“While we said that it’s may not be possible for a country like India, with our revenue requirement and huge market, to wait for the consensus to start our own taxation, we are part of the inclusive framework where there is a general agreement that once there is a consensus, all such unilateral measures will be withdrawn,” Central Board of Direct Taxes (CBDT) joint secretary Rashmi Ranjan Das at CII international tax conference on Wednesday.
“We do not see you lateral measures as going on indefinitely, and we are very hopeful (on reaching a consensus),” he said during a virtual panel discussion.
The official added that he expected a consensus to be reached by mid-2021 or possibly later as most countries were heavily invested in the process and absence of a consensus would lead to more unilateral measures by different countries.
When asked about India’s views on alternative mechanisms to resolving disputes, he said that the country’s focus has been on dispute prevention and hoped that the existing dispute resolution mechanism could be strengthened.
He added that tax certainty was important for all businesses and that India was also putting in a pre-emptive mutual agreement procedure (MAP) forum where a focus group is providing benchmarks for guidance for competent authorities for various transfer pricing cases.
He also pointed to the recent initiatives of the government including the Faceless Assessment Scheme and the Vivad se Vishwas Scheme intend to communicate the government’s intention of making the tax administration transparent and accountable, and fostering a non-adversarial tax regime.
He added that the government was providing an environment of tax certainty to companies and reduced corporate tax rates – which are now competent to most other countries in the world – to attract investments in India.
“Indian Government is committed towards a transparent, fair and moderate tax regime, providing certainty and clarity to attract foreign investments to the country,” he said.
India had reduced the corporate tax rate to 22 per cent for companies that gave up all exemptions and incentives in September last year. The effective rate without exemptions would be about 25.17 per cent. However, a 15 per cent rate has been offered to new companies including manufacturing firms. The rates have been set at a far more attractive levels compared to previous rate of 30 per cent.