The Union Budget 2017 incites anxiety and expectation. Continuing the momentum to achieve digitised economy, will the government provide more incentives for cash-less transactions and introduce cash transaction tax, or will the Budget offset demonetisation pain. With rapid movements in 2016—Ind-AS, ICDS and OECD-G20 BEPS—India is ready with the instruments. General anti-avoidance rule (GAAR) provisions would be effective from FY18. Factoring in the current economic environment and the urge of the government to attract foreign investment, GAAR may be further deferred. Further, it is important to distinguish between tax mitigation and tax avoidance to circumvent bringing genuine arrangements under the radar of GAAR. Among other factors, removing the uncertainty in implementation of tax laws would help. Guidance should be issued on the methodology for evaluating the arm’s-length standard on contentious issues like marketing intangibles, manufacturing intangibles, intra-group management services, inter-corporate loans and guarantee fees, etc.

(Financial Express)