MUMBAI (Reuters) - Investors in India are bracing for higher taxes and less incentives from the government's annual budget to be unveiled on Feb. 1 as the focus shifts to wringing out revenues to finance giveaways and higher public investments to support the economy.
Detailed below are the main expectations of measures that could impact markets:
GUIDELINES FOR GENERAL ANTI AVOIDANCE RULES (GAAR)
- Government set to announce detailed guidelines behind GAAR, which will be implemented starting on April 2017
Also Read
- GAAR is meant to crack down on tax havens, making it harder to claim some tax exemptions
- Key clarification awaited is whether GAAR will take precedence over individual tax treaties, including Singapore and Mauritius
TAXES UNDER INDIRECT TRANSFER RULES
- Government expected to say whether foreign portfolio investors, private equity funds and venture capitals are liable to pay indirect transfer taxes
- Confusion created after tax department said in December such investors could be liable to pay taxes if more than 50 pct of a fund's or investment vehicle's assets are based in India under some conditions
- Tax department also said indirect transfer tax could be charged under certain ownership and investment levels
MASALA BONDS WITHHOLDING TAX
- Government may keep in place a 5 percent withholding tax paid by issuers on "masala" bonds, or rupee-denominated debt sold overseas, despite some lobbying for its removal
SECURITIES TRANSACTION TAX ON EQUITY MARKETS
- STT on futures and options may rise for second year in a row from current levels of 0.05 percent for every 10 million trades, which rises for bigger transactions.
REDUCE TIME PERIOD FOR CAPITAL GAINS EXEMPTIONS
- Reduce threshold for tax exemptions for capital gains
- Currently investments sold after at least a 12-month holding period are exempt from taxes, while anything below that is taxed at up to 20 percent of the gains.
(Reporting by Rafael Nam; Editing by Kim Coghill)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
