Uncertainty in tax administration a key threat to private investments: Indian Private Equity and Venture Capital Association

Photo: Twitter/@IndianVCA

Photo: Twitter/@IndianVCA  


Increasing risk perception about doing business in India, panel told.

Uncertainty in tax administration is one of the key threats to private investments in the country, the Indian Private Equity and Venture Capital Association said in a presentation made before a Parliamentary panel on Finance on Friday.

The presentation accessed by The Hindu lists five major threats to private investors. The first is “increased frictional costs on capital mobility including dividend distribution tax, buy back tax and so on diminishes returns prospects,” the association noted. A similar demand was recently made by the Association of National Exchanges Members of India (ANMI) who said the Dividend Distribution Tax results in double to triple taxation on corporate earnings. The association said the buy back tax curtails the mobility of capital and called it a retrogade tax, sources said.

The second point it raised was “uncertainty in tax administration”. It told the members that there are multiple tax regimes within a single structure. For example, there is a need for “complete tax parity” for investment in listed and unlisted securities.

The association said there is a “perception of India being unfriendly to foreign investors including NRIs”. While the government is busy patting its back for better “ease of doing business” rating, the association has flagged that there is “increasing risk perception about doing business in India”. India is on the 63rd rank in the World Bank’s list of countries rated on ease of doing business in 2019. It moved 14 places up from the 77th position in 2018.

Finally, the association said a slow down in growth has reduced opportunities. As per the latest data, the GDP growth is down to 4.5% — a 26 quarter low. The association, in its presentation also said that in the last decade the returns on the investments have been poor and this has led to giving up on the Indian market.

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Printable version | Jan 27, 2020 3:06:07 AM |

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