Budget 2018: Simplify GST Returns, Says U.K.-India Business Council
From removing retrospective tax to easing FDI cap in insurance, here’s what British businesses want in Budget 2018.
India’s Goods and Services Tax has not made it easier for the U.K.-based firms to do business in India with the number of required tax filings rising from two a year to 111.
Modifications have been made since July which reduces the number of filings, but these are some of the unintended consequences of rolling out GST, U.K.-India Business Council’s Chief Operating Officer Kevin McCole told BloombergQuint in an interview. “So British businesses are very keen that the government continues to learn as it implements and simplifies GST.”
The other trade barriers that the U.K. businesses would like India to remove are legal and regulatory delays, corruption and retrospective taxation. “A clear signal that Mr [Arun] Jaitley could give in his budget next week could be to amend that (retrospective tax) legislation. So that would be a key ask from U.K. businesses,” said McCole.
Foreign investments in India, according to McCole, could go up if the defence offset requirements are liberalised. The rule under the Defense Procurement Procedure requires foreign firms, based on their procurement category, to purchase some portion of their defence contract from Indian suppliers to get a 30 percent set-off in the foreign exchange component. “With some sensible tweaking of those offset requirements, the U.K. businesses will be prepared to invest much more in making in India.”
The other potential area would be hiking foreign direct investment cap in the insurance sector from the existing 49 percent under the automatic route. “There is win, win, win in raising that cap.” That would not just increase the insurance penetration across the country, but also bring in more capital into the economy which can then be invested into long-term projects for infrastructure development, he said.
Lifting the current ban on foreign practice of lawyers and architecture could help in exchange of technology and expertise between the two countries. This also aligns with the government’s smart city agenda, said McCole.
“There are lots of British architecture firms that are really keen to come to India to invest, to bring the technology and to train young Indians to become global architects,” he said. But they are limited from doing that because there's a ban on architects practising here. “And that's one of the issues we are going to be taking forward in the Joint Economic Trade Committee.”