Enhance tax certainty for foreign companies: Niti Aayog

NEW DELHI: Govt’s policy tank Niti Aayog proposed a comprehensive designed framework to enhance tax certainty and predictability for foreign investors. It recommended the introduction of an optional, industry-specific presumptive taxation scheme for foreign firms.

Releasing a working paper on Friday, it also backed broader legislative clarity, administrative efficiency, robust dispute resolution mechanisms, and strategic alignment with international best practices. It said this multi-pronged approach is anticipated to dramatically reduce litigation, boost investor confidence, improve administrative efficiency, and secure India’s tax base by attracting higher quality, sustainable FDI .

It recommends that the finance ministry consider the proposed framework for inclusion in future finance bills, following consultations with industry, experts, and treaty partners. “This reform would be a significant step towards making India a more attractive and predictable investment destination,” said an official statement.

The working paper highlights that FDI and FPI are recognised as vital catalysts for the country’s economic growth. A stable tax regime is crucial for instilling confidence in foreign investors. It said foreign investors frequently encounter significant tax uncertainty and compliance burdens, particularly stemming from issues linked to permanent establishment (PE) and the attribution of profits.