NRIs To Shell Out More Tax After Budget 2018

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Budget 2018
NRIs To Shell Out More Tax After Budget 2018
Apr 2018
In Green Homes
Riding on the spree of the structural reforms
such as the goods and services tax
implementation, IBC ecosystem demonetization,
massive bank recapitalization program and the
on-track growth rate, Union Budget 2018 becomes
the last full budget before the next general
elections.
MSME Sector
The Budget 2018 brings with it cheer to the MSME
sector in the form of reduced corporate tax rate
of only 25 for the companies with total turnover
up to Rs 250 Cr in Financial Year
2016-17. Start-ups Furthermore, to make the 100
tax holiday for start-ups more efficiently or
effectively, the budget proposes to actually
expand the scope of the eligible business to
include the scalable business model while having
higher potential of the employment generation as
well as the wealth creation against the recent
restriction to business being driven by the
technology or intellectual property. Companies
under distress, relieved Budget 2018 has
certainly bought smile to the rehabilitating
organizations under IBC by proposing that which
is unlike the other organizations which can
actually be set lower of past losses as well as
unabsorbed depreciation for the computation of
book profit subjects to MAT. The organizations
under IBC can set-off both, the past losses as
well as unabsorbed depreciation. Furthermore,
such organizations, change in the shareholding
wouldn't result in the lapse of the past tax
losses which basically are otherwise cased where
there is a change in the shareholding beyond
49. Complete tax neutrality to transfers inter
parent wholly owned subsidiary Presently, the
tax neutrality for transfers is available to the
transfer or the organization and not transferee/
recipient organization which is required to pay
the tax based on the fair value of the assets
received. These impacts adversely on the internal
group restructurings. In a welcome move, Budget
2018 proposes to exempt the recipient from tax as
well.
LTCG The biggest talking points in relation to
the budget 2018 in the introduction of 10
long-term capital gains tax for the no market
transfers of the listed securities for the gains
in excess to Rs 1 lakh. Provided that the buoyant
stock markets, this move certainly seems fair
from the perspective of government which will
certainly bring important gains made by the
investors in the tax net. Irrespective, this may
upset domestic and foreign investors in the short
run.
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Non-resident- the scope of taxable presence
widened
When it comes to taxing the digital economy,
India has been front-runner by introducing the
equalization levy. Taking a step further in this
direction, Budget 2018 has certainly widened the
scope of the taxable presence of the
non-residents by moving the physical presence
dominated nexus approaching the significant
economic presence nexus approach. This approach
will definitely be more effective if only the tax
treaties gear up for similar business models,
else, the taxpayers will take shelter under more
favorable tax treaty in comparison to the
domestic law. What the budget did miss Provided
that India has a huge appetite for the quality
infrastructure, Budget 2018 has not really
extended nay rationalization for infrastructure
sector like relaxation from newly introduced thin
capitalization rules which restrict the deduction
of the interest expense to borrow in specific
cases. Also, there is no relief for the fund
industry which was actually expecting some
rationalization. Similarly, dividend distribution
tax regime should have been replaced with the
dividend withholding the tax regime to make sure
seamless credit of such tax to investors which
aren't available in the present regime.
n g
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