NRIs in UAE: New tax bill passed in India; what policies say

Question: A British company for which I am working proposes to set up a data centre in India.  I want to know the policy initiatives in this regard and the procedures to be followed.

ANSWER: The data centre policy has been framed by the Ministry of Electronics and Information Technology to encourage setting up of data centres through single window permissions and streamline the approval process. The object is to make India a favourable destination and to that end data centres have been given infrastructure status.  Further, four dedicated data centre economic zones are being set up to create an ecosystem of cloud service providers, R&D units, IT companies, hyperscalers, and other allied industries at select locations.

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At least 10 state governments have also announced data centre policies based on industry feedback. This will help to distribute the spread of new data centres and take advantage of the many small edge data centres which are coming up in interior locations. The rapid expansion of the sector and AI-led growth have shown the need for having such facilities across the country.  Currently, 80 per cent of the total data centre capacity has been set up in large metros, namely, Mumbai, Chennai and the Delhi-National Capital   Region.

Question: It is a matter of great concern that the younger generation is finding it difficult to get employment even after completing their education from technical institutes. Is the Government doing anything to reap the demographic dividend?  

ANSWER: Policies have been put in place to convert industrial training institutes (ITIs) into skilling centres by collaborating with well-known industrial companies through public-private partnerships. Some of these companies have shown interest to adopt more than one ITI and ensure that a skilled workforce is established. Under the partnership framework, the ownership of the ITI will remain with the Government but the industrial company will introduce courses, train teachers, modernise and upgrade facilities. Maharashtra alone has over 425 ITIs and the response of the private industrial sector is more than encouraging.

To increase the employability of ITI students and to equip them with managerial skills, short-term courses are also being provided in management, soft skills and AI. Courses in business analytics, production management as well as financial and behavioural management are being offered. Indian and foreign companies which are manufacturing electric vehicles have shown interest in tying up with the ITIs.  To ensure that new age skills are developed which can be gainfully employed by young graduates, some of the ITIs are providing courses in AI, machine learning, 3D printing, cyber security, drones and clean energy technologies.

Question: I believe that a new tax law has been enacted by the Indian Parliament this month.  An earlier draft of this legislation was introduced in February this year.  How is the revised law different?

ANSWER: The earlier Bill introduced in February this year was referred to the Select Committee of Parliament. This committee, after consulting professionals and other stakeholders, made 285 recommendations on the draft legislation and most of them have been accepted by the Government.  Therefore, the earlier Bill was redrafted and a revised Bill was introduced in the current session of Parliament which has now been passed by both the Houses. The earlier draft Bill had certain ambiguities regarding the refund process, property taxation, pension, deduction of expenses from taxable income, etc. The revised Bill has endeavoured to fill the gaps with a view to rationalise interpretation and avoid disputes.

The revised legislation also aims to eliminate redundant and repetitive provisions and sections of the law have been reorganised to facilitate reference. The language of the revised Bill is simplified to make it comprehendible to an average citizen. Redundant provisions have been removed to ensure greater clarity. Therefore, the new Bill will ease compliance for individuals, micro, small and medium enterprises, and establish a predictable and transparent tax system.  It is expected that the new law will sustain domestic consumption and attract foreign investments.

The writer is a practising lawyer, specialising in corporate and fiscal laws of India.