The Indian budget for 2014-15 made several changes aimed at attracting foreign investment. It increased FDI limits in insurance and defense manufacturing to 49% from 26%. It committed to implementing the Goods and Services Tax by a still unspecified date. It acknowledged the need for caution with retrospective taxation but emphasized creating a stable and predictable tax regime. It also outlined plans to strengthen infrastructure, manufacturing, the power sector, and e-government initiatives through tax incentives and regulatory reforms.

1. INDIAN BUDGET 2014-15
10 KEY POINTS OF THE BUDGET FOR FRENCH COMPANIES
New Delhi, Ambassade de France, 17th July 2014 - presented by Nicolas Ribollet
1
Seminar organised under the patronage of the French Embassy in India and IFCCI

2. 1. FOREIGN DIRECT INVESTMENT
Insurance
&
Defence
Prior
Cap
26%
New Cap
49%
Jul-142
• FDI limits in defence manufacturing
and insurance were moved up to 49%
from the 26% cap.
• The manufacturing units to be allowed
to sell its products through retail
including E-commerce platforms.

3. 2. HARMONISATION OF INDIRECT TAX : GST
GST
• The finance minister has formally
committed the NDA government to the
Goods and Services Tax (GST).
• Date of implementation of Goods and
Services Tax (“GST”) still to be
confirmed.
Jul-143

4. 3. RETROSPECTIVE TAXATION
Retrospective Taxation
• “Sovereign right of the Government to
undertake retrospective legislation to be
exercised with extreme caution and
judiciousness keeping in mind the
impact of each such measure on the
economy and the overall investment
climate.”
• “A stable and predictable taxation
regime which will be investor friendly
and spur growth.”
Jul-144

5. 4. TRANSFER PRICING
Aligning Indian regulations with global
best practices around benchmarking and
comparables
• Introduction of the “range concept”
(universal standard of interquartile
range) for the determination of arm’s
length price (vs. arithmetic mean
currently prescribed in India)
• Allowing the use of multiple year data
for comparable analysis (vs. only one-
year data currently allowed with some
exception)
Jul-145

6. 5. ADVANCE PRICING AGREEMENT (APA) SCHEME
“Roll back” provision in the scheme
introduced so that an APA entered into for
future transactions may also be applied to
international transactions undertaken in the
previous 4 years.
Jul-146

7. 6. INFRASTRUCTURE / PPP / REAL ESTATE
Significant new urban development
objectives and thousands of new
kilometres of highways and gas pipelines
were included in the budget
Direct infrastructure investments
Long-term funds for infrastructure lending
with minimum regulatory requirements.
Loans to the infrastructure sector
Real estate investment trusts (REITs)
PPP
Jul-147

8. 7. MANUFACTURING
Investment allowance at the rate of 15
percent to a manufacturing company that
invests more than `25 crore in any year in
new plant and machinery.
The benefit to be available for three years
i.e. for investments upto 31.03.2017
Jul-148

9. 8. POWER SECTOR
Tax holiday for power sector
• The sunset clause for tax holiday, has
been extended till FY 2016-17.
• The Budget has proposed to extend the
10-year tax holiday to undertakings that
begin generation, distribution and
transmission of power by end of March
2017.
Jul-149

10. 9. IFRS CONVERGENCE (ACCOUNTING STANDARDS)
Indian companies will have to adopt the
new Indian Accounting Standards (Ind
AS) voluntarily from fiscal year 2015-16
and on a mandatory basis from 2016-17.
Regulators will separately notify date of
implementation of Ind AS for the banks
and insurance companies.
Jul-1410
New Ind-
AS
Standards
Voluntary
2015-16
Mandatory
2016-17

11. 10. E-BIZ
E-Biz
• Single window IT platform (called “eBiz”)
• Central Government Departments and
Ministries to integrate their services with
the e-Biz -a single window IT platform-
for services on priority by 31 December
2014
Jul-1411

12. Contacts
Mr Nicolas Ribollet
Partner & National Leader, French Desk
Email: nicolas.ribollet@mazars.co.in
Mr Dharnendra Rana
Head of Indirect Taxes department
Email: dharnendra.rana@mazars.co.in
Mr Pankaj Gupta
Head of Direct Taxes department
Email: pankaj.gupta@mazars.co.in
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