Corporate tax system complex, need to make it more streamlined, says CBDT's Akhilesh Ranjan
DTC report focuses on using tech to improve compliance; growth in direct tax collections less than expected.
“Corporate taxation in India at present, is a bit higher than international standards, particularly when you compare with the emerging economies and with the neighbouring Asian and South-Asian economies, so reduction in tax rates is called for, a change in the way of corporate taxation is called for as there have been too many complexities introduced year after year,” said Ranjan while inaugurating ASSOCHAMs 16th International Tax Conference.
He added, “The distortions that have crept-in over the years have really made the tax system complex. I think if you're able to simplify those things, then yes compliance will increase and it should lead to better revenue growth in future.”
Talking about the DTC report which has been submitted by the panel headed by Ranjan but is yet to be made public, he said, “We have focussed on compliance as that is the cornerstone of any tax policy and compliance has different aspects, it is not just about tax rates, ease of filing procedures, it is also about modernising systems, improving litigation systems management, making the law itself more comprehensible and more organised.”
He informed that the main thrust is on compliance, persuading the taxpayer to comply even further with the tax laws and building that relationship with the taxpayer where he feels that tax is no longer a burden.
“There are major recommendations there on using technology to improve compliance, to provide better services and information to the taxpayer to in-turn get better information from taxpayer. There are chapters on litigation management, attempt has been made to simplify computation of incomes, various things, the whole structure which had become very complicated by adding on provisions now and again,” he said.
He, however, said that for improving compliance, the taxpayer must believe that the tax rates and structure is something which is reasonable and moderate, that perception must be there in the taxpayers mind, he must not feel that this is a burden. “The moment he starts feeling that this tax is something which the government has the right to ask for, then compliance starts and that's the basic principle.”
Ranjan added, “I think it is a good document, parts of it have already started getting implemented, and I do not think we will have to wait much longer.”
He also said that there is a need to look at approaches which combine alternate dispute resolution systems with systems that can handle or manage the existing litigation in a much better manner. “The taskforce report talks about these alternate dispute resolution systems, I think in the years to come we will be trying to implement some of them.”
Ranjan said that it is more important to develop an advanced system of cooperative compliance. “I think that is something which both government and industry must look forward to, cooperative compliance programme is something which has been successful in countries like the UK, it is something we should be looking at and that's where we will need industry’s and businesses’ cooperation as and when this concept comes into the Indian tax administration whereby industry can participate and get more certainty.”
On concerns about government meeting its direct tax collections, he said, “Yes, the growth in collections is lesser than expected, I think we’ll be sitting down, having a look at all the reasons and reorganising our strategies for that.”