The US-India Tax Forum has suggested the government to bring parity in tax payable by domestic and foreign players in multiple sectors ahead of the Budget for 2024-25. The Forum, which was officially launched in February 2020, aims to ensure a level playing field in sectors like banking, where foreign banks pay high taxes in India. With around 350 member companies, the Tax Forum allows Indian policymakers, global tax experts, and the business community to engage and advocate for a tax environment conducive to making India an attractive investment destination.
The Tax Forum has submitted its recommendations on tax amendments for the upcoming Union Budget 2024-25, to be presented on July 23 by the Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman. Recognizing global developments around the minimum tax deal, the Forum highlighted the need to rationalize corporate tax rates. The recommendations focus on advocating for a stable and predictable tax environment essential for boosting investment sentiment across sectors, as well as the simplification of the withholding tax regime.
Tarun Bajaj, Chairperson of the US-India Tax Forum, emphasized the need for the government’s budget to build on previous reforms and introduce targeted reforms in direct taxes and customs policies to enhance India’s economic partnerships globally. Bajaj anticipates measures to streamline corporate tax structures, incentivize investments, and simplify customs procedures to facilitate smoother trade flows, fostering a conducive business environment and strengthening bilateral economic ties.
USISPF President and CEO, Dr. Mukesh Aghi, highlighted the importance of stable tax policies, robust infrastructure investments, innovative incentives, and sustainable development initiatives for multinational corporations awaiting Budget 2024-25. Recommendations made by the Tax Forum also address significant reforms in the capital gains tax structure, aiming to simplify it and reduce the compliance burden by bringing parity among tax rates and holding periods for investments across various sectors.
Under indirect taxes, the Tax Forum recommends the rationalization of custom duty rates on specific products to make the import of critical supply chain components more cost-effective and streamline the process of bringing goods into the country. As India seeks to capitalize on the China plus one strategy, such customs duty relaxations on the import of supplies strengthening domestic capabilities are crucial for improving efficiencies and enhancing India’s competitiveness as well.
The upcoming Budget Presentation on July 23 by Finance Minister Nirmala Sitharaman will surpass the record set by former Prime Minister Morarji Desai, making it her sixth budget speech. The budget session of Parliament, announced to start on July 22 and conclude on August 12, will focus on the financial needs of the intervening period until a full budget is presented, addressing reforms in direct taxes, customs policies, tariff rates, and incentives to bolster India’s economic partnerships globally, and enhance the ease of doing business, ensuring mutual prosperity and competitiveness in the global market.
