The Budget may announce a different tax regime for the recently introduced new form of business structure in India, limited liability partnership (LLP), which is a hybrid of the characteristics of companies and partnership firms.
The Budget may have tax provisions for new business entities registered as LLPs, but may skip them for existing companies and partnership firms that get converted into the business structure, sources said.
Company Affairs Minister Salman Khurshid said: "The indications we have are that it (tax regime for LLPs) should be resolved in the Budget session... The whole idea is to make it attractive for people as it is entirely a new concept in the country."
He said the tax structure would be one way of luring people towards the new form of business.
Officials of the ministry have been in dialogue with their counterparts in the Finance Ministry to press for a pass-through mechanism, which means that tax liability should be on partners in an LLP and not on the entity itself.
However, the Finance Ministry has not given indication on having new provisions for existing companies converting into an LLP or whether they will get capital gains tax waiver.
