Union Budget 2018-19 - assets.kpmg.com

1 Union Budget 2018 -19 #Budget2018 | # - Indian Chamber of Commerce April, 20182 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights and the WorldWatch out highlights and tax proposals3 Other considerations4 Overview of Indian Corporation Tax Regime 21 India and the World4 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights the Globe and India Outlook Demonetization and GST: Induced supply shocks have eased down considerably FDI increasing China Trade WarBrexit European Union ?North & South Korea Summit talksTrump s Tax ReformsGlobalisation Vs ProtectionismGerman/EU push for talks on FTA with IndiaAutomatic EOI between India and Switzerland (from Jan 1, 2018 )5 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity.

2 All rights Economy: Indicators```GST Introduced(50% increase in number of indirect taxpayers adding almost million new indirect tax payers) GDP growth (%) in FY to per cent growth projected in the coming yearsBank Recapitalization(Addressing NPA issue and increasing credit growth)Fiscal deficit (%) of GDPFY 2016-17: ;FY 2017-18: (Fiscal deficit slippage from target of )Consumer price index inflation (%)FY17-18: trend At Six Year LowDemonetisationimpact :Taxpayer base increased ( Million additional taxpayers) Disinvestment Strategy and IBC introducedForex reserves FY18 : 343 bn($ 425 bn) Forex reserves increased at (Crude Oil Watch)`6 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights of Doing Business: India ShiningIndia in top 100*Countries ranked190 India s riseSource: Doing business 2018 Reforming to create jobs; World score2018100 Reforms for Further Improving the Tax Redressal of Pending of focus on Infrastructure sector ( Budget allocation increased by 25% with focus on completion of existing projects) R&D in India Labour Laws7 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity.

3 All rights s journey with Switzerland* GDP benchmark for 2015 shiftedd from factor costs to market price to bring in line with most of the countries and the base year for calculation of GDP changed from 2004-05 to : Ministry of Commerce & Industry website Source: RBI & GDP growth (%).. along with increasing foreign investmentMarked acceleration in growth over the past two decadesFDI inflows from Switzerland (USD Billion)Recessionary PlungeQuick RecoveryRecovery$ $ $ $ $ $ $ $ $ $ 2006-072008-092010-112011-122012-132013- 142014-152015-162016-17 Dec-17 Foreign direct investment (USD billion)India s Trade with Switzerland (USD Billion) Overview of the Indian Corporation Tax Regime9 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights on Indian corporate tax regimeMAT / AMTL eviable where book profits / adjusted taxable income exceeds the total income computer under normal - of book profits (specific adjustments)Tax TreatiesExtensive tax treaty network (90+ countries) India Active participant to BEPS ProjectComprehensive Dispute ResolutionEffective ruling practices -Advance Pricing Agreements, Advance Authority of Ruling, Safe Harbour RulesStatutory Rate of TaxDomestic Company - Company ; LLP / Firms Dividend Distribution Tax @ (Cess 4%) (not leviable on LLP s).

4 Exempt in the hands of shareholders Withholding tax Withholding tax mechanism prescribed for payments to resident or non-residents For Royalty / Fees for Technical Services Indian domestic law and the India-Swiss tax treaty provide a tax rate of 10%Goods andService TaxTrade Tax Goods and Service Tax (ranging between 5% to 28%) on supply of goods and servicesTransfer Pricing Transfer Pricing provisions applicable with regard to related parties transactions; Tested for Arms Length PriceCarry forward of Losses / DepreciationLosses generally carry forward for 8 years; Unabsorbed Depreciation carried forward for unlimited periodBudget Highlights & Tax Proposals11 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights expectationsDigital industry Greater incentive for digital transactions and fiscal measures to be introduced for e-commerceIncreased thrust on infrastructure Measures to boost private participationGreater leeway to Financial services sector, as most impacted by recent Government initiativesReduction in corporate & individual tax ratesGST regime More liberalized reformsIncentives for MSMEsBudget2018-1912 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity.

5 All rights thrust areas/ policy initiativesBoost to MSMEsFocus on employment generation andsocial security measuresIntroduced world s largest healthcare Programme for vulnerablefamiliesIncreased rural outlays (MSP)Policy for hybrid instruments for start-ups and venture capitalsContinued focus to drive infrastructure sector Impetus to International Financial service centre13 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights Corporate Tax ProposalsLong Term Capital Gain: Exemption withdrawn on LTCG on sale of equity shares or equity oriented units. 10% LTCG tax has been introducedConcessional Tax Rate: Companies with total turnover of less than or equal to INR 250 crores (Euro 31 Million) in FY 2016-17 taxable at 25%.Cess increased from 3% to 4%Prosecution for failure to furnish return of income: Prosecution shall lie against companies for non-filing of return, whether or not any tax is payable.

6 E-assessment: Government notified a new e-assessment scheme for assessment being done in electronic definition of business connection has been expanded to align with modified PE rules as per MLI and OECD BEPS Action Plans. Significant Economic Presence included (revenue based/user based tests introduced) along with including Digital presence in India14 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights to Various SectorsAllocation of Billion to create and augment telecominfrastructureTelecom SectorAllocation of Billion for world s largest government healthcare programmeHealth IndustryAllocation for the Digital India programme doubled to BillionDigital Media Allocation of Billion for development of Educational Sector in the next four yearsEducation15 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity.

7 All rights of the Indian IndustryAlthough India s overall economy is growing, Mr. Modi and his governing BharatiyaJanata Party have been trying to find ways to court the population left behindThe world's largest government's funded healthcare program -National Healthcare Protection Scheme (NHPS) announced by our FM, with approximately 500 million beneficiaries, an insurance scheme of up to INR 5 lakh per family per year for secondary and tertiary care hospitalization is a welcome move not just to maintain a healthy India but this I believe will also create several lakh/s new jobs in the countryThe FM has presented a Budget which is both balanced and positive. Focus on rural infrastructure, agricultural output and farmer income will help reduce the agrarian distress and boost the rural economyThe New York Times T V Narendran,CEO & MD Tata Steel India Jacob,CEO, Apollo Munich Healthcare InsuranceOther considerations17 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity.

8 All rights direct tax legislationConstitution of Task Force for drafting a New Direct Tax Legislation18 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights tax avoidance GAAR MLI (India and Switzerland shall be CTAs) Amendments to Mauritius, Singapore Treaty19 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights New-Age Tax AdministrationTechnology led transformation and Exchange of Information20 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights out Elections 2019: Impact on Reform pace!!Questions & AnswersThank youTheinformationcontainedhereinisofa generalnatureandisnotintendedtoaddressth ecircumstancesofanyparticularindividualo rentity.

9 Althoughweendeavortoprovideaccurateandti melyinformation,therecanbenoguaranteetha tsuchinformationisaccurateasofthedateit isreceivedorthatit willcontinuetobeaccurateinthefuture. Nooneshouldactonsuchinformationwithoutap propriateprofessionaladviceaftera thoroughexaminationoftheparticularsituat ion. 2018 KPMG,anIndianRegisteredPartnershipanda memberfirmoftheKPMG networkofindependentmemberfirmsaffiliate dwithKPMGI nternationalCooperative( KPMGI nternational ),a Swissentity. MehndirattaKPMG Leader:India-Swiss CorridorPartner, International Tax & RegulatoryKPMG in IndiaT : +91 (120) 386 8707M: +91 98117 55379E.