NEW DELHI: Finance minister Nirmala Sitharaman is set to introduce further amendments to tax laws going beyond the Ordinance offering concessions to overseas investors putting money in govt bonds.According to the bill that has been circulated, it has been proposed to replace the broad reference to “electronic goods” with a defined list of “specified electronic goods” and extend the tax exemption by 10 years—up to tax year 2040-41. “This amendment brings greater clarity to the tax exemption available to foreign companies supplying capital goods, equipment or tooling to Indian contract manufacturers engaged in manufacturing specified electronic goods. By expressly defining the eligible product categories, the bill is expected to reduce interpretational disputes, while the extended exemption provides long-term tax certainty for global manufacturers,” said Amit Maheshwari, managing partner at consulting company AKM Global.There is an expansion and clarification of eligible electronic products covered under the incentive regime, including mobile phones, laptops, tablets, servers, wearables, hearables and other related sub-assemblies.The bill also proposes to introduce a new tax exemption for foreign companies undertaking the storage and sale of electronic components through customs bonded areas, where such components are supplied to Indian contract manufacturers of specified electronic goods. The exemption, available until 31 March 2041, is subject to prescribed reporting requirements.Further, conditions for offshore investment funds are proposed to be rationalised by removing several prescriptive eligibility conditions. Further, dividend tax neutrality is proposed to be restored for REIT and InvIT investors.Govt is proposing tax exemption on income on sale of rough diamonds in the hands of an overseas company, that is engaged in diamond mining or is functioning as a sightholder, broker, aggregator or a tender and auction entity for such business, for 15 years, ending in March, 2041.“The bill signals a calibrated shift from short-term relief to longer-term competitiveness. While the Ordinance addressed immediate concerns arising from global economic developments, govt has now supplemented those measures with additional reforms following stakeholder consultations… The liberalisation of the fund management regime, incentives for electronics supply chains, facilitation measures for data centres and diamond trading, and tax relief for foreign investors in govt securities collectively point towards a policy objective of attracting global capital and business activity into India. Collectively, the amendments reflect a clear emphasis on investment facilitation, supply-chain resilience and long-term tax certainty,” said Richa Sawhney, tax partner at Grant Thonton Bharat.
