24 Jan 2017
Doing Business in India
In the past year, the Government has taken steps toward creating non-adversarial, business-friendly and more governance-oriented financial and economic environment in India. Measures have also been taken to attract foreign investment, which include easing foreign direct investment (FDI) policy and extended cooperation with many countries (e.g. Japan, the US, etc.). Several schemes have been announced and implemented to address diverse social economic needs and gaps. The flagship schemes, which have already gained popularity, include ‘Make in India’. This scheme promotes manufacturing in India to boost job creation and skill enhancement, facilitate investment, foster innovation, protect intellectual property, and build best-in-class manufacturing infrastructure. Other schemes include smart cities, Digital India and Swachh Bharat Abhiyaan (Clean India leading cap). These schemes have opened up multifaceted opportunities for multinational corporations (MNCs) such as financial institutions, private equity firms, equipment suppliers, contractors and consultants.
On the tax front, the stated intent of the Government is to have a non-adversarial and conducive tax environment. To support this, the Government has introduced many reforms, including rollback scheme in Advance Pricing Agreement, the strengthening of the Authority for Advance Ruling by the introduction of additional benches, a conducive tax regime for infrastructure investment trusts and real estate investment trusts, the setting-up of a high-level committee to scrutinize fresh cases of indirect transfers arising from retrospective amendments of 2012, conclusive steps to introduce a Goods and Service Tax (GST) law which will subsume at least 14 federal and state levies. The new Government has recently introduced black money law to tackle undisclosed overseas income and assets.
With policies being liberalized and reformulated for ease of doing business in India, tangible steps have been taken to tackle treaty shopping, retrospective taxation, etc. Recently India has signed an intergovernment agreement with US authorities to implement the Foreign Account Tax Compliance Act toward increased transparency between the two countries on tax matters.
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