Simplified Tax Structure is a must for the Success of 'Make In India'

In order to create a positive ecosystem for investors, the tax department is moving towards putting in place an investor friendly and proactive tax system which would help to deliver the ‘Make in India’ Initiative and promote ease of doing business in India.

In an extensively competitive global economy, it is important that domestic taxation laws in India must conform to international best practices so that our country becomes an attractive destination for doing business for both the domestic and the foreign investor. And since domestic laws cover many jurisdictions, it is imperative that the scope for conflict of interest between tax jurisdictions and companies must remain minimal.

Mr Shaktikanta Das, Revenue Secretary, Ministry of Finance, Government of India said, "There are three key challenges before the Government. First is to carry forward the agenda of tax reforms in light of the Prime Minister’s ‘Make in India’ campaign which would strengthen the competitive advantage of India vis a vis other countries. The second challenge is to enhance the competitiveness of our tax administration. In this context, the Government has proposed to set up a separate vertical for dispute resolution, with dedicated officers and panels to be set up at various centres. This would contribute towards reduction of litigation and removal of hassles for the tax payers and other stake holders. The third challenge before the Government is to deal with the problem of unaccounted money and illicit financial flows. The Government is renegotiating many tax treaties to consider limitation of benefits to check the routing of Indian money to tax havens."

Mr Das further added that tax administration is a continuous process. The revenue department is open to change its culture and make tax administration more effective, bring in a moderate tax structure as well as enable ease of doing business. The CBDT and CBEC have recently issued circulars which are non adversarial, and also set up committees to evaluate the feasibility of TARC recommendations. Further, the Government is working towards facilitating 24/7 customs clearance at 17 airports and 18 seaports across the country. He stressed on the fact that tax exemptions should be administered in an efficient manner, and in this context, the Government is setting up a vertical for exemptions, which would facilitate tax concessions and reliefs in a friendly manner. The Government has also set up a High Level Committee under the chairmanship of Dr. Ashok Lahiri to interact with trade and industry and ascertain areas where clarity on tax laws is required. Mr Das suggested in his speech that high pitched assessments without proper base should be avoided.

Echoing the views of the Government, Mr Kaushal Srivastava, Chairman, CBEC, Ministry of Finance,Government of India said that the Government is aware of the fact that the Department has to make efforts to meet the revenue target even while ensuring a moderate tax rate which does not impose a burden on the taxpayer; and that there is an expectation of stability and certainty in the tax regime along with simplified procedures. In this context, GST will provide uniform based consumption tax. Further steps have been taken to handle tax litigation, like prescribing limits to minimize litigation and an extended APA mechanism.

Our country needs a tax system which is simple, predictable, efficient, transparent and investor friendly. It should stimulate entrepreneurship by facilitating ease of doing business, and strengthen our competitive advantage in the global arena. The tax system should be so designed that it not only adds to the revenue stream of the government but also promotes compliance among both individuals and corporates and thereby propel our economy to the high growth trajectory.

Addressing the gathering, Mr Rajiv Memani, Chairman, CII National Committee on Taxation & Chairman – India Region, EY said that the industry applauds the PM’s call for ‘Make in India’, but the vision needs to be supported by sure steps that will help create an environment where investments thrive and tax environment plays a crucial role. However, India needs to strike the right balance between checking tax avoidance and making the tax environment more facilitative compared to other jurisdictions competing for investments.

The CII Global tax Summit is second in the row and provides a forum where policy makers from the government and industry and tax experts converge to deliberate on issues of importance in the area of taxation.