Corporate Tax to be Reduced and GST to be Implemented;
Gaar Deferred by Two Years
The Finance Minister Shri Arun Jaitley said that to give a fillip to growth, investment and promotion of domestic manufacturing and ‘Make in India’, aiming at job creation, a series of measures are included in the budget. In his Budget Speech in the Lok Sabha here today, Shri Jaitley said Tax ‘pass through’ is proposed to be allowed to both Category-I and Category-II Alternative Investment funds, so that tax is levied on investors in these funds and not on the funds per se.
The Finance Minister Shri Jaitley said the measure will step-up the ability of these funds to mobilize higher resources and make higher investments in small and medium enterprises, infrastructure and social projects and provide the much required private equity to new ventures and start-ups. He also said the Permanent Establishment (PE) norms are to be modified to encourage offshore fund managers to relocate to India. The modification will be to the effect that mere presence of a fund manager in India would not constitute PE of the offshore funds, as this is resulting in adverse tax consequences currently.
The Finance Minister also announced deferment of the General Anti Avoidance Rule (GAAR) by two years to accelerate the momentum of investment sentiment in the country, which he said, has turned positive now. Further, to facilitate technology inflow to small businesses at low costs, the rate of income tax on royalty and fees for technical services is to be reduced from 25% to 10%. Another step for boosting employment opportunities announced is that all business entities will be eligible for the benefit of deduction for employment of new regular workmen of 50 rather than 100 employees.
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