Lawmakers will seek to clear bills that formalise tax cuts for overseas investors buying Indian sovereign debt and insulate offshore funds from tax liability if their investments are managed by India-based fund managers, the people said, citing internal deliberations and a public list of business. Parliament will also vote to extend tax holidays for overseas suppliers of equipment to local electronics manufacturers and give benefits to data centres and diamond mining, the people added.
Modi has been taking a series of steps to stem outflows and support the rupee, and urgency has built after the US-Iran war to cushion the economy and make it resilient to external shocks. The government is trying to position India as a alternative to China, in an attempt to capture a share of global manufacturing and create jobs for its large labour force.
Finance Minister Nirmala Sitharaman is likely to introduce the bills even as much of the ongoing parliament session — due to run through Aug 13 — has been stalled by the opposition first seeking a debate about exam paper leaks and student protests. With less than 10 days left in the session, the government faces mounting pressure to secure passage of the tax measures despite the legislative logjam.
The finance ministry didn’t respond to requests for comment.
Details of the bills:
- Amendments to the Income Tax Act will offer tax exemptions to contract manufacturers until 2041. Previously, the tax break was to end in 2031. The latest proposal includes electronics products such as mobile phones, laptops, tablets and servers;
- The government will seek to cement into law an ordinance that exempts foreign institutional investors from “any interest on government security, and any capital gains arising from the sale, exchange or transfer of such government security”.
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