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Pre-budget expectations: Union Budget 2019

Consumer

In the run-up to Union Budget 2019, the cabinet committees have been set up to address the focus areas of growth and job creation across sectors. Expectations are rising to bring in reforms aimed at creating a tax and business friendly regime and enhancing foreign investments. Join us as our experts share their views around pre-budget expectations.

The country is pinning a lot of hopes on the newly elected government and the industry expects the new leadership to boost the consumer sector and address pending tax issues through budgetary measures in the upcoming budget. Some of the key budget expectations of consumer industry are listed below:

  • Clarification regarding circumstances wherein LRD would constitute a PE since several distributors operate as LRD and are earning return in line with other third party distributors.
  • In view of the OECD’s public consultation document on digital economy, wherein market jurisdiction/ user participation is required to be considered for allocation/ attribution of profits (i.e., move from FAR to FAR+M approach), re-characterisation of AMP spend as an international transaction should be done away with.
  • Recognition of economic adjustments for consumer sector industries specifically for start-up companies due to underutilisation of capacity, use of market penetration strategies and higher marketing efforts, etc.
  • Prescription of requisite documentation for justification of royalty payment (brand royalty and technical royalty) in order to reduce litigation on account of disallowance
  • Introduction of safe harbour rates for manufacturers and distributors for selected consumer sector industries
  • In the wake of slow down of economy, measures to increase disposable income in the hands of consumers viz. increase in basic exemption limit, decrease in tax rate, increase in 80C limit and increase in standard deductions/ tax exempt allowances.
  • Extension of section 10AA benefit/ introduction of new export benefit to promote and accelerate exports from India.
  • Higher depreciation for large capital expenditure to incentivise growth of capital formation in the country and boost “make in India” initiative of Government. Incentives relating to investments such as section 32AC should be extended.
  • Allow deduction of entire carried forward losses or at least the higher of book losses or unabsorbed depreciation to all the loss making companies falling under MAT.
  • Enhance current deduction threshold of Rs. 25,000 under 80JJAA to say Rs. 50,000 per month to boost employment generation.
  • Introduction of tax incentive/ rebate (under direct and indirect taxes) for consumers scrapping vehicles registered prior to year 2000 (when emission norms were introduced).
  • Restore weighted deduction of 200 percent or continue deduction of at least 150 percent of R&D expenses considering ambitious plan of BS VI norms, electric vehicles, and to provide impetus to R&D in India.
  • Adequately address issues related to taxation of digital economy including withholding of taxes on e-commerce players to avoid protracted litigation. 

 

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