India still hot investment hub: Deloitte

Last Updated: Wed, Jan 09, 2013 05:52 hrs

India remains an attractive investment destination, even as taxation uncertainties pose a challenge, according to global consultancy Deloitte.

"While India continues to be an attractive investment destination, the dynamic Indian tax framework creates some apprehensions in the investors' perception about the approach on the tax issues related to transactions in India," said a survey of investors, spread across various segments, conducted by Deloitte.

"Around 63 per cent of those questioned consider Singapore to be a favourable jurisdiction for investments into India," said the survey, adding 53 per cent consider uncertainties in the tax position as a significant challenge for doing business in India.

Also, about 80 per cent of the participants indicated there should be rationalisation in India's corporate tax rates in the range of 20 to 30 per cent.

Deloitte said the Indian tax landscape had been in the limelight globally due to the landmark ruling of the Supreme Court in the Vodafone case, followed by retrospective amendments, along with the proposed General Anti-Avoidance Rules ( GAAR).

The survey suggested there was a need for a robust tax policy and an equally strong tax litigation process or an effective dispute resolution mechanism, to reinforce a stronger faith from multinational investors.

It said investors believe India had an effective tax credit mechanism, which helped in reducing the overall tax burden, though there was room for improvement.

"On an overall basis, the results indicate the Indian tax climate is considered to be reasonably favourable and India continues to be an attractive investment destination despite some dissatisfaction in the minds of investors with existing tax policy and the litigation framework," Deloitte added.

The survey focused on five key factors -intermediate holding company, permanent establishment, foreign tax credit, GAAR and tax litigation.

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