India: Tax measures in budget 2016

India: Tax measures in budget 2016

The Finance Minister on 29 February 2016 presented the Union Budget 2016. Among the tax measures included in the budget are measures to:

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  • Repeal of certain corporate incentives that currently have the effect of reducing the corporate tax rate
  • Implement under the OECD base erosion and profit shifting (BEPS) project a three-tiered transfer pricing documentation requirement for corporate taxpayers satisfying a threshold amount of turnover
  • Provide a concessional tax rate of 10% on income from royalties earned by resident taxpayers from patents
  • Impose a new income declaration program, whereby taxpayers must disclose and legitimise assets and income and pay tax on previously undisclosed amounts
  • Provide for equalisation of the taxation of digital or e-commerce transactions that currently escape India’s tax reach
  • Revise the rules for taxation of retirement benefits, to allow for partial tax at the time individuals seek to withdraw amounts from provident and superannuation funds
  • Impose an additional 10% surcharge tax on taxpayers earning more than INR 1 million from dividends and a higher surtax for individuals earning more than INR 10 million from dividends.
  • Continue towards the long-awaited goods and services tax (GST) regime
  • Realign customs and excise tax (duty) rates in order to boost domestic manufacturing
  • Broaden application of the service tax, by removing exemptions for specified legal services, construction services for metros, certain types of passenger transportation

In general, the proposed amendments relating to direct taxes would apply from Assessment Year 2017-18. The changes in the rates of central excise and customs duties would be effective. The changes to the service tax provisions would be effective either on the enactment of the Finance Bill, 2016, or from 1 April 2016, or from a date to be subsequently provided.

 

Read a 2016 report [PDF 865 KB] prepared by the KPMG member firm in India: Union Budget 2016

Additional information about the Union Budget 2016 is provided on a dedicated webpage of KPMG in India.

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