With the BJP-led National Democratic Alliance (NDA) set to win a clear majority in the 2014 general elections, it could rain tax reforms in the country in the coming months, say tax experts.
There is now likely to be fewer obstacles in pushing through legislative changes in Parliament for say ushering in a new direct taxes code or introducing goods and services tax, they pointed out.
For instance, getting a constitutional amendment done for enabling GST introduction may now be a breeze given the decisive mandate received by the NDA.
With the BJP manifesto stressing the need to deal with the “tax terrorism” and “uncertainty” unleashed by the UPA Government, there is now increased expectation that the retrospective taxation of indirect transfer of shares would be done away with during the NDA regime.
“A likely fallout of this decisive mandate for BJP is that the pace of execution of long-pending tax reforms would improve considerably. The retrospective amendment (on indirect share transfers) which dampened investment sentiment may now even be made prospective”, Girish Vanvari, Co-Head of Tax, KPMG in India said.
Besides promising a non-adversarial and conducive tax environment, the BJP manifesto for 2014 general elections had assured that the tax regime will be rationalised and simplified.
BJP also promised to bring on board all state governments in adopting GST, addressing all their concerns
A fractured mandate in the previous two general elections had thwarted the UPA’s attempts to bring about big ticket tax reforms like GST introduction or enacting a new direct tax code.
Ketan Dalal, Joint Tax Leader, PwC India said he expects the new dispensation at the Centre to address the concerns of international investors, who have been particularly badly impacted by a very aggressive approach of the taxman, and equally aggressive interpretations.
One expects the BJP-led NDA regime to usher in a liberal and taxpayer friendly tax regime, said G Ramaswamy, former President of the CA Institute.
“There is a need to review the entire direct taxes code proposed by the UPA Government”
M Lakshinarayanan, Managing Partner-Tax, Deloitte, Haskins & Sells said that the retrospective amendment on indirect transfer of shares had not only created an air of uncertainty in the tax law, but also created a perception that India was not a tax friendly jurisdiction.
“This in turn impacted the flow of overseas investments into India. It is imperative that the operation of this amendment be made prospective”
One of the key priorities for the new government would definitely be to change the perception of India as an investor unfriendly nation, he added.
.srivats.kr@thehindu.co.in