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Below is on Overall Budget Impact On BFSI By Manoj Purohit, Partner & Leader – Financial Services Tax, BDO India.

Laying down the foundation for the next decade when India enters Amrit kaal i.e., 75 years of independence, the foremost priority for the Government was to infuse the economy with substantial CAPEX which will not only accelerate demand and supply chain but also create a destination for foreign investments. Though the Economic Survey put India amongst the top 15 growing economies and IMF projecting GDP growth slowdown in FY 2023-24, there are many sprints that India needs to encounter to achieve a USD 5tn economy by 2025. Largely on the BFSI front, the announcements made are clarificatory in nature and certain amendments are to continue incentivising the inflows. The key ones are:

* Tax incentives and clarifications in IFSC w.r.t ODI Income, tax holidays extension on fund relocation, setting up a single window for approval of registration and setting up an inhouse arbitration centre

* PAN being made a common business identifier to make entry route easier and reduce compliance burdens specifically for foreign entities governed by various statutes

* Clarification on taxability of income from Market Linked Debentures and Business Trust via REITs & InVITs

* Introduction of tax on high value insurance policies (other than ULIP) issued on or after 1 April 2023

Over the last few years, the Government’s focus has been shifted to long term policies and investments to make India not only self-reliant but also fundamentally strong to combat global factors such as war, inflation rising interest rates making India a bright spot and preferred investment destination for foreign institutions. The Budget proposals are clearly reflecting the intent of the Government to lay a roadmap to become the world’s top 5 countries for making captive investments.

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