The latest episode of CNBC TV18’s deliye spotlights entered the major insight by a recent survey conducted by Deloitte, which captures opinion from industry professionals about expectations for existing tax policies and reforms.
Let us find out possible measures to simplify the current challenges, ongoing initiatives and India’s income tax structure and increase economic growth.
DELOIITTE surveys and exposes the case for simplification
A delotted survey reveals 94% consensus of 94% among the professionals of the industry on simplifying India’s income tax policy. The emotion currently reflects increasing frustration with complex and often burden provisions of the structure.
Online Income Tax Policy Surveys are associated with more than 320 professionals from various industries, including technology, media and telecommunications, financial services, life science and healthcare, consumer goods, energy, resources, industrial and government and public services.
The survey has revealed that 64%of the respondents considered transfer pricing laws to be complicated or extremely complex, followed by fines and prosecution laws (63%) and evaluation/revaluation process (61%). Many participants evaluated the opposing rescue rules (GAAR and SAAR) as the most complex.
Additionally, more than 70% of respondents emphasized the need for simplification in individual income tax returns (ITRs), corporate ITRs and tax audit reports. The time and cost of tax litigation were exposed as major commercial operations concerns.
Gokul Chaudhary, President of Tax at Deloite India, said how the Finance Minister has recognized the issue, even addressed it in the Union Budget last year. However, the challenge lies in maintaining a delicate balance between the challenge, simplicity and the need to effectively address the complex -tax scenarios.
The government’s visit for simplification began in 2015 when the Finance Ministry started reducing the income tax holidays and tax rates. This practical improvement, which has lasted for eight years, has made significant progress.
Today, instead of offering tax holidays within the Income Tax Act, incentives are provided outside the Act such as the production linked incentive (PLI) schemes.
Moving forward, the key is to remove the meaningless classes from the Income Tax Act, making it more brief and easier to interpret. Such efforts will improve tax certainty, especially for global investors, and compliance for domestic taxpayers.
As Chaudhary has emphasized, technology should play a central role in achieving this vision, rapid, more accurate and user -friendly tax compliance systems.
Tax challenges of MNCs in India
Equaling compliance and admission requirements remains an important demand for multinational corporations (MNCs). A major MNC tax and customs leader Sanjeev Aggarwal explains that pending tax litigation is a significant obstacle.
With more than six lakh direct tax cases pending in various courts, the Commissioner of Appeal, Income Tax Appellate Tribunal (ITAT), including the High Courts and the Supreme Court, are judicial backlog, shocking.
Reperate appeal procedure – where taxpayers and tax departments often increase matters – the fuel increases delays. To address this, Aggarwal suggested setting a high limit to appeal to tax disputes, to ensure that only important matters reach the High Courts.
Initially the clear interpretation of tax laws can also prevent disputes from arising. The upcoming budget allows the government to provide such explanation, promote more certainty and reduce litigation.
Transfer pricing complications
Transfer pricing rules, which control the respective-party transactions, are among the most challenging aspects of India’s tax landscape. As India integrates deeply in global supply chains, the amount of such transactions is ready to increase.
Chaudhary explains that the government’s reserved port rules, initially designed to reduce the investigation of transactions within predetermined margin, have been reduced due to lack of competition. Amending these rules to cover 90% of related party transactions Will encourage widespread adoption and streamlining compliance.
Another Tantra, Advance Pricing Agreement (APA) program, has shown promise to taxpayers by giving certainty to five years. However, the long process of finalizing APA is a matter of concern.
Susking transfer pricing audit during APA dialogue can reduce pressure on taxpayers and tax authorities. The implementation of these measures will align India’s transfer pricing structure with global best practices, reduce compliance burden and promote investors’s trust.
Impact of tax uncertainty in India
Tax uncertainty creates significant challenges for global corporations, affecting their strategic plan and investment decisions. While companies try to follow tax laws, they require clarity on their liabilities.
Aggarwal rapidly outlines the importance of APA proposals and highlights the need for stake consultation before starting the new tax provisions. Publishing draft laws to public response can help refine policies and find out explanatory issues quickly, which can ensure smooth implementation.
The retrospective tax modification, which has historically created uncertainty, has been largely saved in recent years. However, any new tax reforms should prioritize transparency and fairness to create confidence between investors and taxpayers.
Effect of encouraging development areas
Tax incentives play an important role in promoting innovation and supporting high-development areas. Aggarwal noted that the target support is still required when the Government of India is phasing out some areas, such as research and development (R&D).
Increasing R&D incentive will improve the quality of Indian goods, promote global competition and increase exports.
The government should carefully evaluate which incentives provide the highest economic returns. A balanced approach- targeting important areas like R&D- will ensure that tax incentives promote prolonged growth effectively.
Take advantage of technology for faceless assessment
India’s faceless assessment scheme has been a transformational initiative, taking advantage of technology to increase transparency and efficiency in tax administration. Chaudhary praised the government’s efforts to modernize the tax system, given that the faceless scheme is also spread to appeal. However, he accepts the remaining challenges and ensure impartiality and the need for promotion.
Adopting technology in tax administration reflects India’s commitment not only as an exporter of IT services, but also as a nation implementing IT-powered reforms, not only India’s commitment to innovation. Encouraging more acceptance and creative response from taxpayers will help to maximize its potential benefits, refines the faceless assessment system.
Building a simplified and effective tax system
India stands at a significant turn in its tax reform journey. Equaling the Income Tax Act, resolving litigation obstacles, aligning transfer pricing rules with global standards, and promoting tax certainty are necessary steps to increase the country’s tax policy.
By taking advantage of technology and confusing stakeholders in policy-making, the government can create a fair, more efficient tax system that supports economic growth and attracts global investments.
The insight by the survey and expert opinion of the Deloite underlines the urgency of these reforms. As India wishes to become a $ 7 trillion economy, a simplified and investor-infrastructure structure will be important in realizing this vision.
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