Look beyond calls for tax freedom, says FM industry | Today’s news
New Delhi: Finance Minister Nirmala Sitharaman on Wednesday urged industry and tax experts to go beyond calls for lower taxes or higher exemptions and incentives and instead come up with evidence-based ideas to improve the tax system along with an assessment of any unintended consequences their proposals may have.
Speaking at a global tax conference in Bengaluru, Sitharaman also called the “continuous negative commentary” on growth “worrying” and said the economy was on solid footing despite heightened external headwinds.
“India navigates these waters amid global challenges in such a way that our people do not suffer and we are much better off than others,” the minister said in a question-and-answer session that followed her address at an event organized by the International Tax Research and Analysis Foundation.
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The minister appealed to tax professionals and institutions not to limit themselves to the sectors they represent and to help make independent research on tax policy part of the public discourse.
“I do not question the sincerity of these (pre-Budget) statements and submissions. Naturally, each sector argues from the point of view it represents. But a mature debate on tax policy must go beyond sectoral considerations,” Sitharaman said. “I would like to hear a statement that says: here is a provision that no longer serves the tax system and should be removed, even though we currently benefit from it, and (another provision) would be better than this.”
The proposals must also specify the compliance requirements they may require, the potential beneficiaries and the implications of any such changes on the wider tax base, the minister said, calling on experts to contribute to a consultative process that puts the nation’s interest first.
The government, Sitharaman said, focused on “reducing tax disputes rather than just managing them”. The focus was on making voluntary compliance easier and reserving enforcement capacity for cases that really needed it, she added.
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The Vivad Se Vishwas scheme, she said, provided an opportunity to taxpayers and the government to settle old disputes instead of being embroiled in endless litigation.
Thresholds for ministerial appeals have also been raised ₹60 thousand before the Income Tax Appellate Tribunal, ₹2 million before the High Courts and to ₹5 crores before the Supreme Court. It is among a number of measures that the minister mentions as efforts to reduce tax disputes.
Digital taxation
Responding to a question, Sitharaman underlined the “monstrosity” of taxation on the digital economy as it spans geographies.
She said digital companies, transactions, consumption of digital products and services all have a “full play” in our economy. But there are complex questions about the nature of regulation and the amount of taxation that policymakers face.
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On crypto assets, she said discussions are ongoing in India and that the government will continue to tax such transactions at source until there is more clarity among stakeholders.
In the Union Budget for FY23, Sitharaman announced a 30% tax on any income from the transfer of virtual digital assets, including crypto, and a 1% tax deducted at source on all such transactions.
