Twitter

Follow palashbiswaskl on Twitter

Friday, July 11, 2014

While there's disappointment over status quo on taxing past offshore deals, measures in the budget will provide companies a more predictable tax regime, cut disputes and help kick-start investment

While there's disappointment over status quo on taxing past offshore deals, measures in the budget will provide companies a more predictable tax regime, cut disputes and help kick-start investment

Jul 11 2014 : The Economic Times (Bangalore)
BUDGET AT A GLANCE : DIRECT TAX - DIRECT CUT IN DISPUTES


While there's disappointment over status quo on taxing past offshore deals, measures in the budget will provide companies a more predictable tax regime, cut disputes and help kick-start investment
DIVIDEND TAX Measure New Method to Fix Dividend Distribution Tax Impact Tax outgo will rise for companies if they pay out the same amount as dividend. If companies want to maintain their tax outgo, then shareholders have to bear the brunt. The effective rate of dividend distribution tax, a tax on dividends paid by companies, will increase to 17% from 14%. Will discourage long-term investments by retail shareholders.But HNIs will be better off than paying dividend tax on their own.
RETRO TAXMeasure Status-quo on RetrospectiveTaxation ImpactInvestor confidence willnot be restored inVodafone type of cases.
Placing the onus on a panel to resolve pendingdisputes does not guarantee a solution. Butthe law is clear that tax will be charged when Indian assets change hands between offshore entities.
INVESTMENT Measure Investment Allowance Limit Lowered Impact Spur growth in manufacturing, especially in the small and medium enterprises (SMEs) sector. Demand for capital goods sector will rise. More jobs will be generated, leading to industrial growth.
Timeline extension will be a relief for companies already enjoying the tax benefit.
TRANSFER PRICING Measure Transfer Pricing Rules Eased, Rollback of APAs Impact Huge relief for captives of IT and ITeS MNCs that need to follow rules in pricing their services when they do business with their parent outfit or arms. Will lower their tax outgo as chances of transfer pricing adjustments will reduce, & cut litigation. Disputes will end even on pending s assessments with the s rollback of APA, an d arrangement between s govt and taxpayer, to . compute transfer prices in advance.
CAPITAL GAINS TAX Measure Higher Capital Gains Tax for Unlisted Shares Impact Will hurt private equity deals. Exit will become tougher for private equity investors as they will have to pay 50% more tax, with an increase in the tax rate on sale of shares held up to 36 months from 20% to 30%. For foreign funds, it could be 40% from 10%.
CSR MORE TAXING Measure Companies Can't Claim a Cut on Expenses on CSR Impact Companies can't do charity with government money. So the tax outgo for companies will rise, will hurt shareholder earnings. This could also discourage companies from spending their entire corporate social responsibility (CSR) budget.


No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...

Welcome

Website counter

Followers

Blog Archive

Contributors