Budget 2017: Four taxes that should be lowered or abolished

Equalisation Levy 

Backdrop: India was among the first nations to introduce such a levy; recently for service tax, too, it was made mandatory for foreign companies to register in India; it is expected that more services will be brought into the ambit of EL this Budget. 

Points to Ponder: With digital proliferation in India rapidly increasing, is it the right time to expand the scope of EL; is the levy justified on the principle that companies should pay tax where their customers are; with several Indian companies providing services globally, will other countries follow suit and will this hurt Indian businesses; with the levy being expanded to B2C services, will it increase costs to end users? 

General Anti-Avoidance Rule (GAAR) 

Backdrop: Proposed to come into force on April 1, 2017. 

Points to Ponder: Are we ready for GAAR; is the administration ready, will it appreciate the nuances or will it become a tool for harassment; considering several other measures, like Treaty changes, do we need GAAR now; what are the global best practices and learnings; what are the safeguards needed; what should international investors look out for; how should Indian industry prepare for it? 

Taxing Investments in Startups 

Why it's a bad idea: It is a provision that hurts more than it benefits; out of sync with reality of how investments are made in the startup ecosystem; unfair to levy only on private companies and exempt listed companies where manipulation is higher; unfair to levy only on resident investments; goes against the government's startup focus; leaves huge amount of discretion with revenue officers on vexed issues like valuation which is against ease of doing business mantra. 

Backdrop: With surcharge and cess, rates in India are among the highest. 

What should be done: Urgent need to calibrate and bring the rate down; most exemptions have been taken away in any case, and hence, lowering should be hastened and not spread out over 4 years; at the same time, critical exemptions like SEZs and infra-related should continue; need to balance tax as an impetus to investment and revenue mobilisation; immediate reduction across the board an imperative to counter demonetisation effect; minimum alternate tax (MAT) rates also need to be rationalised. 

As tax season is round the corner we thought of sharing some fun stuff on the subject with you peeps.

From a penalty on growing beards to fees for cow farts, here are nine bizarre taxes that acutally existed.

Source: ETwealth