Dinesh Kanabar praises Budget 2025 for addressing long-standing tax and compliance issues



Dinesh Kanabar, CEO of Dhruva Advisors, has lauded the latest budget for its proactive approach in tackling long-standing tax and compliance challenges.

Kanabar, stated the long-term nature of infrastructure investments and welcomed the proposal to extend the investment horizon to five years. This move aims to avoid the disruption caused by year-on-year adjustments, providing greater stability and certainty for investors.

Finance Minister Nirmala Sitharaman has revealed that the nil tax slab under the new income tax regime will be increased from ₹7 lakh to ₹12 lakh. She also proposed to introduce the new income tax bill next week.

Kanabar also praised the government’s decision to eliminate the tax implications on funds relocating to the GIFT City, a crucial step in attracting global capital to India’s financial hub.

Moreover, the decision to accept transfer pricing for a block of three years without frequent revisions is expected to reduce litigation, making India a more attractive destination for non-residents looking to invest.

Kanabar highlighted the overall reduction in compliance costs and litigation, which could significantly enhance the ease of doing business in India.

A significant reform is the extension of safe harbour rules, which Kanabar noted would ease the compliance burden for multinationals. While not an immediately visible change to the general public, this policy shift is expected to have a profound impact on promoting foreign investment and simplifying tax processes for large enterprises operating across borders.

Read Here | Budget 2025: FM increases income tax deduction limit for senior citizens to ₹1 lakh

The application of tonnage tax to domestic vessels is another important measure, reinforcing the government’s commitment to incentivising the maritime sector.

Additionally, reforms in charity renewal processes and the ability to update tax returns over a four-year period reflect the government’s effort to address long-standing irritants, making the tax environment more business-friendly.

Zia Mody, Co-Founder and Managing Partner at AZB, shared her thoughts on the government’s push to formalise the insurance FDI limit to 100%. She also applauded the finance minister’s commitment to revamping KYC norms in 2025, which have long been a pain point for businesses. These moves are expected to enhance the ease of doing business in India, a critical factor for both foreign and domestic investors.

Mody expressed a desire for further announcements regarding pre-packaged insolvency procedures and cross-border insolvency cases, which could help address non-performing assets (NPAs). She also highlighted the importance of reducing unnecessary government litigation, a goal that aligns with the finance minister’s vision of digitising and faceless assessments.

Mody also pointed to the pressing need to liberalise Press Note 3, which restricts investment from neighbouring countries. This policy has unintentionally slowed down foreign direct investment (FDI) from private equity firms and is seen as an area ripe for reform.

Ashok Wadhwa, Group CEO at Ambit, lauded the government’s move to increase income tax slabs, particularly for the middle class. With a focus on individuals earning up to ₹25,00,000, the relief is seen as a significant step in addressing the long-standing demand for tax relief from this demographic.

Although Wadhwa acknowledged that corporate tax reform was less prominent in this Budget, he noted that the measures introduced were highly beneficial for individual taxpayers.

Follow all the updates on Income Tax Slabs Budget 2025 here

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