{"id":124935,"date":"2021-08-10T19:43:44","date_gmt":"2021-08-10T14:13:44","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=124935"},"modified":"2021-08-10T19:43:44","modified_gmt":"2021-08-10T14:13:44","slug":"tax-certainty-is-critical-if-the-economy-is-to-attract-enough-capital","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/tax-certainty-is-critical-if-the-economy-is-to-attract-enough-capital\/","title":{"rendered":"Tax certainty is critical if the economy is to attract enough capital"},"content":{"rendered":"<p><strong>Source:<\/strong> <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/timesofindia.indiatimes.com\/blogs\/toi-edit-page\/2012-2021-our-future-tax-certainty-is-critical-if-the-economy-is-to-attract-enough-capital-to-grow-at-7-8-for-decades\/\" target=\"_blank\" rel=\"noopener\">ToI<\/a><\/span><\/p>\n<p><strong>Relevance<\/strong>: Issue of retrospective taxation<\/p>\n<p><strong>Synopsis<\/strong>: The repeal of the retrospective tax decision helps to minimize the risk of authorities taking harmful and unpredictable decisions.<\/p>\n<h5><b>Background<\/b><\/h5>\n<ul>\n<li><strong>Read Here:\u00a0\u00a0<\/strong><span style=\"color: #0000ff;\"><strong style=\"background-color: var(--global--color-background); font-family: var(--global--font-secondary); font-size: var(--global--font-size-base);\"><a style=\"color: #0000ff;\" href=\"https:\/\/forumias.com\/blog\/retrospective-taxation-and-the-taxation-laws-amendment-bill-explained-pointwise\/\">Retrospective taxation and the Taxation Laws (Amendment) Bill \u2013 Explained<\/a><\/strong><\/span><\/li>\n<\/ul>\n<h5><strong>Introduction<\/strong><\/h5>\n<ul>\n<li>It is hard to grow an economy without individuals and firms taking risk, and for an economy to grow at 7% or 8% annually for several decades the dependency on foreign risk capital is even larger.<\/li>\n<li>In this context, retrospective taxation laws have hampered the flow of FDI\u2019s and undermined the ability of corporate to take risks.<\/li>\n<li>Encouraging them to invest more requires such confidence-building steps that the government is committed to reducing uncertainty, and rectifying past errors.<\/li>\n<\/ul>\n<h5><strong>Adverse impact of Retrospective taxation<\/strong><\/h5>\n<ul>\n<li><strong>Adds to the risks and destroys investment environment<\/strong>: According to experts, changing laws retroactively, spoils the operating environment, and adds to the imagined risks a firm must keep in mind before investing.<\/li>\n<li><strong>Higher costs<\/strong>: The expected returns from an investment, depends on the cost of capital, which in turn depends on the uncertainty a project or business faces. The higher the uncertainty, the higher the cost.<\/li>\n<\/ul>\n<h5><strong>Positives of curb on Retrospective taxation\u00a0<\/strong><\/h5>\n<ul>\n<li>The impact on the flow of investments is likely to be much more significant, as the change signals that retrospective changes will not happen again.<\/li>\n<li>Often, the capital comes attached with technology and skill transfers, which further helps growth.<\/li>\n<li>Tax certainty will help to attract enough capital to grow at 7%-8% for decades.<\/li>\n<li>Growth of Start-ups in India is highly dependent on foreign investments.<\/li>\n<\/ul>\n<p><span style=\"text-decoration: underline;\"><strong>Terms to know<\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #0000ff;\"><strong><a style=\"color: #0000ff;\" href=\"https:\/\/forumias.com\/blog\/what-is-retrospective-taxation\/\" target=\"_blank\" rel=\"noopener\">Retrospective taxation<\/a><\/strong><\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Source: ToI Relevance: Issue of retrospective taxation Synopsis: The repeal of the retrospective tax decision helps to minimize the risk of authorities taking harmful and unpredictable decisions. Background Read Here:\u00a0\u00a0Retrospective taxation and the Taxation Laws (Amendment) Bill \u2013 Explained Introduction It is hard to grow an economy without individuals and firms taking risk, and for&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/tax-certainty-is-critical-if-the-economy-is-to-attract-enough-capital\/\">Continue reading <span class=\"screen-reader-text\">Tax certainty is critical if the economy is to attract enough capital<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,8399],"class_list":["post-124935","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-retrospective-taxation","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1701139176},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/124935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=124935"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/124935\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=124935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=124935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=124935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}