Rationalise, simplify taxes in India, urges US industry

Washington: Ahead of the annual budget presentation, an India-centric top US strategic and business advocacy group has urged Union Finance Minister Nirmala Sitharaman to simplify and rationalise direct and indirect taxation system in India, a move it believes would increase the confidence of global investors and yield greater foreign direct investment.

Direct taxes can be in the form of income tax, capital gains tax or securities transaction tax, while indirect taxes such as GST, Customs Duty or VAT are levied on all end-consumers to buy any goods or services. "Rationalise corporate tax rates for foreign companies," said the US-India Strategic and Partnership Forum (USISPF) in its submission to the finance ministry ahead of the annual budget presentations on February 1.

It said that the rate for foreign companies, including banks be reduced to bring parity and sought to rationalise tax for new manufacturing companies. Urging India to simplify capital gain tax reforms, USISPF sought harmonising holding periods and rates of different instruments.

"Reiterate India's commitment to the global tax deal," it said and urged the Union Finance Minister to extend the concessional tax regime to Foreign Portfolio Investment (FPI) from investment in securities. USISPF has also suggested tax incentives to specific sectors like renewable energy and R&D investment in the health sector.