if the effective tax rate stands amended this year as surcharges having been raised and the road map for exemptions and tax holidays to be eliminated needs to be studied,” said Chaudhri. 
 
Also, much of the reforms process outlined in the Budget proposals needs to be realised through tangible steps over a period of time. “It remains to be seen how reforms unfold and take shape in terms of GST implementation and TARC recommendations. Impact on prices would be interesting to watch with Budget proposals withdrawing service tax exemptions on construction of airports and ports, government services, increase in service tax rates and higher additional duties on petrol and diesel,” said Dimri. 
 
While the budget set stage for long-term growth in a tax perspective, it seems to have failed to tackle immediate ground realities. 
 
 (Image: Reuters)

The long and the short of tax proposals in Budget for 2015-16

It was being billed as a big bang budget but there is almost nothing to suggest that. On the contrary, it is a workmanlike full year budget for Finance Minister <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> with the focus directed more towards <keyword id="17408" type="PERSON" weightage="20" keywordseo="infrastructure">infrastructure</keyword> so that the investment cycle can be revived. 
	 The Finance Minister has given in to the demand of the industry and proposed reduction in <keyword id="118200" type="UNKNOWN" weightage="20" keywordseo="corporate-tax">corporate tax</keyword> to 25 per cent from 30 per cent earlier. This should boost the investment cycle over the next 12-18 months, which could help revive the job market, a promise made during the election campaign. The finances of the government could be helped by a Rs. 69,500 crore disinvestment target for the next fiscal. 
	 
	While the sharp cut in corporate tax may look good, the proposal to create an enabling environment for business and GAAR being deferred has certainly added to the comfort for business leaders. 
	 
	The stringent penal provisions for black money is certain to set the cat among the pigeons. 10 year rigorous imprisonment for black money stashed overseas, 300 per cent penal tax on the concealment of money overseas and some of the other provisions have made the intentions of the government clear. Worse, those found concealing income will not be permitted to go to the Settlement Commission. 
	 
	According to Forbes, India has the third highest number of billionaires after US and China. Since the government manages a mere Rs. 1008 crore from wealth tax, it has been done away with. A 2 per cent surcharge replacing wealth tax for the super rich should be easier for the government to administer. 
	 
	The finance minister plans to incentivise the use of debit and credit cards and disincentivise the use of cash. Barring that announcement, there was nothing major to tout on curbing the black money menace within the country. 
	 
	The middle class was expecting tax breaks from the party they voted to power just a few months ago. That has been a disappointment because barring the tax break for spend on health expenses to Rs. 25,000 from Rs. 15,000 and the odd other such rebate, there has been nothing to cheer about. Higher service tax means spending on telecom services, eating out and consuming other services will be more expensive. 
	 
	The monetisation scheme for gold is an interesting experiment to tap into the wealth locked up in Indian homes. A sovereign gold bond scheme with a fixed interest rate will allow Indian to earn money out of their investment while the government can hope that gold imports will be curbed, cutting down India’s foreign exchange spend. 
	 
	The finance minister has not put more money in the common man’s pocket. Clearly, it is industry that will have to drive the economic engine in the near term. 
	 
	About the author: The article has been authored by veteran financial journalist Ashutosh Sinha

Union Budget 2015: Not the common man's budget

Finance Minister <keyword id="42575" type="PERSON" weightage="80" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, who presented the Modi government’s first full-fledged Union Budget on Saturday, seems to strike the right chord with both India Inc as well as individuals. While Finance Minister Jaitley decided to keep <keyword id="6354751" type="COMPANY" weightage="80" keywordseo="Income-Tax">income tax</keyword> slabs unchanged, however, he announced that individual tax payers would be benefited to the extent of Rs 4,44,200 from the exemptions announced. 
BI India lists down the key announcements in the taxation policy announced in the Union Budget 2015. 
 
1. The government announced an increase service tax rate and education cess to 14% from 12.36%. 
2. Bringing relief to the super-rich of the country, FM Jaitley has abolished wealth tax and instead has put a 2% surcharge on individuals with income over Rs 1 crore. 
3. The transport allowance exemption has been hiked from Rs 800 per month to Rs 1,600 
4. The government also announced an exemption of Rs 50,000 for pension under Sec 80C of the Income Tax Act 
5. He has raised the tax emption in the National Pension Scheme to Rs 1,50,000 from its present level of Rs 1,00,000. 
6. The government also announced an exemption of Rs 50,000 for pension under Sec 80C of the Income Tax Act 
7. The transport allowance exemption has been hiked from Rs 800 per month to Rs 1,600 
8. In a bid to promote health insurance in the country, the Centre announced an increase in health insurance premium deduction upto Rs 25,000 from Rs 15,000 
9. The health insurance premium deduction for senior citizen has been increased from Rs 10,000 to Rs 30,000. On the <keyword id="118200" type="UNKNOWN" weightage="80" keywordseo="corporate-tax">corporate tax</keyword> front, Finance Minister Jaitley made a slew of announcements. 
10. Corporate tax has been reduced from 30% to 25% 
11. The government will continue to reduce corporate tax by 5% over the next four years 
12. CSR activities for ‘Clean Ganga Fund’ and Swacch Bharat Kosh will enjoy 100% tax exemption 
13. Defers GAAR by two years 
14. GST to be implement in next fiscal year 
 
15. Recognising yoga as a part of the Indian culture, the government has announced tax relief for yoga instructions, institutions 16. Slash in <keyword id="44235" type="ORGANIZATION" weightage="80" keywordseo="Custom-duty">custom duty</keyword> on raw materials and intermediaries 
17. The government increased consolidated service tax to 14% 18. The government has announced a cut by 6% in the <keyword id="6356916" type="UNKNOWN" weightage="80" keywordseo="excise-duty">excise duty</keyword> levied on footwear that have a retail price of over Rs 1000 per pair 
19. The income tax department will bring in more clarity on indirect transfer of assets and dividends paid by foreign firms 
20. Any sale transaction exceeding Rs 1 lakh will require PAN numberPAN must for any sale exceeding Rs 1 lakh 
21. Tax on technical goods reduced to 10% from 25% 
22. The Centre also reduced custom duty on 22 items 
23. The Clean energy cess has been increased to Rs 200 from Rs 100 per metric ton of coal in order to finance Green Energy Fund 
On the issue of black money, the government announced some stringent reforms. 
24. Rigourous 10 year imprisonment for concealment of income 
25. The Centre will also be able to seize foreign properties and assets through Foreign Exchange Management Act 
26. In a bid to tackle illegal transactions in the real estate sector, the government will also introduce Benami Property Bill 
Other key highlights include: 
27. Direct tax proposals to result in a loss of Rs 8,315 crore 
28. The indirect proposals will yield Rs 23,383 crore 29. The government will also rationalize <keyword id="73398" type="ORGANIZATION" weightage="80" keywordseo="MAT">MAT</keyword> rules for FIIs

Budget 2015: Tax Sops Galore, both India Inc and people cheer

Prime Minister <keyword id="6354477" type="PERSON" weightage="80" keywordseo="Narendra-Modi">Narendra Modi</keyword> on Saturday said reforms are "just a way station" to transforming India, with a slew of measures putting the economy back on track and vowed to provide a transparent and predictable tax regime as well as protection to <keyword id="388837" type="UNKNOWN" weightage="20" keywordseo="intellectual-property">Intellectual Property</keyword> Rights. 
 
Speaking at the ASEAN Business and Investment Summit, he said government actions in the past 18 months have led to bringing down inflation while at the same time leading to higher GDP growth and foreign investmen .. 
 
"Reform is not an end in itself. Reform for me is just a way station on the long journey to the destination. The destination is the transformation of India," he said. 
 
"India is reforming to transform, it is at a take-off stage. I invite you to be part of this change," he said. 
 
When the BJP-led government took office in May 2014, the economy faced serious challenges in high fiscal and current account deficit, stalled infrastructure projects and persistent inflation. 
 
"It was obvious that reforms were needed. We asked ourselves the question - Reforms for what? What is the aim of reform? Is it just to increase the measured rate of GDP growth? Or is it to bring about a transformation in society? My answer is clear: we must 'reform to transform'," he said. 
 
The fruits of development have to be taken to the margins of geography and to the bottom of demography. "We have to touch lives, while reaching for the sky," he said. 
 
Action during the last 18 months has ensured that "GDP growth is up and inflation is down, foreign investment is up and the current account deficit is down, tax revenues are up and interest rates are down, thee fiscal deficit is down and the rupee is stable," Modi said. 
 
Stating that a series of concerted steps including structural and institutional reforms have initiated, the Prime Minister said the government was "moving fast" to make sure tax regime is transparent and predictable where genuine investors and honest tax payers get quick and fair decisions. 
 
"Going further, I want to assure you that India is committed to protect Intellectual Property Rights of all innovators. We have taken several initiatives for transparency and online processing in IP administration. A comprehensive National IPR policy is expected by the end of the year," he said. 
 "To re-vitalise the flow of <keyword id="6362476" type="ORGANIZATION" weightage="80" keywordseo="investments">investments</keyword>, the second wave of structural and financial reforms have been launched. "We are trying to further open up the economy and introduce an element of predictability and stability in taxation system," he said. 
 
While productive public investment has been substantially increased, carbon taxes on fossil fuels has been imposed to show India's commitment to climate change. 
 
Stating that the world economy was not exactly doing well, Prime Minister said the economic revival in India is the result of a series of concerted policies. 
 
Even while cutting the fiscal deficit, productive public investment has been substantially increased. 
 
"We have embarked on a course of fiscal consolidation. We have entered, for the first time, into a monetary framework agreement with the Reserve Bank to curb inflation," Modi said. 
 
Recounting steps taken, he said carbon taxes on fossil fuels has been imposed, diesel price de-controlled, cess on coal hiked by three fold and wasteful expenditure has been cut. While confidence within and outside the country has increased, the IMF and World Bank have expressed even better hope for the <keyword id="6356076" type="UNKNOWN" weightage="80" keywordseo="indian-economy">Indian economy</keyword> this year and after, Modi said. 
 
Macro-economic stability, he said, is good. 
 
"Our aim is to create jobs for more than a billion young hands. To provide this, the share of manufacturing must reach around 25 per cent in our GDP," he said adding 'Make in India' campaign has been launched and government is aggressively working on ease of doing business front. 
 
Reducing complicated procedures, making them available at one platform -- preferably online, simplifying the forms and formats has been taken up on war footing, he said recalling India jumping 12 ranks in the recent World Bank's 'Ease of Doing Business Report of 2016'. 
 
Modi said the Index of Industrial Production (IIP) has shown a distinct improvement over the previous year. "We are working in all ways to make India a global manufacturing hub." 
Enumerating steps taken, he said a series of simple but powerful structural reforms in agriculture have been taken, the world's most ambitious housing for all programme launched and undertaken major improvements in the transport sector. 
 
Concerted action to revive stalled infrastructure projects and a major revamp of the power sector have been undertaken, he said. 
 
The pace of award of new highway works has increased from 9 kilometers per day in 2013-14 to 23 km a day currently. "These will have large multiplier effects throughout the economy," he said. 
 
Prime Minister said the government was committed to restore credibility in the process of allocation of natural resources. 
 
"My government has intervened with legislative and administrative measures to improve the supply of critical inputs and raw materials. They include Coal, other minerals and spectrum. The hallmark of this intervention is allocation through transparent auction," he said. 
 
About 190 million new bank accounts have been opened under the Jan Dhan Yojana. 
 
In a break with over 65 years of tradition, states have been involved in framing foreign policy. 
 
Prime Minister said the government was trying to remove the bottlenecks that were affecting growth process. 
 
"India is a land of immense opportunities," he told the ASEAN business community. "Our democratic values and an alert judicial system ensure the safety of your investments. We have set the tone of Governance with a long term vision and an open mind. We are particularly working to make India the easiest place to do business." 
 
He said "it is India's turn" now. 
 
"And we know that our time has come. We are at a take-off stage. I invite you to come and see the winds of change in India,” he said. 
Modi said maximum focus of the government is on building futuristic infrastructure. 
 
"By exercising tight control over unproductive expenditure, we have greatly increased capital investment by the public sector. To further augment such investments, we are encouraging the PPP (public-private partnership model)," he said. 
 
Also, National Investment and Infrastructure Fund has been set up to leverage public investments. 
 
"We are also coming up with Tax Free Infrastructure Bonds with a view to broaden the corporate bond market and to provide long term finance for infrastructure," he said. "We are eager to work with Malaysia, Singapore and other ASEAN countries in this regard." 
 
Prime Minister said the initiatives of 18 months has led to sentiments for private investment and inflow of foreign investment turning positive with foreign investment rising by 40 per cent. 
India, he said, has been consistently ranked as the most attractive investment destination by several global agencies and institutions. 
 
He said the government has allowed and enhanced FDI levels in key sectors including insurance, defence and railways and put most of the sectors on automatic approval route. 
 
Also FDI policies in sectors like construction, plantation and medical devices has been rationalised and composite caps for Foreign portfolio investors has been allowed. 
 
A new bankruptcy code has been drafted and formation of the Company Law Tribunal to expedite cases is on the way. 
 
"We have ended retrospective taxation," he said adding the implementation of General Anti Avoidance Rules (GAAR) has been deferred. 
 
Also, the Goods and Services Tax Bill has been introduced in Parliament. 
 
"We are hopeful of rolling it out in 2016. This will create a unified system of taxation across the country," he said. 
 
Calling India and ASEAN natural partners, Modi said ASEAN's ten member countries form an economic powerhouse and have emerged as one of the largest economic zones in the world. 
 
"Last fifteen years have seen your rapid and yet stable growth. Your Macro-economic stability has been the main reason for growth and stability in South East Asia. With good governance, futuristic infrastructure and focus on new age technologies, you have created excellence," he said. 
 
Image credit: Indiatimes

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