with a fiscal deficit of 68 the need for revenues is understandable still the abolition of corporate surcharge of 10 would have been bolder and more desirable compared to a reduction in surcharge to 75 bringing the corporate tax rate down marginally from 3399 to 3322a better option to bridge the revenue gap would have been to increase the shortterm capital gains tax rate for listed securities to 30 from the existing 15 most countries around the world do not tax shortterm capital gainshiking the mat rate to 18 from the existing 15 is undesirable especially as small companies too bear the burden the us is perhaps the only developed jurisdiction which has a similar regime but it exempts small companies the finance bill proposes to tax transfer of shares of unlisted companies to firms or other unlisted companies at prices below their fair market value however valuation may be a contentious issue during assessmentas of now it appears genuine business structuring will not be impacted the risk of exposure to indian taxes increases for foreign companies through an amendment which will come with retrospective effect from june 1 1976 the government proposes to bring into the tax ambit income earned by nonresidents from royalty interest or fee for technical services even if the services are rendered outside india or if there is no place of business or business connection in indiathe government had earlier tried to overturn a supreme court ruling in the case of ishikawajimaharima by introducing an explanation in tax laws but the ruling continued to be relied on sudhir kapadia is tax market leader ernst young