kpmg in india’s pre-budget survey 2019-20 · 2020-07-28 · kpmg in india’s pre-budget survey...
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1KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG in India’sPre-Budget survey 2019-20
home.kpmg/in
July 2019
2KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG in India’s pre-budget survey 2019-20 findings
The taxpayers in India have many expectations from the Union Budget 2019-20 which is the second term full-fledged budget of the NDA government and presented by India’s first full-time woman Finance Minister.
KPMG in India had conducted a pre-budget survey and are pleased to present the survey results of what the country expects the budget to deliver. We are also happy to state that a majority of respondents believe that the overall tax environment in India has improved as compared to the past.
Direct tax
• The new and simplified Direct Tax Code (DTC) being on the anvil, majority of the respondents expect that the Union Budget 2019-20 is unlikely to announce any major direct tax policy amendments. The levies like Minimum Alternate Tax, Dividend Distribution Tax, Surcharge and Cess are also unlikely to change significantly
• Majority of the respondents expect that the corporate tax rate is unlikely to be reduced to 25 per cent as applicable to small companies. The respondents expect that the tax rate for LLPs will be aligned with the tax rate applicable to companies
• Majority of the respondents expect that for individuals there will be an increase in the basic tax exemption limit of INR2.5 lakh
• Majority of the respondents expect the tax rate on long term capital gains arising on unlisted equity shares be harmonised at 10 per cent for Resident and Non-Resident taxpayers
Indirect tax
• The responses received indicate that a large section of the respondents are equally divided on the possibility of GST rate reduction in the upcoming Budget
• Majority of the respondents expected extension of the tenure of the National Anti-Profiteering Authority. This came true with a two year extension of the authority announced by the GST Council recently
3KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Extending tax incentives/holidays
• Majority of the respondents expect that the weighted deduction for scientific research expenditure incurred in the recognised in-house R&D facility to be extended beyond 31 March 2020
• As an impetus to the ‘Make in India’ initiative, majority of the respondents expect the tax holiday for exports available to SEZ units be extended beyond 31 March 2020
• To boost the real estate sector, majority of the respondents expect a raise in the deduction limit of INR2 lakh for housing loan interest on self-occupied properties
• Towards a competitive edge for IFSCs, the respondents expect an extension of tax holiday available to IFSCs to a much longer period than 10 years and also a 100 per cent holiday throughout the holiday period in line with international benchmarks
Reduction of tax litigation and rationalization
• The respondents expect that the APA renewal process will be made less onerous and less time consuming especially where there is no change in the facts of the applicant’s case
• In line with the increase in monetary limits for filing of appeals by the tax department, the respondents expect further measures to be introduced to reduce tax litigations including a new scheme for dispute settlement
• The respondents feel that the ‘secondary adjustment’ transfer pricing provisions are creating several practical difficulties in implementation and need to be relaxed suitably
• The respondents expect that the thin capitalisation transfer pricing provisions for NBFCs and banks will be made on par and NBFCs to be exempted from their ambit
• The respondents expect the relaxation of deemed income provision applicable to buyers who purchase listed shares under insolvency regulations and this is likely to boost the resolution of stressed assets under the IBC regime
The inf ormation contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeav or to provide accurate and timely information, there can be no guarantee that such information is accurate as of thedate it is received or
that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation
© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
This document is for ecommunications only
4KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Industry
TechnologyBuilding and
Construction
Consumer
MarketsEducation
Defense and
Aerospace
Financial
ServicesTelecommunications Healthcare
Life Sciences |
Pharmaceutical
Energy and
Natural resources
Media and
entertainmentPrivate equity
LAB
15% 7% 5% 2%
1% 11% 2% 4%
3% 3% 2% 2%
Transport, leisure
and sports
Public sector
enterprise
2% 1%
Others
40%
Responses226
5KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect the Honourable Finance Minister not to
make any major direct tax amendments in the upcoming
budget and wait for the report of the new DTC committee?
0 1
5 3 %Yes
2 0 %Maybe
2 7 %No
6KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect the corporate tax rate to be reduced to 25
per cent for all companies and LLPs?
0 2
Companies with a turnover exceeding
INR250 croreLLPs
Yes
Maybe
No Yes
Maybe
No
3 9 % 4 6 %
1 5 %
4 4 % 3 4 %
2 2 %
7KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect reduction/abolition of the following:
0 3
Minimum AlternativeTax Rate
Dividend Distribution Tax
Surcharge
Cess
Long-term capital gains tax on listed securities
Reduction Abolition No change
2 6 % 1 9 % 5 5 %
3 3 % 1 4 % 5 3 %
2 2 % 2 2 % 5 6 %
1 4 % 2 8 % 5 8 %
2 5 % 2 2 % 5 3 %
8KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect harmonisation of capital gains tax rates
between domestic and foreign sellers?
0 4
3 9 %Yes
3 0 %No
3 1 %Maybe
9KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect the new Finance Minister to increase the
maximum threshold of non-taxable limit of income
(INR2.5 lakh currently) for individuals?
0 5
Maybe
No
5 %2 1 %
Yes
7 4 %
10KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
According to you, will the Government consider any
form of additional taxation for “super rich” taxpayers
(say above INR10 crore of income or above INR100 crore
of assets).
0 6A
2 2 %
2 6 %
Yes
No
Maybe 2 2 %
2 6 %
5 2 %
11KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
what is most likely that the Government could consider?
0 6B
Re-introduction of
wealth tax/estate
duty
Introduction of
inheritance tax
Higher tax rate of
40 per cent for
income above
INR10 crore?
Do not expect any
additional tax on
super rich
1 0 % 1 3 %
5 8 % 1 9 %
12KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
In your view, what all incentives should the Government
consider for the housing sector? (select all applicable)
0 7
Increase the limit for interest of housing
loan for self-occupied properties
from INR2 lakh.
Remove the limit of INR2 lakh for set off of house property loss with other income of
the same year
Carve out deduction for repayment of
housing loan principal from existing overall
limit of deduction under Section 80C of
INR1.5 lakh
6 5 % 5 1 % 3 4 %
13KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Weighted deduction for expenditure incurred on in-
house R&D facility is expiring on 31 March, 2020. Do you
expect that this weighted deduction will be extended in
order to support the ‘Make in India’ initiative?
0 8
6 6 %Yes
1 0 %No
2 4 %Maybe
14KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect extension in the sunset date of tax
holiday for SEZ unit beyond 31st March, 2020?
0 9
No
Yes
May be
5 2 %
2 8 %
2 0 %
15KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect an extension in tax holiday for IFSC units
from 10 years to 15 years?
1 0
3 5 % 3 5 %3 0 %
Yes NoMay be
16KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect NBFCs to be exempted from applicability
of thin cap rules?
1 1
2 3 %
4 3 %
Yes No
May be
3 4 %
17KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect extension of thin cap norms to domestic
financing structures?
1 2
3 2 %
Yes
3 0 %
No
3 8 %May be
18KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect rationalisation of ’avoidance’ norms
attributing deemed income for buyers at the time of
purchase of shares of listed companies/companies
under Insolvency and Bankruptcy Code?
1 3
Yes
Maybe
No
3 6 %
4 0 %
2 4 %
19KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
May be
1 8 %
1 5 %
No
6 7 %
Yes
1 4Do you expect the procedure for ’renewal’ of Advance
Pricing Agreements (APAs) to be simplified?
20KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect the onerous requirements of ’Secondary
Adjustment’ to be eased given the practical difficulties
faced during implementation by most taxpayers?
1 5
5 1 %Yes
2 1 %No
2 8 %May be
21KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you think a settlement mechanism to close long
pending issues in litigation will be introduced?
1 6
6 7 %Yes
1 8 %May be
1 5 %No
22KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you expect GST rate reduction in the coming
budget?
1 7
4 1 %Yes
1 5 %May be
4 4 %No
23KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Do you think the term of National Anti-profiteering
authority will be extended?
1 8
5 9 %Yes
2 3 %May be
1 8 %No
24KPMG in India’s Pre-budget survey 2019© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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The information contained herein is of a general nature and is not intended to address the circumstances of any particular
individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such
information is accurate as of the date it is received or that it wil l continue to be accurate in the future. No one should act on such
information without appropriate professional advice after a thorough examination of the particular situation.
© 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affi liated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
This document is for e-communications only.