Changes in excise rate rebate claim procedure will impact exporters: Dr Reddy's

Dr Reddy's and other large Indian pharmaceutical companies earn two-thirds of their revenues from exports, said the company's CFO

Dr Reddy's Laboratories Limited's president and chief financial officer Saumen Chakraborty today said the changes in the excise rebate claim procedure will negatively impact many exporters significantly and make valuation procedures cumbersome.

Dr Reddy's and other large Indian pharmaceutical companies earn two-thirds of their revenues from exports.

While the deferral of the sunset clause for Special Economic Zones (SEZs) is a welcome move, the status quo in the corporate tax rate for large corporates is a bit surprising since the Finance Minister, in Finance Bill 2015, had indicated that there would be gradual reduction of the rate from 30 per cent to 25 per cent in the next four years, he pointed out.

 

Also the decrease in R&D weighted deduction to 150 per cent may have an impact on innovation as it could de-incentivise the industry to spend more on research, he said in a statement.

Levy of tax on dividend income which has already been subjected to Dividend Distribution Tax and Corporate tax results in multi-layer taxation which could have been avoided, according to Saumen. Deferral of Place of Effective Management (POEM) was a welcome move and the introduction of country by country reporting in line with Organisation for Economic Co-operation and Development (OECD) action plan will add to the transparency in tax reporting and compliance, he said.

Terming it as a fairly well balanced budget, he said the Finance Minister's proposals for simplification of the tax regime by way of reducing litigation and increasing the transparency in the system will help in the long run.