What is there Ease of Doing Business in India Post Budget 2020?

Last Updated at: February 28, 2020
230
What is there Ease of Doing Business in India Post Budget 2020?

This post is written by Ajinkya Metangley

 

India has become a favoured investment destination by being accountable, transparent, and logical. International companies find ease in parking their funds in education, healthcare, and the fin-tech sector. An NRI can invest in securities in mining, alcohol brewing, agriculture, industrial explosives, power, hazardous chemicals, transport, insurance, drugs & pharmaceuticals, industrial parks, and NBFCs sectors, etc. Here, the approval of the RBI is not required.

Here we are highlighting some points that will showcase the ease of doing business.
  1. Now, India occupies 63rd rank among 190 countries in the World Bank’s ease of doing business ranking 2020 report.
  2. Completing the procedures required to build a warehouse now costs only 4% of the warehouse value. Today only six nations in the world score better than India’s 14.5 out of 15 on this index.
  3. Importing and exporting became easier for companies for the fourth consecutive year. Thanks to the constructive efforts of the government, our country occupies 68th rank globally. The time needed for the logistical processes for exporting and importing goods has been significantly reduced.
  4. Moving over to Resolving Insolvency rankings, the current ranking of our country is 52nd. In the index of Logistics Performance, its international ranking has been elevated by 10 points.
  5. Dividend Distribution Tax is to be removed. The dividend shall be taxed at the hands of the recipients.
  6. To boost investments and shore up the lagging economy, corporate tax for existing companies slashed to 22 percent. Govt proposes a 100% tax concession to sovereign wealth funds on investment in infra projects. Moreover, the concessional tax rate of 15 percent extended to power generation companies.
  7. Moreover, the ‘zero effect, zero defect’ manufacturing policy would be the icing on the cake, as the model, aims to achieve high-quality manufacturing that’s also green.
  8. The government has made an outlay of Rs 10,000 crore over the next three years to incentivize the purchase of electric vehicles. Tax benefits are also been declared to develop the manufacturing and purchase of electric vehicles.
  9. An allocation of Rs 8,000 crore will be made for National Mission on Quantum computing and Technology.
  10. Nirvik (Niryat Rin Vikas Yojana) scheme to implement enhanced insurance cover and decrease the premium for small exporters.
  11. ’Vivad se Vishwas’ scheme announced by Sitharaman for direct taxpayers whose appeals are pending at various forums. 4.83 lakh direct cases pending in several appellate forums. Under the scheme, the taxpayer pays the only amount of disputed tax. They will get a complete waiver on interest and penalty if the scheme is availed by March 31, 2020.
  12. One of the most demanded changes by the startup ecosystem has been in the ESOPs taxation policy, as this is a key incentive for startups in attracting top talent. Sitharaman showed this in her speech, “During their formative years, startups generally use Employee Stock Option Plan (ESOP) to attract and engage extremely talented employees. ESOP is a notable segment of compensation for these employees,”

Currently, ESOPs are taxable at the time of exercise as well as the time of sale. This leads to a cash-flow issue for employees does not sell shares directly and continue to hold them over a long time “To give a boost to the startup ecosystem, I intend to reduce the strain of taxation on the employees by deferring the tax payment by five years or till they leave the company or when they sell their shares, whichever is most advanced,” the finance minister added.

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  1. INR 27,300 Cr has been allocated for the development and promotion of industry and commerce for the year 2020-21. The government will set up an Investment Clearance Cell portal to offer “end to end” facilitation and support to boost the support ecosystem and funding prospects for such startups, including pre-investment advisory, and facilitate clearances.
  2. To encourage India’s domestic manufacturing and attract huge investments in the electronics value chain, the FM proposed a scheme centred on supporting the manufacture of mobile phones, electronic equipment, and semiconductor packaging. The scheme is expected to be adapted for manufacturing medical equipment.
  3. Sitharaman said that the app-based invoice financing platform for MSMEs will be launched so that such small and medium businesses can avail of benefits from financial services providers based on these invoices.

Further, to reduce the compliance strain on small retailers, traders, and MSME sector as well as the assessment challenges for the income tax department, the government has suggested to increase the auditing threshold for MSMEs from INR of Rs 1 Cr in turnover to INR of Rs 5 Cr. While this is a welcome move, only a few MSMEs would be able to avail of these benefits. The reduced compliance burden would pertain to only those MSMEs that accomplish less than 5% in cash.

 

 

0

What is there Ease of Doing Business in India Post Budget 2020?

230

This post is written by Ajinkya Metangley

 

India has become a favoured investment destination by being accountable, transparent, and logical. International companies find ease in parking their funds in education, healthcare, and the fin-tech sector. An NRI can invest in securities in mining, alcohol brewing, agriculture, industrial explosives, power, hazardous chemicals, transport, insurance, drugs & pharmaceuticals, industrial parks, and NBFCs sectors, etc. Here, the approval of the RBI is not required.

Here we are highlighting some points that will showcase the ease of doing business.
  1. Now, India occupies 63rd rank among 190 countries in the World Bank’s ease of doing business ranking 2020 report.
  2. Completing the procedures required to build a warehouse now costs only 4% of the warehouse value. Today only six nations in the world score better than India’s 14.5 out of 15 on this index.
  3. Importing and exporting became easier for companies for the fourth consecutive year. Thanks to the constructive efforts of the government, our country occupies 68th rank globally. The time needed for the logistical processes for exporting and importing goods has been significantly reduced.
  4. Moving over to Resolving Insolvency rankings, the current ranking of our country is 52nd. In the index of Logistics Performance, its international ranking has been elevated by 10 points.
  5. Dividend Distribution Tax is to be removed. The dividend shall be taxed at the hands of the recipients.
  6. To boost investments and shore up the lagging economy, corporate tax for existing companies slashed to 22 percent. Govt proposes a 100% tax concession to sovereign wealth funds on investment in infra projects. Moreover, the concessional tax rate of 15 percent extended to power generation companies.
  7. Moreover, the ‘zero effect, zero defect’ manufacturing policy would be the icing on the cake, as the model, aims to achieve high-quality manufacturing that’s also green.
  8. The government has made an outlay of Rs 10,000 crore over the next three years to incentivize the purchase of electric vehicles. Tax benefits are also been declared to develop the manufacturing and purchase of electric vehicles.
  9. An allocation of Rs 8,000 crore will be made for National Mission on Quantum computing and Technology.
  10. Nirvik (Niryat Rin Vikas Yojana) scheme to implement enhanced insurance cover and decrease the premium for small exporters.
  11. ’Vivad se Vishwas’ scheme announced by Sitharaman for direct taxpayers whose appeals are pending at various forums. 4.83 lakh direct cases pending in several appellate forums. Under the scheme, the taxpayer pays the only amount of disputed tax. They will get a complete waiver on interest and penalty if the scheme is availed by March 31, 2020.
  12. One of the most demanded changes by the startup ecosystem has been in the ESOPs taxation policy, as this is a key incentive for startups in attracting top talent. Sitharaman showed this in her speech, “During their formative years, startups generally use Employee Stock Option Plan (ESOP) to attract and engage extremely talented employees. ESOP is a notable segment of compensation for these employees,”

Currently, ESOPs are taxable at the time of exercise as well as the time of sale. This leads to a cash-flow issue for employees does not sell shares directly and continue to hold them over a long time “To give a boost to the startup ecosystem, I intend to reduce the strain of taxation on the employees by deferring the tax payment by five years or till they leave the company or when they sell their shares, whichever is most advanced,” the finance minister added.

Get Legal Advice now
  1. INR 27,300 Cr has been allocated for the development and promotion of industry and commerce for the year 2020-21. The government will set up an Investment Clearance Cell portal to offer “end to end” facilitation and support to boost the support ecosystem and funding prospects for such startups, including pre-investment advisory, and facilitate clearances.
  2. To encourage India’s domestic manufacturing and attract huge investments in the electronics value chain, the FM proposed a scheme centred on supporting the manufacture of mobile phones, electronic equipment, and semiconductor packaging. The scheme is expected to be adapted for manufacturing medical equipment.
  3. Sitharaman said that the app-based invoice financing platform for MSMEs will be launched so that such small and medium businesses can avail of benefits from financial services providers based on these invoices.

Further, to reduce the compliance strain on small retailers, traders, and MSME sector as well as the assessment challenges for the income tax department, the government has suggested to increase the auditing threshold for MSMEs from INR of Rs 1 Cr in turnover to INR of Rs 5 Cr. While this is a welcome move, only a few MSMEs would be able to avail of these benefits. The reduced compliance burden would pertain to only those MSMEs that accomplish less than 5% in cash.

 

 

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