Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: articles on VAT and GST in India :: form 3cd :: ACCOUNTING STANDARDS :: cpt :: TDS :: empanelment :: due date for vat payment :: VAT Audit :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company
 
 
« News Headlines »
 Can the filling of GSTR-3B be avoided by filing GSTR-1, 2 & 3?
 CII seeks extension of time for filing GST returns
 A tax saver scheme with higher returns
 GST registration mandatory for TDS entities
 Govt rules out extension for filing GSTR-3B returns after December
 Tax department’s e-filing portal out of action for 2 hours
 Use ITR-2 to show salary and capital gains income
  TDS Applicability On Government Contracts Under Gst (Under Section 51 Of The Cgst Act, 2017)
  How to file ITR for FY 2016-17 and all the links you need
 All about E-way Bill under GST
 Good and simple tax: on the GST regime

Obama's tax plan could push up outsourcing cost 50%
May, 06th 2009

American firms could see a 50% rise in the cost of outsourcing business processes to India if President Barack Obama's new tax proposals are accepted. Even though outsourcing will still make business sense, industry watchers concede the move could act as a dampener.

Obama has proposed to tax expenditure by US companies on availing services from outside the country from 2011. The move has been proposed to discourage outsourcing and contain the flight of jobs to other countries.

According to Uday Ved, head of global tax consultancy firm KPMG, payments by US companies for services outsourced to India or other countries are treated as normal expenditure and deducted from the company's revenue at present. They are not required to pay tax on that amount.

For example, if a company spends $100 on outsourcing, it will save about $35 as corporate tax, said Ved. So, net outgo of money will only be $65. However, if Obama's new tax proposal goes through, the company will not be able to save the $35. So the net outgo will be $100 instead of $65 - or 53.86% more than the present cost.

However, Aparup Sengupta, chief executive officer of BPO company Aegis, pointed out that American companies save 60%-75% by outsourcing their back office operations to countries like India. The savings are higher if high-end operations are outsourced.

Sengupta said that in general, a service which costs around $48 per seat per hour in the US is accomplished at $11-12 per seat per hour in India. So, US companies save almost 75% by outsourcing their activities to India. The savings in high-end BPO services are even higher as the fixed cost in all the cases remains the same and the only increment is the marginal increase in wages of trained manpower.

Besides the cost arbitrage, the availability of trained manpower will also be an issue in the US, said Sengupta. Particularly in the IT space, there is a shortage of talent in the US. So, regardless of whether the tax is levied or not, US companies will have to outsource to remain globally competitive.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions