BUDGET 2023: Leading US advocacy organisation submits Budget wish list; Demands Tax System Rationalisation

The US-India Strategic and Partnership Forum (USISPF) emphasized the need for FM Nirmala Sitharaman to streamline and rationalize India’s direct and indirect taxes systems in a pre-Budget presentation to the Finance Ministry.

The USISPF is a US strategic and corporate advocacy organisation focused on India.

The USISPF stated that simplification and rationalisation will boost global investors’ confidence and lead to increased Foreign Direct Investment into the country, and that such a move would reaffirm India’s adherence to the global tax treaty.

The conference promoted a predictable and stable tax environment, increased business-friendly policies, decreased transaction costs, and rationalized tax rates and tariffs. Reduce corporate tax rates for overseas businesses, it urged. According to the statement, this would bring tax rates for foreign businesses, including banks, into line.

Direct taxes including income tax, capital gains tax, and securities transaction tax, it should be emphasized. On the other side, indirect taxes are imposed on all final users of any goods or services, such as GST, Customs Duty, or VAT.
In regards to capital gains tax, USISPF advised the FM to look into coordinating holding times and rates across various instruments.

Additionally, it stated that the Finance Minister should let Foreign Portfolio Investment (FPI) from investments in securities benefit from the favorable tax environment.

The USISPF also brought up tax incentives for some industries, such as renewable energy and health-related R&D.

The forum demanded clarification on “customs duty exemptions provided to oil and natural gas companies, reduction in customs duty rates for x-ray machines from 10% to 7.5% and providing customs duty exemption on all items imported by specified research and development units” in relation to indirect taxes.

Additionally, it stated that the Finance Minister should reverse the increase in customs duties on nutritional products.

The forum made the following suggestions about customs tariffs:

a) Clarifying unclear language in the Customs Tariff Act

b) An extension of concessional customs duty to advanced biofuel projects, and

c) Strengthening the process on the ground with respect to trade facilitation schemes like CAROTAR and Faceless Assessment.