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Government Committed to Improve Ease of Doing Business: Mr Sushil Chandra, Chairman, Central Board of Direct Taxes
Dec 04, 2018

Mr Sushil Chandra, Chairman, Central Board of Direct Taxes, Ministry of Finance, reiterated the Government’s assurance in bringing about simplification and certainty of tax law as also efficient litigation management to be in consonance with the commitment to improve ease of doing business. The Government is in favour of establishing an industry-friendly tax structure which would improve tax compliance. The Government is following a consultative and collaborative approach with the various stakeholders while reforming the tax systems, he further said, while addressing the gathering at the International Tax Conference: Keeping Pace with Global Dynamics, organized by Confederation of Indian Industry at Hotel Le Meridien in New Delhi today.

Elucidating on the various initiatives taken by the Government in the recent past, Mr Chandra said that the department has taken recourse to technology and automation in multifarious areas such as pre-payment of taxes, filing of returns, refunds, case selection and finalisation of cases for scrutiny, among others. The returns proforma has also been simplified and processing of refunds has been frontloaded to facilitate ease of doing business. He further maintained that assesses no longer need to be in fear of scrutiny as the process has been made non-discretionary based on technology and e-assessment. Less than 0.5% of cases have been brought under scrutiny which should provide comfort to assessees.

Mr Chandra alluded that further reforms are on the anvil as the process was underway to provide PAN number in four hours, providing pre-filled returns which would need to be endorsed by assessee and faster processing of returns. 

On litigation, he said that circulars are being issued to officials to the effect that once the verdict is given by the High Court and Supreme Court, there would be less chances of appeal by the taxation department.  Further, the Authority of Advance Rulings (AARs) has also been geared up to provide final rulings.

Further, the government has made significant progress on Mutual Agreement Procedure (MAP) and Advance Pricing Agreements (APAs) to improve certainty in tax matters. For instance, 245 APAs have been concluded - a process which provides tax certainty to companies for nine months in transfer pricing cases; and more suggestions are being sought for the improvement of the mechanism. Further, more than 500 tax matters have been resolved under MAP. This underscores the resolve of the Government to reduce litigation and also provide alternate forums for dispute settlement.

Mr Chandra came out strongly in favour of strict enforcement of tax laws and stated that Government would consider reducing tax rates in case there is better tax compliance. Elaborating on the issue, he said that at a time when industry desired lower tax rates in line with global practices, the mentality should be comparable with international standards when it comes to payment of taxes. The Government has already signed treaties with 70 countries on automatic information exchange on financial transactions and hence it would be in the interest of assesses to provide information on their foreign assets and bank accounts, among others in their returns to avoid prosecution as the department is taking strong action against defaulters.

Alluding to international taxation, Mr Chandra said that the government had taken a lead in BEPS implementation and taxation on the digital economy. It has been the first to impose equalization levy. Further a consultation process is in place to determine Significant Economic Presence of an entity; the opinion of stakeholders has been invited and the committee set up for the purpose would give its report by March. The Government is firmly of the view that the economic value generated by the company should be taxed even when the company has no physical presence even while ensuring that India continues to remain an attractive destination for investment.  

During the Conference, Mr Akhilesh Ranjan, Member (Legislation), Central Board of Direct Taxes, Ministry of Finance stressed that the implementation of BEPS has been one of the leading issues on the Government’s agenda since the last couple of years. We have the laws and mechanisms in place, we have been receiving the country by country reports (CBCRs), now the Government is working on how to utilize the CBCRs. India has signed the Multi Lateral Instrument, and in the next year or so, a lot of changes are expected to happen in the Double Taxation Avoidance Agreements (DTAAs), as a consequence of the same.

Action I on Digital Economy has led to evolution of tax laws globally. As a result of the Digital Economy guidelines, business models are changing, not only in internet based companies, but in all industries. Digital Economy cannot be ring fenced and that is a big advantage. India has implemented guidelines on Significant Economic Presence (SEP) and this can lead to reasonably attribution of income to the relevant economies. There are many factors which contribute to the change in tax rates in a country. Requirement of funds for investment, availability of the required incentives to industry and consistency with the global trends are some of the important factors for determination of tax rates.

CII International Tax Conference has been well attended by the Government, industry and consultants, both domestic and International. During the daylong Conference, discussions were held on Global policy trends, Transfer Pricing, US Tax reforms and impact of BEPS on digital economy taxation.

4th December, 2018

New Delhi

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