Money & Banking

Treat NBFCs on par with banks on tax treatment: says Kanoria

K. R. Srivats New Delhi | Updated on February 19, 2015 Published on February 19, 2015

The upcoming budget should align the tax treatment of non-banking finance companies (NBFCs) with those available for banks, Sunil Kanoria, Vice Chairman, SREI Infrastructure Finance Limited has said.

It should in particular eliminate tax deduction at source (TDS) on equated monthly instalment (EMI) revenue streams of NBFCs, Kanoria said here on Thursday.

“When the EMIs received by banks are not subjected to TDS, there is no justification for the EMI payments received by NBFCs to get taxed at source. Such a treatment affects the margins of NBFCs”, Kanoria, who is also President-elect of Assocham, said.

Kanoria also felt the upcoming budget should be public-investment led so as to initiate the investment cycle.

Most entrepreneurs (private sector) had “no risk appetite” and were in no position to pump in capital for atleast next two years, he said. “People are not willing to take construction risks. Most investors would rather prefer brownfield investments which throw up good cash flows.”

Kanoria also said the upcoming budget should usher in clarity and simplicity in tax laws. The main problem is that of tax administration not being efficient.

For foreign investors, taxation continues to be a key risk in India, he said, adding that tax administration needed to be more effective so as to gain confidence of investors.

The main problem in India is not about policy, but more about effective implementation, Kanoria noted.  India should also have “strong bankruptcy rules” if the country’s financial system is to be protected, he said.

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Published on February 19, 2015
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