In Focus – Taxation

Direct Tax

Tax incentives for the Healthcare sector by lowering the tax rate or increasing deductions for expenses of pharma companies
Employment generation by extending the benefit of Section 80JJAA (Deduction in respect of employment of new employees)
Revised threshold for deductions under ‘Income from Salaries’
Corporate tax incentives by allowing a deduction related to COVID-19 related CSR expenditure.
Tax relief for individuals by increasing income not chargeable to tax or reducing tax rate.

Indirect Tax

Announcement of incentive rates and applicability criteria under RoDTEP Scheme
Exemption in the Customs duty rate on the import of COVID-19 vaccines to ensure affordability

Transfer Pricing

Introduction of Simplified Transfer Pricing Documentation to reduce compliance burden costs and manage risk
Safe Harbour provisions may be notified for a longer period and online filing to be made available
Guidelines for assessing the economic impact of COVID-19 on transfer pricing arrangements
Clarification on potential cascading effect of secondary adjustments

Mergers And Acquisition

Allowability of carry forward of business losses in case of merger/amalgamation for companies other than those operating industrial undertakings
Rationalization of the dividend tax between domestic and foreign investors
Merger of LLPs into a company and vice versa
Rationalization of the deemed gift taxation provisions on shares and securities under section 56 – in terms of exemption for inter-group restructuring transactions, tolerance limit of 10% (as provided in the case of immovable properties); applicability of fair market value concept to shares, if lower than book value, recognition of different rights attached to shares
Exemption from the indirect transfer implications in the hands of non-residents pursuant to the merger of two foreign companies

In Focus – CFO's Wishlist

Extending the various export incentive schemes such as SEIS, MEIS at least for the next 2 to 3 years
Import of life saving instruments attracts zero or minimum duty. A reduction in import duty of raw materials for manufacturing life saving instruments can promote Make in India.
Introduce exemption for companies with one legal entity but multiple offices to cross charge common cost and account for GST, which creates additional compliance burden and exposes the company to audit risk.
Cashing out TDS credits (in full) or allow companies to sell these TDS credits at a discount. This would help loss-making companies in unlocking the much-needed cash
Lower CIT rates, or introduce partial exemption – e.g. first INR XXX to be either exempt or taxed at reduced rates.
Lower TDS rates under Section 194 on a professional service fee to 2%, to align with FTS, this will avoid unnecessary compliance issues with tax office, given the interpretation of FTS and professional service is not always clear. This makes it easier for the company to comply.

In Focus – Healthcare

In light of COVID-19, the government should commit to an increase in healthcare expenditure by at least 0.5% of GDP with an aim to reach 2.5% to 3% by FY 2024-25.
Provide subsidized loans, land, and tax holidays for hospitals built in Tier II and Tier III cities to enhance the Ayushman Bharat scheme.
Allow CSR funds to be utilized for building and maintaining hospitals/primary/secondary care centers and make this expenditure tax-deductible.
Provide tax benefits for the export of medical devices to encourage domestic manufacturing.
To encourage adoption of health insurance in the country:
- Enhance the tax rebate under Section 80D from the current value of INR 25,000 to INR 50,000 (and INR 75,000 for senior citizens)
- Reduce GST on health insurance policies from 18% to 5%
- Introduce a new scheme to cover those not currently covered under the PMJAY scheme
Zero-rating of GST for healthcare services - While healthcare services remain tax-exempt, tax on inputs continues to add to the cost of healthcare services.
GST levied on most Medical devices is 12% and should be brought down to 5%.
Spare parts used for medical devices should be charged at the same customs and GST rate as the products in which they are used.
To encourage healthcare-related R&D investments in the country.
- Reintroduce the 200% weighted deduction on R&D expenditure across the healthcare industry
- Provide the healthcare industry with the same tax and incentives benefits as provided to SEZs earlier
Extend the current PLI schemes for two more years.
Open public procurement for all companies investing in India.

In Focus – Foreign Direct Investment

Lower corporate income tax rate of 15% for MSMEs and select large units for new expansion/greenfield projects.
Defined timelines and Single window centralized registrations/grants of permits for Greenfield Setups/Industrial Clearances.
Centrally communicated timelines for companies applying for incentive proposals at a central and state level.
Detailed layout of scheme covering applicability, conditions, etc., for selected sectors considered under centrally announced production linked incentives scheme (with an outlay of INR 1.45 trillion)
Centrally mandated setting and publishing of timelines for local registrations and approvals from states.
Defined implementation timeline for previously announced Labor Codes and National Logistics Policy.

In Focus – Food Processing Sector

Incentive for expanding or new setup for all types of food processing companies
Production Linked incentive subsidy for Food Processing Sector
Incentivize packaging companies to reduce cost for food processing companies or introduce export incentives for exporting food processing companies to make Indian companies globally competitive
GST exemption/concession to mass market products as were available under excise regime
Specific Incentive program for alternate agricultural method like Hydroponic, Aquaponic, etc.
Improve the sustainability of low-margin businesses like restaurants by extending the benefit of complete ITC to combat COVID-19’s impact.

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Webinars - Unravelling Union Budget 2021

Indo German Chamber of Commerce

The Federation of Indian Chambers of Commerce & Industry

The Indo-Italian Chamber of Commerce and Industry & European Business Group

Software Exporters of Pune

Indian Electrical & Electronics Manufacturers' Association

Indo American Chamber of Commerce

Association of Food Scientists & Technologists (INDIA)

Tricor Japan

US India Chamber of Commerce DFW

Singapore Indian Chamber of Commerce & Industry

Decoding Union Budget 2021-22

Union Budget 2021 Forecast

In Focus – Taxation

Direct Tax

Indirect Tax

Transfer Pricing

Mergers And Acquisition

In Focus – CFO's Wishlist

In Focus – Healthcare

In Focus – Foreign Direct Investment

In Focus – Food Processing Sector

Insights from Union Budget 2021

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