GST, corporate tax, eKYC announcements: What India Inc. can expect from Budget 2019

gst-e1435153544567.jpg

Reduction of corporate tax, angel tax exemptions, GST amendments, fintech promotion and clarity on eKYC are few announcements that Indian businesses are keenly looking forward to when Arun Jaitley presents an interim budget on 1 February.

Here is what to expect from the interim financial budget which will be presented by Arun Jaitley on 1 February 2019.

Reduction of corporate tax

Finance Minister is expected to make the announcement of bringing corporate tax down to 25 percent for all the companies. Presently, it is 30 percent for companies having a turnover of more than Rs 250 crore, and 25 percent for companies with annual turnover within Rs 250 crore. In addition, there are other taxes like dividend distribution tax (DDT) and minimum alternate tax (MAT), which are applicable in particular cases.

The Confederation of Indian Industry (CII) has demanded a reduction in the corporate tax, stating that, “tax rate on all corporate taxpayers should be reduced to 25 percent unconditionally, without any turnover criteria, and brought down to 18 percent in a phased manner.” Also, the Finance Ministry is under pressure to keep India’s corporate tax structure globally competitive after the US administration in 2018 declared the greatest corporate tax rate cut in the American history, reducing it from 35 to 21 percent.

Clarity on e-KYC

The government has taken colossal endeavors to advance ‘Digital India’ yet there is much space for development. After the Aadhaar decision, the service industry is looking for greater clarity in the e-KYC process.

A strategy framework and spending allotment for the appropriation of the Electronic National Automated Clearing House (e-NACH) and DigiLocker will also give impetus in further helping the digital businesses in on-boarding new customers, which at the moment is challenging for many companies, particularly those in telecom, banking and finance.

GST amendments

The GST exemption threshold was recently doubled by the government from Rs 20 lakh to Rs 40 lakh. It is now expected that further amendments would be introduced to create a better GST uniformity and structure, across all sectors in India. “We expect the government to unveil several steps in the upcoming budget including a possible provision of value-added services like marketing fees, advertising and other such promotions under a progressively lower GST tax structure,” said Satya Prabhakar, CEO of online commerce portal Sulekha.

The government can also consider increasing online accounting and online tax calculation procedures for thousands of MSMEs who will benefit from an easy compliance regime, he added.

Tax exemption for startup investors

Indian Software Product Industry Round Table (iSPIRT), a think tank for India’s software industry, recently expressed concerns about the angel tax (30.9 percent tax levied on investments made by external investors in startups or companies) in a letter to the Prime Minister on behalf of Indian startups titled Grave situation facing startups on the Section 56 (2)(viib) “Angel Tax”.

Indian entrepreneurs and investors are therefore keenly looking forward to this year’s interim budget. In fact, Commerce and Industry Minister Suresh Prabhu also recently approved a notification related to a clause to make allowances for angel investors and make changes in the section 56 of the IT Act.

Fintech committee

According to a NASSCOM report that came out last year, the total transaction value across fintech organizations has been assessed to be to cross USD 73 billion in 2020, developing at a five-year CAGR of 22 percent since 2016.

Arun Jaitley announced in 2018 the setting up of a fintech committee under the finance ministry to help the development and advancement of the Indian fintech space and he may finally give a nod to it. Recently also, RBI stated that it is working on creating norms to allow multiple private entities to set up payment systems and encourage competition.

Source : http://www.cio.in/feature/gst-corporate-tax-ekyc-announcements-what-india-inc-can-expect-budget-2019

Leave a Reply

Your email address will not be published.

Solve this and then Post comment *

scroll to top