Budget 2025: Proposal to run US -India Tax Forum investment and development – CNBC TV18

As India prepares the Union Budget for 2025, the US-India Tax Forum (UsisPF) has made recommendations with the aim of increasing India’s economic competition. These suggestions focus on investment, innovation and stability, paving the way for India’s emergence as a global economic leader.

The major proposals of the forum are broken here.

Equalize direct taxation

UsisPF emphasizes tax reforms that simplify direct taxation. Major recommendations include:

To streamline TDS rates: Reducing the complexity of tax cuts on the source (TDS) by limiting it to two or three rates. This compliance will reduce the burden and encourage businesses to focus on growth.

Tax equity for foreign banks: Aligning tax rates for foreign bank branches with domestic banks, making India more attractive to foreign investment.

Concessional tax rate for FPI: Introduction to 10% tax rate on dividend income for foreign portfolio investors (FPI) to promote capital flow.

Support for Gift City: To exempt dividends in Gift City and offer tax exemption on financial transactions, place it as a major global financial center.

Transfer pricing reforms: expanding safe harbor regulations and accelerating the Advance Pricing Agreement (APA) process for transparency and predictability.

Driving Regional Development: Manufacturing, Health Services and Renewable Energy

To promote regional development, UsisPF recommends targeted incentives in major industries:

Advanced manufacturing: expanding concession tax rates for greenfield construction projects, especially in high-development areas such as renewable energy, electric vehicles and semiconductors.

Healthcare Access: To reduce tariffs on important life-saving drugs including cancer treatment and vaccine, while continuing exemption for certain medicines under patient aid programs (PAP).

Renewable energy and EV adoption: To encourage manufacturers in renewable energy and electric vehicles to support India’s stability goals and employment generation.

Improvement in indirect taxation: a competitive tariff structure

UsisPF asks to overhall India’s indirect taxation system to align with global standards:

To simplify customs tariffs: To encourage investment, especially in electronics manufacturing and other major areas, applying a three-level customs tariff system (0%, 5%and 10%).

Adaptable to digital economy: modernization of tax policies

In the rapidly developed digital scenario, UsisPF suggests the following measures:

Regrant Tantra Levi for equal: Introduction to refund mechanisms where tax liabilities are modified, ensure fairness in the digital economy.

To simplify tax compliance for digital service providers: Following tax laws for foreign companies without permanent installations in India, making it easy to strengthen India’s position as a technical hub.