In 2020, India lost arbitration cases to Vodafone and Cairn. These cases were against India’s retrospective taxation regime that came into effect on 2012. On December 21, the Indian government challenged the Vodafone case verdict before the Singapore Court. Given the retrospective taxes’ reputation of being unattractive for investors, the government could do well in removing such taxations – especially at the time when India is considering increasing investments to ensure Atmanirbhar Bharat. Alterations in this regard should be ensured to enable India to become a lucrative investment destination.
Recently, the Supreme Court in the case of Adjusted Gross Revenues allowed the telecom companies 10 years’ time to pay the AGR dues to the department of telecommunications. The decision comes after the last years’ judgment which upheld the government definition of AGR calculations. The judgment is important with respect to its detailed and strict plan and its possible impact on the telecom and Banking sector and overall Indian Economy.
The digital tax issue has been a source of contention between the USA and France for a while now. Meanwhile, India has gone ahead to set up a taxation framework on a transaction basis. Recently, it expanded the tax regime to include a wider range of digital activities, seeking to improve revenue inflow. This comes in times of the economic slowdown draining the coffers of the government.
Direct tax contributes to a significant portion of the government’s revenue. However, with the growing economic crisis due to the coronavirus outbreak, the government was forced to ease tax burdens on individuals. The Income Tax department has set its budgetary direct tax collection target for 2020-21 at Rs.13.19 lakh crore, 28% higher than the actual collection in the last fiscal, which ended on May 31, with a huge reliance on Vivad se Vishwas scheme that provides for a direct tax dispute resolution mechanism. Yet, this novel scheme is also facing challenges due to the pandemic. It is necessary to ease pressure on taxpayers to increase spending and promote new businesses, while also ensuring necessary revenue sources for the government.
The interim report of the Fifteenth Finance Commission was placed before the Parliament ahead of the General Budget (2020-21). The Commission will submit its report for an extended period of 2020-21 to 2025-26 by October.
In September 2019, the Finance Minister Nirmala Sitharaman had made a deep cut in the corporate tax rate from 30% to 22%. India’s combined effective tax rate was among the highest in the world. After the tax cut, the effective tax rate for all domestic companies has been reduced to 25.17%. India’s base corporate tax, due to this move, is now on par with most Asian countries – increasing its competitiveness in the global market. This move comes in response to the brewing problem of the economic slowdown in the country. The cut in the corporate tax rate was seen as a boon by the corporates in the midst of the growing crisis within the Indian economy.
The recent report of the Union comptroller and auditor general (CAG) on the goods and services tax (GST) does praise its rollout as a landmark achievement. Notably, the revenue obtained from the GST in July 2019 stood at Rs.1.02 lakh crore. This is a 5.8% hike when compared to the GST revenue collected during the same month last year. However, the CAG also points out several deficiencies in its implementation.
The government under the prime ministership of Narendra Modi on November 8, 2016, had announced that the largest denomination of Rs 500 and Rs 1000 were demonetised with immediate effect ceasing to be a legal tender. This move led to widespread impacts across all the sectors of the economy. In a recent report by Azim Premji University, around 50 lakh people lost their jobs since demonetization was launched in November 2016. This report on jobs has come at a time when employment is one of the biggest issues in the Lok Sabha elections.
Indian elections cost huge sums of money. This money hardly comes from contributions by sympathizers of the political party but from big corporate houses. Such contributions have largely come from undeclared income/black money and this increases corruption in the electoral process. It highlights the need for implementing effective reforms in electoral finance.In the previous article, we have discussed the Electoral Bonds Scheme for bringing transparency in electoral finance. In this article, we are going to discuss another such reform called State funding of elections as a measure to bring transparency and eliminate corruption in the electoral process.