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Jaitley Delivers India's 2017-18 Budget

by Mary Swire,, Hong Kong

03 February 2017

On February 1, 2017, India's Finance Minister, Arun Jaitley, presented the country's Budget 2017-18, which contains several proposals aimed at simplifying and rationalizing the country's direct tax regime.

The Budget proposes to halve the existing personal income tax rate of ten percent for taxpayers earning an annual income between INR250,000 (USD3,713) and INR500,000. A new surcharge of ten percent of tax payable is proposed on individuals whose annual taxable income is between INR5m and INR10m, while the current surcharge of 15 percent of tax payable is retained for those earning more than INR10m.

The Budget proposes to introduce a simple one-page income tax return for individuals with taxable income (other than business income) of up to INR500,000.

The Budget also reduces the income tax rate for smaller companies with an annual turnover of up to INR500m to 25 percent.

Last, the Budget contains a range of proposals in the area of international tax law, including new rules on secondary transfer pricing adjustments, new interest deductibility rules to implement the recommendations contained in Action 4 of the base erosion and profit shifting project, and other changes to domestic transfer pricing provisions. The Budget also proposes to exempt Category I and II foreign portfolio investors from indirect transfer provisions and deletes the requirement for offshore funds to maintain a minimum fund size in the year in which the fund is being wound up to benefit from the special tax regime for offshore funds.

The Budget does not propose detailed changes to current indirect tax regime as it is intended to soon be replaced by a new goods and services tax regime.

TAGS: individuals | tax | business | India | tax avoidance | tax incentives | interest | law | ministry of finance | tax authority | offshore | professionals | legislation | transfer pricing | tax rates | tax reform | legislation amendments | trade | services | Tax | BEPS

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