Latest Expert Exchange Queries
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) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: due date for vat payment :: empanelment :: VAT Audit :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: cpt :: form 3cd :: TDS :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES
Direct Tax »
 CBDT issues final rules for taxing share buy back by companies
 CBDT issues final rules for taxing share-buyback
 The direct tax collections up to September, 2016 are at Rs. 3.27 lakh crore which is 8.95% more than the net collections for the corresponding period last year.
 IDS is tremendous success: CBDT chief Rani Singh Nair
 Submit monthly data of appeals disposed of: CBDT to officers
 Direct tax mop-up jumps 9 per cent in H1, indirect tax up 26 per cent
 Income tax department slams notice on five Mumbai-based exporters over offshore accounts
 Redress TDS mismatch grievance of taxpayers: CBDT
 Tax department changes rule for accommodating deductions for deferred spectrum payment
 Tax dept renotifies income computation, disclosure standards
 Sushil Chandra to be the next CBDT chief

Changes that defined the direct tax system in India
February, 27th 2014

By Prashant Khatore, Tax Partner, EY

The last decade in Indian direct tax system has seen significant changes and reforms, with some of these changes even garbing headlines at global level. The thrust of recent tax policies appear to be towards widening of tax base by reduction in tax rates, minimization of tax exemptions, rationalisation of tax provisions and enforcement of tax compliances.

The last decade was full of excitement in view of introduction of various new taxes and tax controversies of multi-million dollars. These developments were in terms of introduction of new taxes and provisions such as e-initiative of tax administration; Fringe Benefit Tax (FBT), Securities Transaction Tax (STT), Banking Cash Transaction Tax (BCTT), Direct Tax Code (DTC), General Anti-Avoidance Rules (GAAR), Dispute Resolution Panel (DRP), Advance Pricing Arrangement (APA), Safe Harbour Rules, etc., efforts to renegotiate tax treaties and retrospective amendment in tax laws overruling the court rulings.

The leading initiative to make increased use of information technology (such as e-tax returns, e-payment of taxes, digitization of TDS machinery, etc.) has done profoundly well and helped the government to facilitate efficient tax administration and plug in leakages to some extent.

With focus to prevent generation and circulation of unaccounted money, tax return filing was made compulsory for taxpayers meeting specified criteria (widely known as one-by-six criterion) in 1997; however this was scrapped in 2005 since it failed to achieve the desired objectives. In addition, various reform measures have been taken to increase tax compliances, track tax drips and apparently widen the tax base by introducing provisions relating to Annual Information Return (AIR); strengthening of withholding tax provisions; focused usage of permanent account number (PAN), etc.

During the last decade, some of the cardinal provisions introduced to widen the tax base were FBT, BCTT and STT. FBT and BCTT led to additional compliances, without corresponding increase in tax base and administrative advantages to the government and hence were abolished in 2009. STT was introduced to spur the capital market by abolition/ reduction of capital gain tax on sale of certain listed securities and payment of nominal amount of STT on such sales, with this rate being further reduced over a period of time.

Further, considering that profit linked incentives are inefficient and in past did not have significant impact on the desired objectives, the government shifted focus from various profit linked incentives to investment linked incentive. Also, various tax incentives on export sales were withdrawn by the Government.

Another significant emphasis of the last decade was towards international transactions and payments, with retrospective amendments for taxability of indirect share transfer, taxability of software, services, royalty etc. Some of these retrospective amendments caused negative impact on overall investment and business climate in India. Efforts were also made efforts to renegotiate certain tax treaties, clauses for Limitation of Benefit and Tax Information Exchange Arrangements.

The period also witnessed controversial and high pitched tax litigation, particularly on international tax issues. Another significant and widely debated initiative was introduction of DTC and GAAR, which were introduced as anti-tax avoidance measures. After lot of debate, provisions of GAAR have been rationalized and its implementation has been deferred till the year 2015.

However, as consensus on DTC provisions is not yet reached, its implementation has not yet decided. Recently, after considering the impact of certain controversial tax provisions and actions by tax authorities in some cases on overall investment and business climate, the government has formed various committees to address the concerns of the investors, which has reflected some positive perspective for taxpayers.

Further, recent introduction of APA and safe harbour rules is widely welcomed by the investors and is expected to reduce transfer pricing litigation and bring in certainty.

Overall, it can be sad that the last decade was marked with significant changes in the tax policy and litigation. The efforts are still continuing to strike the right balance between revenue collection and non-adversarial tax administration. Given that tax continues to attract significant attention of all players in the global economy, we should have a stable, fair, predictable and unambiguous tax regime to make best use of the opportunity and achieve our objective of growth.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multi-level Marketing MLM India Affiliate Marketing Affiliate Marketing Software MLM Software MLM Solutions Multi level marketing solutions MLM Servi

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