Washington: For India to remain on track as a favourable investment destination and become a $ 5 trillion economy, it has to streamline taxation guidelines and improve GST compliance which will boost exports and increase growth, according to top India-centric American business advocacy groups.
US India Strategic and Partnership Forum (USISPF) has appealed to Finance Minister Nirmala Sitharaman to announce reduction and streamlining of various tax and tariff structures and open up the economy, arguing that it would bring the country on the path of fast track growth and create employment in large numbers.
“As businesses become increasingly digital, India’s digital taxation model needs to be globally aligned for the future,” USISPF said, adding that it has put forth industry recommendations to improve ease of doing business, tax guidelines, GST compliance, CSR spending and digital taxation framework.
In a series of recommendations ahead of the Union Budget 2020, USISPF urged Sitharaman to allow two per cent mandatory spend on CSR as a tax-deductible expense. Seeking to defer implementation of GST E-invoicing scheme until legal and technical challenges are addressed, USISPF recommended to include natural gas under the ambit of Goods and Service Tax.
USISPF asked Sitharaman to address trade barriers by resolving legislative and procedural challenges under the Customs Law and sought certainty in tax policies to foster positive investment sentiments. Recommending greater Ease of Doing Business in the insurance sector, it suggested that the FDI caps for insurance companies should be increased up to 100 per cent without additional restrictions on management control. Private equity funds should be allowed to hold more than 10 per cent of the paid up equity share capital of the unlisted insurance companies, it said, adding that the first preference for re-insurance sector should be amended.
US India Business Council, which comes under US Chambers of Commerce, recommended removing price controls in the media and entertainment sectors. “It’s time to promote the sector holistically, from pricing regulation to FDI limits, and ensure a competitive market that can promote innovation,” it said.
USIBC also recommended opening of India’s satcom market to achieve nation-wide connectivity and high-speed internet access. The Indian government efforts to increase broadband + 5G access made huge strides, and new communications technology will support digitalisation of the economy, it said.
Seeking reduction in tariffs on ICT products, USIBC said such a move will support India’s long-term manufacturing competitiveness and digital leadership. Lowering costs of intermediate and finished ICT goods will support ‘Make in India’ and attract companies moving supply chains out of China, it said.
USIBC has also recommended supporting India’s telecom sector by removing GST on license fees and spectrum usage charges. This would free up investment for 5G, service improvements and coverage in rural areas, it said. Setting GST for drugs ‘an essential item’ at a standard five per cent, with a zero per cent rate for life-saving drugs, it said will reduce costs for patients and support government’s efforts to improve access to affordable.
Seeking 100 per cent FDI in insurance sector to improve insurance coverage create a robust ecosystem at par with global markets, USIBC said that this will have positive impact on jobs, investment and skilling for Indian citizens thus help in making a USD5 trillion economy possible. Among other things, USIBC also recommended streamlining tax filing by automating first-line GST and transfer pricing reviews. “This would improve consistency and transparency, shorten tax review times and support India’s digital transformation,” it said.