Contrary to the profile of a routine annual exercise, devoid of sensational policy changes and amendments in other countries of significance, the Budget in India has come to be virtually an event, with all the comment, speculation, and dramatic hype preceding the event, the collective bated breath that greets the unfolding of the budget, followed by the rounds of discussions and analyses that happen thereafter.
S Gayathri, partner, tax and regulatory services, Grant Thornton India
While one may argue that a dose of excitement never did anyone harm, if there is one general wish that a genie was to grant vis-a-vis the Budget, that has to be for stability. No more screeching brakes on previously granted benefits, or rollbacks of seemingly thought out provisions introduced in the past, or indeed, pulling the rug from under the feet of citizens who have committed time, energy and funds in ventures on the basis of what appeared to be far reaching policy decisions in the past!
For the businessman, such an appeal would emanate from the growing sense of unease and helplessness; leaving aside his own dilemma, how does he get others, in particular, people of other lands, to have faith in, and commit to his ventures? For the consultant, to what extent does he caveat his opinion on the likely implications of a proposed enterprise — matters of interpretation, yes, but its very existence, two years down the line?
If moving on to smaller but more specific wishes does not appear unreasonably avaricious, there is a desire for a robust scheme for the taxation of REITs. With the proposed legislation for REITs having been drafted along the lines of the globally evolved ones, one now hopes for clarity in the form of a set of tax provisions governing the Fund and its investors such that the only element of uncertainty in that sphere would be the market values of the underlying real estate assets!
What one would also like to see is a sunset to the controversies surrounding SEZs, at least from a tax and regulatory perspective. Hopefully, the Ministries concerned have resolved their differences and will be able to stand by their initial, well, at least the present position in respect of the tax implications for the developers, co-developers, units, offshore banking units, and the like. In addition, the provision of clarity on the scheme applicable for International Financial Service Centres (it exists only in definition, at present) which are meant to function from within an SEZ. Also desired is a correction of the computation provision in Section 10AA of the Income Tax Act, which provides deduction from the income of units operating in an SEZ. Besides, a final say, please, on the availability and extent of the much-anticipated extension of tax benefits for STP units.
One also wishes for an environment where an investor bringing in funds into an Indian business from a particular jurisdiction does not have to fear a reversal in the terms of the relevant agreement between India and that country, which could work to the detriment of the investor. Also, it would be nice to have a clear sense of whether on exit, the investor would be taxed on capital gains or profits and gains of business as the numerous guidelines issued seem very often to point equally to both these categories!
There is a fierce hope that none of these wishes resemble horses, and therefore, are completely capable of being fulfilled. The countdown has begun…….
The writer is partner, tax and regulatory services, Grant Thornton India