INDIAN BUDGET 2014-1510 KEY POINTS OF THE BUDGET FOR FRENCH COMPANIES

New Delhi, Ambassade de France, 17th July 2014 - presented by Nicolas Ribollet

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Seminar organised under the patronage of the French Embassy in India and IFCCI

1. FOREIGN DIRECT INVESTMENT

Insurance &

Defence

Prior Cap 26%

New Cap 49%

Jul-142

• FDI limits in defence manufacturingand insurance were moved up to 49% from the 26% cap.

• The manufacturing units to be allowed to sell its products through retail including E-commerce platforms.

2. HARMONISATION OF INDIRECT TAX : GST

GST

• The finance minister has formally committed the NDA government to the Goods and Services Tax (GST).

• Date of implementation of Goods and Services Tax (“GST”) still to be confirmed.

Jul-143

3. RETROSPECTIVE TAXATION

Retrospective Taxation

• “Sovereign right of the Government to undertake retrospective legislation to be exercised with extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate.”

• “A stable and predictable taxation regime which will be investor friendly and spur growth.”

Jul-144

4. TRANSFER PRICING

Aligning Indian regulations with global best practices around benchmarking and comparables

• Introduction of the “range concept” (universal standard of interquartile range) for the determination of arm’s length price (vs. arithmetic mean currently prescribed in India)

• Allowing the use of multiple year data for comparable analysis (vs. only one-year data currently allowed with some exception)

Jul-145

5. ADVANCE PRICING AGREEMENT (APA) SCHEME

“Roll back” provision in the scheme introduced so that an APA entered into for future transactions may also be applied to international transactions undertaken in the previous 4 years.

Jul-146

6. INFRASTRUCTURE / PPP / REAL ESTATE

Significant new urban development objectives and thousands of new kilometres of highways and gas pipelines were included in the budget

Direct infrastructure investments

Long-term funds for infrastructure lending with minimum regulatory requirements.

Loans to the infrastructure sector

Real estate investment trusts (REITs)

PPP

Jul-147

7. MANUFACTURING

Investment allowance at the rate of 15 percent to a manufacturing company that invests more than `25 crore in any year in new plant and machinery.

The benefit to be available for three years i.e. for investments upto 31.03.2017

Jul-148

8. POWER SECTOR

Tax holiday for power sector

• The sunset clause for tax holiday, has been extended till FY 2016-17.

• The Budget has proposed to extend the 10-year tax holiday to undertakings thatbegin generation, distribution and transmission of power by end of March 2017.

Jul-149

9. IFRS CONVERGENCE (ACCOUNTING STANDARDS)

Indian companies will have to adopt the new Indian Accounting Standards (IndAS) voluntarily from fiscal year 2015-16 and on a mandatory basis from 2016-17.

Regulators will separately notify date of implementation of Ind AS for the banksand insurance companies.

Jul-1410

New Ind-AS

Standards

Voluntary 2015-16

Mandatory 2016-17

10. E-BIZ

E-Biz

• Single window IT platform (called “eBiz”)

• Central Government Departments and Ministries to integrate their services with the e-Biz -a single window IT platform-for services on priority by 31 December 2014

Jul-1411

Contacts

Mr Nicolas Ribollet

Partner & National Leader, French Desk

Email: nicolas.ribollet@mazars.co.in

Mr Dharnendra Rana

Head of Indirect Taxes department

Email: dharnendra.rana@mazars.co.in

Mr Pankaj Gupta

Head of Direct Taxes department

Email: pankaj.gupta@mazars.co.in

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