Page 106 - economic_survey_2021-2022

80 Economic Survey 2021-22

Measures to boost investment

¾ To promote foreign investment and tax certainty, the retrospective part of the amendment
made by Finance Act 2012 regarding taxation of offshore indirect transfer of assets located
in India has been nullified by the Taxation Laws (Amendment) Act 2021 so as to provide
that no tax demand shall be raised in future on the basis of the said retrospective amendment
for any offshore indirect transfer of Indian assets if the transaction was undertaken before
28th May 2012. A framework has been notified specifying conditions under which
existing litigation on this issue can be settled. The amount paid/collected in these cases
shall be refunded, without any interest, on fulfilment of certain conditions. Removal of the
retrospective taxation on offshore indirect transfer of Indian assets signals the Government’s
resolve to ensure a non-adversarial tax environment.

¾ Incentives have been provided by Finance Act 2020 to encourage foreign investments of
Sovereign Wealth Funds and Pension Funds into the infrastructure sector of India. Finance
Act 2021 relaxed some of the conditions. Since January 2021, nine Sovereign Wealth Funds
and 14 Pension Funds have been notified to claim exemption.

¾ In order to incentivize start-ups, the eligibility for claiming tax holiday has been extended
for start-ups incorporated till 31st March 2022 by the Finance Act 2021. The capital gains
exemption for investment in start-ups has also been extended for one more year till 31st
March 2022.

¾ Various tax incentives have been provided for units located in International Financial
Services Centre (IFSC) in order to make it a hub for financial services in the world. IFSCs
provide Indian corporates easier access to global financial markets and promote further
development of financial markets in India. Further incentives have been provided in the
Finance Act 2021 like tax holiday on capital gains for aircraft leasing companies, tax
exemption for aircraft lease rentals paid to foreign lessor, tax incentives for relocating
foreign funds into IFSC and allowing tax exemption for the investment division of foreign
banks located in IFSC.

Promoting digital transactions

¾ It is the declared policy of the Government to encourage digital transactions and move
towards cash less economy. In furtherance of this objective, through the Finance Act 2021,
the monetary threshold of getting books of accounts audited has been increased to Rs 10
crores in case of businesses whose total turnover or gross receipts made in cash does not
exceed 5 per cent of the total turnover or gross receipts and the total expenditure including
purchases made in cash does not exceed 5 per cent of the total expenditure during the
previous year.

Measures undertaken to curb Tax Evasion and promote the widening of tax-base

¾ For widening the tax net of Tax Deduction at Source (TDS) and Tax Collection at Source
(TCS) several new transactions were brought into its ambit. These transactions include
huge cash withdrawal, foreign remittance, purchase of luxury car, e-commerce participants,
sale of goods, acquisition of immovable property, etc.