India Tax Reforms – Transparent Taxation

India Tax Reforms – Transparent Taxation

The Indian government since 2014 has been focussing on reforming India’s tax structure by introducing new forms of direct and indirect taxes and alleviating the way of tax filing compliances from the 70+ year old age ridden ways post-independence.  The government claims to follow its vision of minimum government and maximum governance.  This means it intends to take all steps to reduce the interference of the government in the lives and business affairs of its citizens.  For this, the government aims to make optimal utilization of technology and inject efficiency, integrity and consideration in the bureaucracy.  The thinking and approach of the entire tax system is hereby envisioned for overhaul and innovation.

Today, India clocks 63rd globally in the World Bank ranking for Ease of doing Business.  India is seeing foreign investors pouring investment as the government has boosted confidence and welcomed global businesses with swift bureaucracy and attractive tax implication.  Also, the new GST law which was introduced in 2017, by scrapping multiple tax laws, to consolidate into one indirect tax law, and which is completely tax digital, has giving lot of impetus for entrepreneurs. Also, the government has aimed to reduce tax litigations by capping the limit to file cases in High Courts to INR 1 Crore (10 Million) and in Supreme Court to INR 2 Crore (20 Million).  Also, the “Vivad se Vishwas” scheme has paved way for out of court settlement of tax disputes.  The individual taxes up to INR 5 Lakhs (0.5 Million) have been zeroed and tax slab rates for individuals are also reduced since last 2020 budget.  India’s corporate tax rate is now down to 22% from 30%, making it among one of the lowest globally.

The Transparent Taxation – Honour the Honest initiative of the government is aimed at making things seamless, effortless and faceless.  So this new platform shall offer for the first time a Taxpayers Charter, Faceless Appeals and Faceless Assessments.  This is projected to infuse honesty amongst taxpayers and kill corruption from the tax system.

Let us briefly list down what this means:

-       Local city and state income tax departments played important role in regional assessment of individual and businesses.  This is now scrapped.

-       Through a sophisticated computer program, tax scrutiny would be initiated from anywhere in India, with the taxpayer and tax officer both subjects being faceless.

-       The review of the scrutiny order will be done by a faceless team in a different city from where it was originally assessed.

-       The process of appeals against orders will also be faceless.

-       A new Taxpayers Charter is issued for Indian citizens, which will list out their rights and duties, offering a sense of respect for taxpayers from the tax department.  The charter will aim at facility and safety of taxpayers as well.

In the recent years, there has been a hike in the number of Indian citizens filing income tax returns by 2.5 Crore (25 Million) assessees, however in a total population of close 140 Crore (1.4 Billion) people, only 1.5 Crore (15 Million) end up paying income taxes.  Through this initiative, and the previous measures of reducing tax rates, the government is hopeful that the Indian people shall come forward to file their income tax returns religiously and pay taxes honestly.  It is indeed imperative for any government to have taxes paid and collected honestly in order to provide its citizens better facilities and infrastructure.  It now remains to be seen, how successfully this much awaited tax administration reform shall work towards nation building.

For any queries on this article or help with your taxes, feel free to write to us at info@gjmco.in or Schedule a Call.

 

Thanks & Best regards,

Knowledge Base team

GJM & Co.

Chartered Accountants

www.gjmco.in

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