The Income Tax Gambit To Ramp Up India's Growth

(MENAFN- Live Mint) The new income tax bill must align with global best practices to attract foreign investment, support domestic businesses, and benefit individual taxpayers, experts said as India's tax Regime prepared for a major overhaul.

Global best practices should include those on investment incentives for venture capitalists, a threshold-based approach for MSMEs-similar to models in the UK and US-and measures to modernize tax administration, tax experts said.

The Union cabinet approved the income tax bill on 7 February to replace the existing law, and it is expected to be tabled in Parliament today.

“With India's growing role in the global economy and the increasing relevance of digital transactions, it would be difficult for the country to ignore international best practices,” said S.R. Patnaik, head, taxation at Cyril Amarchand Mangaldas.“We are certain the new Act will align with global standards and India's economic commitments.”

Sudhakar Sethuraman, partner at Deloitte India, agreed that adopting global best practices in tax administration and policy will enhance India's competitiveness.“A balanced approach will modernize the tax system, incentivize investments, and boost job creation,” he added.

Also read | Cabinet okays bill to replace Income Tax Act, may be tabled in parliament soon

Sethuraman further suggested that the new bill should incorporate incentives for angel investors and venture capitalists investing in startups. These could include tax exemptions on capital gains or a reduction in the minimum holding period to make startup investments more attractive.

“R&D tax credits or incentives for startups engaged in research and innovation-similar to what is offered in countries like the US and the UK-can be considered,” he said. Additionally, he emphasized the need for tax incentives in sustainability-driven industries.

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