CSR tax breaks for companies: During the Covid-19 pandemic, many companies, being good corporate citizens, spent money to help society at large. If this is not complete tax protection, companies expect tax breaks for their CSR (Corporate Social Responsibility) initiatives.
Taxation of the digital economy: In order to meet the challenges of tax collection in a digitized economy, the government extended the scope of the equalization tax (EQL) with effect from April 1, 2020 in order to include the e-commerce income of foreign providers in the Indian tax network. However, the ambiguity of this new levy has left taxpayers unclear on various issues. Without attaching too much importance to the positions advocated by the United States, it is only fair that the government is issuing guidelines on this new tax to iron out the wrinkles.
Promotion of the EODB initiative (Ease of Doing Business): Clarifications on the tax liability of using various new technologies (such as cloud computing, AI, etc.) that are changing the way businesses are run in the current pandemic landscape would greatly facilitate the government's EODB initiative. Given the widespread use of digital services in companies, some of which are obtained from overseas providers, the government should clarify critical aspects of withholding tax so that Indian users are not burdened with future withholding tax claims.
Tax disputes: The Vivad se Vishwas (VsV) direct tax system has achieved reasonable success. Companies want to deal with their pending tax disputes and focus on their core business. Instead of using these systems as a one-off opportunity for companies, the possibility of settling tax disputes must be permanently enshrined in tax law. This will go a long way towards reducing future tax disputes.
Rules for loss carryforwards: Currently, the benefit of loss carryforward and unabsorbed depreciation is permitted, among other things, in the case of a merger of a company that owns an "industrial company". However, similar loss carryforward rules do not exist for other sectors such as real estate, services and media. In order to maintain parity, the loss carryforward rules need to be extended to these sectors as well, which will contribute to the rapid growth and consolidation of businesses in a pandemic-hit economy.