As budget day nears, here is a glance at taxes that need to be lowered, and those that need to simply go away:1. Equalisation Levy (EL) Backdrop:• 6 per cent charge on services pertaining to cross border digital transactions• India was among the first nations to introduce such a levy• It is expected that more services will be brought into the ambit of EL this BudgetPoints to ponder:• But with digital proliferation in India rapidly increasing, is it the right time to expand the scope of EL• Is the levy justified on the principle that companies should pay tax where their customers are• With several Indian companies providing services globally, will other countries follow suit and will this hurt Indian businesses• With the levy being expanded to B2C services, will it increase costs to end users2. General Anti-Avoidance Rule (GAAR) Backdrop:• It is an anti-tax avoidance rule targeted at arrangement or transactions made specifically to avoid taxes• Proposed to come into force on April 1, 2017Points to Ponder:• Are we ready for GAAR; is the administration ready• Will it appreciate the nuances or will it become a tool for harassment• Considering several other measures, like Treaty changes, do we need GAAR now• What are the global best practices and learnings; what are the safeguards needed• What should international investors look out for; how should Indian industry prepare for it3. Taxing Investments in Startups Why it's a bad idea:• It is a provision that hurts more than it benefits as it is out of sync with the reality of how investments are made in the startup ecosystem• Unfair to levy only on private companies and exempt listed companies where manipulation is higher• Unfair to levy only on resident investments• It goes against the government's startup focus• It leaves huge amount of discretion with revenue officers on vexed issues like valuation which is against ease of doing business mantra

Source: Times of India January 29, 2017 07:07 UTC