• Service: Tax, Global Indirect Tax, Global Transfer Pricing Services, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/11/2014

India - Direct, indirect tax measures in Budget 2014-15 

July 11:  India’s newly elected government presented its first Union Budget 2014-15 before the Parliament on 10 July 2014.

Among the tax provisions in the budget are measures concerning India’s most awaited tax reform—a uniform goods and services tax (GST).

Other proposed measures would:

  • Establish a high level committee to scrutinise all “fresh” tax cases arising from the retroactive application of law changes from 2012 in respect of indirect transfers
  • Extend the availability of advance ruling to residents
  • Strengthen the authority for advance rulings by creating additional benches
  • Change India’s transfer pricing rules to bring them in line with the leading international practices—read TaxNewsFlash-Transfer Pricing

As proposed, direct tax rates would remain unchanged for all taxpayers, but with a recalibration of tax “slabs” (brackets) for individual taxpayers.

Other measures would be intended to encourage investment in real estate and infrastructure sector funds by clarifying the basis of taxation of income in the hands of the trusts/funds and investors. Provisions relating to charitable trusts would be “tightened” so as to address perceived abuse.

An investment allowance would be continued as an incentive for manufacturing companies to encourage investment in plant and machinery.

Foreign institutional investors (FIIs) could expect clarity on the characterisation of their income, and the government has signaled an intention to “tap” overseas securities markets by removing from the “tax net” transfers of such securities between non-residents.

Read a 32-page July 2014 report(PDF 898KB) prepared by the KPMG member firm in India: India’s Union Budget 2014

Financial accounting

Finance Minister also announced a roadmap and definite dates for convergence with IFRS for Indian companies as part of his Union Budget speech on 10 July 2014.

Read a July 2014 report(PDF 124KB) prepared by the KPMG member firm in India: The government proposes to make Ind AS mandatory from the financial year 2016-17

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