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India Union Budget 2020-21 - Live Updates

01 February 2021

Faceless seems to be the thrust in addressing tax disputes. With a tax law, not yet simplified to the desired extent, it remains to be seen whether the faceless dispute resolution committee and faceless tribunal would reduce litigation.- Partner & Leader/ Tax & Regulatory Services


Keeping all the 6 pillars in mind (1) Health & well-being (PM Atmanirbhar Swasth bharat yojna), (2) Physical and Financial Capital and Infrastructure (Capital Expenditure outlay increased to INR. 5.54 lakh crores), (3) Inclusive development for Aspirational India (Rural infra development fund to be Increased to INR. 40000 crores and Micro irrigation fund doubled to INR. 10000 crores), (4) Reinvigorating human capital (More than 15000 schools to be strengthened to emerge as exemplary schools), (5) Innovation and R&D (Digital Payments – 1500 crores earmarked to promote digital mode of payments), (6) Minimum Government – Maximum Governance (Conciliation mechanism to be set up for contractual disputes to safeguard interests of foreign investors), the government has maneuvered a very difficult budget successfully. A detailed analysis of the fine print and meticulous implementation of the schemes will determine whether we are progressing towards a “V” shaped or a “K” shaped recovery. - Gunjan Prabhakaran, Partner & Leader/ Indirect Tax


The Finance Minister’s speech remains silent on amending any material tax rates giving a huge relief with respect of bringing a COVID Tax cess. The speech misses key tax expectations such as special consideration for COVID related expenses, introduction of new tax incentives for boosting manufacturing and consumer spending, rationalising tax rates for LLP, clarifying on issues arising on digital tax, etc. - Harry Parikh, Associate Partner/ Transaction Tax / Tax & Regulatory Services


Pre filled columns for dividend, capital gains income, interest from banks, post office etc. in the tax return will ensure accurate income disclosure by the assessee and will also save substantial time in preparing the tax return. - Anish Shah, Associate Partner/ Transaction Tax / Tax & Regulatory Services


The FM’s clarification on tax withholding on dividend payment to FPIs to be done after considering the tax treaty benefits is a welcome move as the current law is silent on this aspect - Nitesh Mehta Partner/  Transaction Tax / Tax & Regulatory Services  


Faceless ITAT, is going to be a game changer. It can release the stress in certain locations where the backlog of cases is more. A tax payer can now reach out to better consultants to manage their tax litigation. - Pradeep Kasthala, Partner / Tax & Regulatory Services


Allowability of treaty benefits to Foreign Portfolio Investors on dividend income will help in reducing the cash blockage, resulting in availability of additional funds available for disposal, augmenting the capital market. - Manoj Purohit, Partner and Leader/ FS Tax - Tax & Regulatory Services


Reducing the reopening of assessments from current 6 years to 3 years will help bring certainty to global investors and improve ease of doing business in India. - Partner & Leader/ Tax & Regulatory Services


DFI dedicated to infrastructure may help alleviate concerns of the industry regarding availability of long-term financing for infra projects. - Niranjan Govindekar, Partner / Tax & Regulatory Services


The proposed tax exemption to air craft leasing companies is a significant step towards realising the dream to make India a hub for aircraft leasing and maintenance units for aircrafts. - Niranjan Govindekar, Partner / Tax & Regulatory Services


The FM slashes timelines for re-opening of assessment by half and also gives a threshold of INR 50 lakhs for reopening only in specific cases. This can be huge for M&A deals where there is always an uncertainty on reopening of tax assessments and negotiating tax indemnities.- Harry Parikh, Associate Partner/ Transaction Tax / Tax & Regulatory Services


Customs Duties on Chemicals is calibrated to improve domestic value addition and remove inversions. BCD on Naptha reduced to 2.5% to remove inverted duty structure.

Over 400 Customs Duty Exemptions are to be reviewed and revised Duty structure is to be put in place, removing old and unnecessary exemptions identified through industry consultations.

PLI  proposed by the FM, is a major booster dose for the pandemic inflicted manufacturing industry.

Reduction in time for income tax proceedings from 6 years to 3 years is a huge relief and a welcome move to bring tax certainty.

- Gunjan Prabhakaran, Partner & Leader/ Indirect Tax


The FM has made a bold attempt by creating a Hexa pillar Budget to boost India Inc. in the pandemic hit economy. Targeted measures in the healthcare space should act as necessary inoculation for India's young workforce. Investment in the infrastructure sector, reducing regulatory forbearance, consolidation of regulations, implementing digitisation in several sectors should act as catalysts in improving India's rank in Ease of Doing Business. - Harry Parikh, Associate Partner/ Transaction Tax / Tax & Regulatory Services


To avoid multiple interpretation by different acts, consolidation of SEBI Act, SCRA and other laws pertaining to securities into a Securities Market Code is in line with the government’s earlier efforts to streamline complementing legislations for uniformity and efficiency in administration. Uniform regulator/ act has been the key pillar to provide ease of operation for business and enhance the confidence of the investors. - Manoj Purohit, Partner and Leader/ FS Tax - Tax & Regulatory Services


The divestment plan announced last year is the one which will be given effect to in the next year to generate funds. Which means that no additional divestment plan is contemplated. - Pranay Bhatia, Partner & Leader/ Tax & Regulatory Services


The Budget proposes a financial incentive to promote digital payments, this furthers the continued focus of the Government towards a less-cash economy. - Partner & Leader/ Tax & Regulatory Services


The Budget has rightfully recognised the new age gig economy including platform workers and made provision for benefits including insurance, minimum wages and health benefits. This should be coupled with a simplified compliance regime for aggregators and employers to make the delivery of benefits effective. - Suraj Malik, Partner, Transaction Tax / Tax & Regulatory Services


The proposal to have Stressed Asset Resolution ARC and Management Company can reduce the stress on the banks and can be a game changer. One will have to wait to see how effective this proposal will be – Nitesh Mehta Partner/  Transaction Tax / Tax & Regulatory Services 


Considering the increased capex focus, success of the government’s divestment plan will play a critical role – Partner and Leader, Transaction Tax / Tax & Regulatory Services,


More companies to be benefited in terms of lesser compliance due to an increase in the threshold of paid up capital and turnover for small companies – Anish Shah, Associate Partner/ Transaction Tax / Tax & Regulatory Services


Simplified regime for one person company will encourage start-ups and entrepreneurs to do business under a corporate structure in an organised and structured manner that can help them to scale and grow – Suraj Malik, Partner, Transaction Tax / Tax & Regulatory Services


Decriminalisation of offences under LLP regulations and enhancing thresholds and criteria for small company and one person company is yet another step by the government to improve ease of doing business in India – Nitesh Mehta Partner/  Transaction Tax / Tax & Regulatory Services  


An Institutional framework to buy investment grade corporate bonds along with new AMC to take up stressed debt from banks together would help in bringing in liquidity to debt markets and facilitate faster debt resolution for stressed assets. - Suraj Malik, Partner, Transaction Tax / Tax & Regulatory Services


“Increase in FDI limits from 49% to 74 % for the insurance sector is a welcome step and will help insurance companies to raise funds to ensure their solvency is maintained in line with growing business needs. This will also augment foreign inflows and help attract more foreign companies” - Manoj Purohit, Partner and Leader/ FS Tax - Tax & Regulatory Services


Enhancing FDI in the Insurance sector up to 74% will attract significant capital permitting Indian insurance companies to grow and also potentially aid the government’s divestment programme. - Suraj Malik, Partner, Transaction Tax / Tax & Regulatory Services


In addition to the PLI scheme, seven more textile parks announced under mega Investment Textile Park scheme - Gunjan Prabhakaran, Partner and Leader - Indirect Tax 


Consolidation of several securities laws into a single code will provide certainty and stability to deepen and strengthen Indian capital and debt markets. - Suraj Malik, Partner, Transaction Tax / Tax & Regulatory Services


“To ease access of finance and augment funds for the infra sector, the proposal of providing FPIs an entry into debt financing of REITs and InvITs will open up a large source of fresh funding for the infrastructure and real estate sectors. This will also open up a new avenue for FPIs to invest in a growing market like India.” - Manoj Purohit, Partner and Leader/ FS Tax - Tax & Regulatory Services


The current buoyancy in capital markets provides an ideal backdrop that can be leveraged for divestment and the proposed National Monetisation Pipeline for brownfield infrastructure projects. - Suraj Malik, Partner, Transaction Tax / Tax & Regulatory Services


Budget ‘Tablet’ with focus on six key pillars appears to be a well targeted booster dose pill for stimulating the economy. - Suraj Malik, Partner, Transaction Tax / Tax & Regulatory Services


Substantial push to Business Trusts by conversion of assets and opening the same for FPI will provide new channels for alternative funding. - Pranay Bhatia, Partner & Leader/ Tax & Regulatory Services


Special focus on Manufacturing will also assist in inviting FDI in this sector. - Pranay Bhatia , Partner & Leader/ Tax & Regulatory Services