US-India Tax Forum Proposes Key Tax Reforms Ahead of Union Budget 2025

Last updated: 18 January 2025

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Ahead of India's Union Budget 2025, the US-India Tax Forum has submitted a set of recommendations designed to simplify the country's tax system and encourage investment. The proposals cover both direct and indirect taxes, with a particular focus on sectors like manufacturing, renewable energy, and healthcare. Key suggestions include streamlining Tax Deduction at Source (TDS) rates, aligning tax rates for foreign banks, and offering concessional dividend tax for Foreign Portfolio Investors. The forum also advocates for simplifying customs tariffs and introducing reforms for the healthcare and digital service sectors to foster a more investor-friendly environment.

Ahead of the Union Budget 2025, the US-India Tax Forum, under the US-India Strategic Partnership Forum (USISPF), has put forth recommendations aimed at simplifying India's tax framework and boosting investor confidence. The proposals span direct and indirect taxes, focusing on fostering growth in critical sectors like manufacturing, renewable energy, healthcare, and digital services. Key Recommendations on Direct Taxation Streamlining TDS Rates: The Forum recommends reducing the Tax Deduc

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FAQ :

The main goal is to simplify India's tax framework, boost investor confidence, and foster growth in critical sectors ahead of the Union Budget 2025.

Recommendations include reducing TDS rates to two or three, aligning tax rates for foreign bank branches with domestic ones, and introducing a 10% concessional tax rate on dividends for Foreign Portfolio Investors (FPIs).

The forum suggests extending concessional tax rates for greenfield manufacturing beyond March 2024 and introducing a 15% tax rate for Maintenance, Repair, and Overhaul (MRO) firms.

Key indirect tax proposals include simplifying customs tariffs with a three-rate structure (0%, 5%, and 10%) and reducing tariffs on life-saving drugs.

The forum recommends expanding Safe Harbor provisions for transfer pricing, streamlining the Advance Pricing Agreement (APA) process, and allowing multiple hearings for businesses with complex structures.

The forum advocates for tax exemptions on dividends and financial transactions within GIFT City to help establish it as a global financial hub.

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CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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