To accelerate employment generation, incentivising corporates to invest in education and skilling the workforce, especially in the IT – ITES sectors, is likely to be proposed in the upcoming Union Budget.
The government may extend the benefits of Section 80 JJAA to a larger section of employers to encourage employment. The weighted deduction under section 35CCD for skill development projects may also be revamped.
For special economic zones (SEZ), the income tax holiday sunset on March 31, 2020 and duty reliefs could also be revisited to accelerate growth of IT exports, as new age tech such as Artificial Intelligence takes centre stage.
The scope of safe harbor transactions was increased in 2017 to provide certainty to taxpayers. Suitable amendments to include distribution of content by an Indian company under the safe harbor regime will help the fast-growing media and entertainment sector.
Similarly, extending Section 72A benefits to the broadcasting sector which allows industrial undertakings to carry forward tax losses in case of mergers or amalgamation will help the sector.
For a fast track 5G adoption, the government may introduce an investment allowance/weighted deduction not only for spectrum but also for the capital spend. 5G related R&D may be given additional relief.
While India takes a firm stand at the G20 for taxing the digital economy based on a proportional approach, it is to be seen whether any enabling amendments will be made in the Tax laws further to the Significant Economic Presence provisions made in Finance Act 2018.