Kaushik Mukerjee wanted: Clear laws on taxation of cloud computing

We expect implementation of the Shome Committee recommendations on GAAR in the fine print, deferral and toning down the rigour. Shome Committee has also given its recommendations on the capital gains tax on indirect transfer (Vodafone tax issue).

The world at large is eagerly expecting the roll back of the tax – at least its retroactive application. Additionally, pragmatic clarification of the law would bring about certainty in its application.

On a positive angle, the Government should look at providing tax benefits to contract R&D, investment allowance benefits, focus on infrastructure sector.

SEZs should not be subject to MAT. Given the rise in the MAT rate, the limit on the period for MAT credit should also be removed.

Further, the Government should bring in clear laws on taxation of new business concepts such as cloud computing.

Increase in the tax rates does not necessarily bring about high growth. It would therefore be good if the tax rates are not raised – for corporates or individuals.

Additionally, taxing the rich is not likely to be a money-spinner for the Government – so will be inheritance tax.

On the personal tax front, concerns of the middle class should be addressed. The basic exemption threshold should be increased to Rs 3 lakh.

Given the high rates, deduction of housing loan interest should be doubled to Rs 3 lakh.

Senior citizens should be allowed to deduct medical expenses from income (in addition to mediclaim premium).

(The author is Executive Director, Tax & Regulatory Services, PwC India)

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