The Bombay Chamber submitted its Pre-budget Memorandum to the Finance Ministry on 14 October 2021. We are grateful to the CBDT for granting us an audience on 22 October 2021 to explain some of our key recommendations in person through a video conference.
In continuation of the pre-budget consultation, we would like to submit a detailed representation on two key issues of special significance to the service sector which plays a very significant role in the Indian economy. We do not seek any new concession or incentive considering the current Government’s policy of keeping the tax regime simple by lowering tax rates and doing away with concessions or incentives. Our representations are for (a) clarifying that the existing provisions of section (s.) 2(19AA) of the Income Tax Act (‘Act’) apply to demerger of business by divestment of shares in operating subsidiary and (b) extension of benefit of s.72A to service sector. The detailed representations on these two issues are attached herewith.
We believe the above amendments will address, albeit partially, inherent bias in the Act towards the manufacturing sector and remove the tax hurdles in achieving a seamless business reorganisation in the service sector.
We shall be pleased to explain the representations in person and/or to provide any further information or clarifications which the Government requires to implement the above representations.