News: Ficci boosters for FDI

(TT 27/11/2006) New Delhi - Indian industry has drawn up a nine-point fiscal agenda in the run-up to Union Budget 2007-08 to boost FDI inflow into the country and promote overseas investment by domestic companies.

Industry captains want the receipt of dividend and capital gains of the subsidiaries of Indian companies, which are present overseas and want to repatriate their earnings into India, to be either exempted from tax or taxed on a concessional basis.

The recommendation forms part of a detailed note prepared by the Federation of Indian Chambers of Commerce and Industry (Ficci) for the consideration of the government.

“This should be done to enable overseas holding companies that have their subsidiaries in India to offset the distribution taxes paid in India from tax payable by them in their respective countries,” the note says.

India Inc has also sought to re-look at the country’s transfer pricing norms that provide for a 100-300 per cent penalty on the tax payable on the amount of adjustment.

“Nowhere in the world are penalties so high. These need a second look,” said Ficci president Saroj Poddar.

Industry has called to introduce the concept of ‘participation exemption’ on the lines of provisions prevalent in other countries.