The article below is from BKR member firm KC Mehta & Co.
“Change is hard at first, messy in the middle and gorgeous at the end” (Robin Sharma)
A quote that perfectly describes the current situation of the Indian tax and regulatory environment. For the past few years, India has been in news, albeit for good reasons. India has emerged as one of the most favoured destinations for foreign investment in recent years. This is a clear indicator of the trust that business communities from across the world have bestowed upon India.
India’s selection as a spot for foreign investment was a no brainer considering the enormous amount of young and skilled workforce and the humongous customer base that India offers. However, the growth was limited considering the scepticism that prevailed in the minds of investors in terms of the ever-changing tax and regulatory environment, at times, creating a negative perception. Plus a host of retrospective tax amendments that followed the Vodafone Saga added fuel to the fire.
In my opinion, that was an eye opener. An eye opener for both, the investors and the Government. The investors got a feel of what was to follow. The Government, on the other hand, got the bitter taste of criticism from all corners of the profession and industry.
A complete overhaul:
That brought in a change – a much desired change. Over the past four years, Independent India has witnessed, arguably, the biggest tax and regulatory developments in its history. The Company Law was revamped (implementation of Companies Act 2013), the hyped Goods and Services Tax (GST) has been implemented, Indian Accounting Standards (Ind AS) have been introduced which is a move towards internationally accepted accounting methodologies.
On the International Tax front, India has kept pace with the changing times, be it being a signatory to Multilateral Convention to Implement Tax Treaty related measures to prevent BEPS (‘MLI’) or joining the Multilateral Competent Authority Agreement (MCCA) on Automatic Exchange of Information (AEOI). India has been aggressively renegotiating its tax treaties to pluck the loopholes that led to cases of double non-taxation.
Being a part of the system, one can witness the changes being brought about in the administration of tax matters. Tax officers have started conducting Tax audits online, which is a big step towards a paperless tax office (which still is quite distant a goal). Resolution of tax disputes has become the focal point of the Government. Towards this end, the Government has been bringing a lot of clarity on various tax issues which had attracted long drawn litigation, thereby reducing the pendency of cases and also bringing about some kind of consistency on handling of specific issues.
Time to decode:
In November 2017, the Government has set up a new task force to draft a new direct tax legislation which shall provide its comments within six months. It would be interesting to see how the Government would bring in the new law, considering that it scrapped the talked about Direct Taxes Code back in 2015. A revamp of the direct tax legislation could pave way for a lot of advancements which will go well with the changing times and shall factor the nuances of industry which otherwise were being missed out in the old law.
We are one lucky generation. A generation that is getting to witness a change that will shape the new business-friendly India! What these changes have done is they have kept the business houses on their toes and made the otherwise lazy population of India, more active.
Change is definitely difficult, more so when it is impacting, at least 1.32 billion people. Right implementation of the changes along with support from the taxpayers will surely bear fruits for the economy in the long run!
As George Bernard Shaw said, “Progress is impossible without change, and those who cannot change their minds cannot change anything!”
K C Mehta & Co., India
+91 99983 24622