US-India Tax Forum Pushes for Tax Parity in 2024-25 Budget

The US-India Tax Forum has urged the government to equalize tax rates for domestic and foreign players in multiple sectors ahead of the 2024-25 Budget. The forum's recommendations include provisions for a stable tax environment to boost investments and simplify tax regimes.

The US-India Tax Forum has called on the Indian government to establish tax parity between domestic and foreign entities in the upcoming 2024-25 Budget. This recommendation, forwarded through the US-India Strategic Partnership Forum (USISPF), aims to level the playing field in sectors such as banking, where foreign banks' branches face higher taxes.

Launched on February 25, 2020, the Tax Forum acknowledged global trends towards a minimum tax deal and stressed the need to rationalize corporate tax rates. The forum submitted its recommendations to the Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, ahead of the Budget presentation on July 23. The US-India Tax Forum, comprising around 350 member companies, serves as a premier platform for Indian policymakers, global tax experts, and the business community to discuss and advocate for a conducive tax environment to attract investments.

The forum underlined the importance of a stable and predictable tax environment to boost investment sentiment. An investment-led growth strategy is essential for India's economic growth, necessitating measures to enhance ease of doing business, rationalize costs, and simplify tax rates and tariffs. Among its top recommendations is the simplification of the withholding tax regime, as well as the rationalization of Tax Deducted at Source (TDS) and Tax Collection at Source (TCS) provisions.

Tarun Bajaj, Chairperson of the US-India Tax Forum and former Revenue Secretary, emphasized that the forthcoming budget is expected to build on previous reforms. Key areas of focus include direct taxes, customs policies, corporate tax structures, investment incentives, and customs procedures.

USISPF President and CEO Dr. Mukesh Aghi echoed these points, stating that multinational corporations expect the 2024-25 Budget to prioritize stable tax policies and substantial infrastructure investments. Furthermore, the forum advocated for significant reforms in the capital gains tax structure and the rationalization of customs duty rates to enhance India’s competitiveness globally.