India Regulatory Brief: Medical Devices Park, Simplified Income Tax Return Forthcoming
India’s First Medical Devices Park Set for Gujarat
The federal government announced plans to set up India’s first industrial park for manufacturing medical devices in Gujarat, Prime Minister Narendra Modi’s home state. The Gujarat state government has earmarked land in Sanand, an automobile manufacturing hub, for medical device manufacturers. The National Institute of Pharmaceutical Education and Research (NIPER), which is based in Ahmedabad, Gujarat, will oversee research and development for the project.
The federal government recently opened the medical device industry up to 100 percent foreign direct investment (FDI). Currently, 71 percent of India’s medical devices and 87 percent of high-end medical devices, including medical electronics and surgical equipment, are imported. However, experts expect this dynamic to change following the FDI reform, and the government’s announcement of plans to provide other infrastructural and financial incentives for the industry.
The creation of the park followed a recommendation from a federal government task force, which was setup earlier this year by the Department of Pharmaceuticals to promote the Make in India campaign. Other recommendations of the task force include enhancing policy and institutional support, strengthening infrastructure and providing tax breaks for the industry. The federal government’s commitment to the industrial park in Gujarat indicates that it will likely follow through on other task force recommendations; government officials report that tax incentives for domestic manufacturers will be unveiled in a phased manner.
New Income Tax Return (ITR) to be Simplified
Government officials report that the new Income Tax Return (ITR) form released last week will be revised after widespread criticism from tax experts. The new ITR required taxpayers to provide more details on bank accounts and foreign travel, amongst other information. The new information requirements for the ITR included the number of bank accounts held, account numbers, addresses of the banks, Indian Financial System Code (IFSC Code) and any joint account holders. Most controversially, the new form required information on foreign trips, including countries visited, number of times visits were made and travel related expenses.
These new requirements were part of a government effort to reduce tax avoidance and black money. However, the new ITR was criticized by tax experts who believed the government was asking for too much data and making filing returns too difficult to perform. Statements by government officials indicate the amount of information required by the ITR will be simplified in the near term; however, details remain forthcoming.
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Real Estate Bill Paves Way for Regulatory Agency
The Indian Union Cabinet recently passed the Real Estate Regulatory Bill. The most important development from this bill is the creation of a regulatory agency responsible for the real estate sector. Its goal will be to provide more protection for consumers.
The new regulatory agency will maintain an online database, which will compile information on building projects, developers and promoters. The database will also compile information on developers and promoters who have had their registration revoked. Developers will have to file project details with design specifications that can only be changed with approval of two-thirds of the buyers. The bill will apply to projects with a plot size greater than 1,000 square meters or more than 12 apartments.
According to the bill, developers will have to deposit 50 percent of their project revenue into an escrow account. This specification is designed to keep developers from diverting money to another project, a practice which sometimes leads developers run out funds before a project is completed. Experts expect property prices to rise in the medium term due to the increased compliance requirements, but the new regulations will ultimately lead to a more transparent and reliable real estate sector.
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