Financial Daily from THE HINDU group of publications
Tuesday, Dec 09, 2003
Financial Daily from THE HINDU group of publications Tuesday, Dec 09, 2003 |
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Industry & Economy
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Industry Associations GMCI for changes in transfer pricing norms Our Bureau
Bangalore , Dec. 8 THE Greater Mysore Chamber of Industry (GMCI) has asked the Government to make changes in transfer price norms to avoid litigations. In a pre-budget memorandum presented to the Finance Ministry, GMCI's Chairman for direct taxation committee, Mr K.R. Girish, said customs valuation procedure and transfer pricing norms should be synchronised to end increasing litigation. Mr Girish said there are no specific guidelines in transfer pricing regulations to deal exclusively with cost sharing arrangements. Hence, it is necessary to introduce a specific rule in the Income Tax Rules for dealing with such transactions. The approach for establishing the arm's length price should also be specified. Mr Girish said clear provisions dealing with the taxability of e-commerce transactions should be enacted to avoid litigations. The Government should also issue clarifications with respect to withholding taxes on payments made on purchase of software used as a tool in own business and not for the purpose of any commercial exploitation. Mr Girish said the Income Tax Act should be amended to provide for tax exemption with respect to transfer from the Indian holding company to its 100 per cent foreign subsidiary. He said anomaly regarding provisions relating to issue of shares on proportionate basis should also be removed. He said the Government should issue a note that respective companies should decide on who will discharge the borrowings if all operating assets and liabilities get transferred to the resulting company. Indexation benefit should also be allowed for the period when the shares were held in the demerged company or the amalgamating company. Mr Girish said the Government should remove surcharge and reduce tax rate for companies and partnership firms. He said the corporate tax should be made uniform and pegged at 30 per cent. The Government should also abolish or at least exempt the dividend distribution tax payable within group companies. The memorandum said the wealth tax should be removed completely or amended with respect to vacant industrial lands held by industrial units. The Government should also bring out guidelines on how foreign tax credit can be availed. The memorandum suggested removal of disparity between banks and other financial institutions and non-banking financial companies with regard to the deductions allowed in respect of provision for bad and doubtful debts.
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