The government is considering tightening taxation norms for Indian companies having intermediary holding entities in overseas locations, as part of its efforts to increase its tax revenues.
“With very limited scope left on domestic front to widen tax collection due to inflationary pressure, the Finance Ministry is looking at ways to mop up additional revenues from international taxation front,” a source told PTI.
A proposal to this effect is expected to be announced by the Finance Minister Pranab Mukherjee in the annual Union Budget to be presented on February 28, sources said.
The government may propose strict norms for disclosure by Indian companies and individuals to tax department about investments and interests in overseas entities, especially those with a holding company structure.
The income from these investments and interests would be taxed accordingly, they added.