Companies anticipate taxmen to turn aggressive: Survey

Indian businesses are anticipating a "more aggressive" stance by tax authorities as their tax arrangements come under greater scrutiny, says a survey.
The findings are part of leading consultancy Deloitte India's BEPS (Base Erosion and Profit Shifting) survey titled 'Anticipating BEPS India impact'.
Indian businesses are anticipating a more aggressive stance by tax authorities in the future regarding hybrid instruments and interest deductions, it said.
About 65 per cent of the respondents either "agree or strongly agree" that although the tax authorities have not been aggressive in tax examinations of hybrid instruments and interest deductions so far, they are likely to do so going forward.

"Retrospective amendments in India have significantly dented investor confidence in the past," it noted.
Further, the survey said vast majority of the respondents believe that regulators should consider and protect the interests of Indian headquartered multinationals while implementing BEPS recommendations in India.

The BEPS project is aimed at putting in place measures to prevent tax evasion and avoidance, including by multinational companies.
Anis Chakravarty, Partner at Deloitte India, said there is a heightened level of awareness among Indian companies on the impact of BEPS measures on their business operations and the likelihood of increased compliance.
"The BEPS project is extremely relevant for India, especially the action plans dealing with treaty abuse, permanent establishment, intangibles, digital economy and transfer pricing country-by-country reporting," he added.

This India specific BEPS survey was conducted with a target audience of tax executives from multinational companies.
So far this fiscal, corporate tax collection has not been
impressive as corporate earnings are not very robust. This has led to a growth in direct taxes of 11 per cent as against 33 per cent growth in indirect taxes, he added.
He said the shortfall in direct taxes to the tune of Rs 40,000 crore would be made up by robust collection in indirect taxes and the total tax collection target for the fiscal would be met for the first time in five years.

Adhia said the income tax department is trying to widen its tax base as currently 3.5 per cent of total population pays the income tax.
He said while about four crore people file I-T returns, another about two crore people pays Tax Deducted at Source (TDS).
Adhia said the tax department is making efforts to reduce litigations. At present 3.4 lakh litigations are pending in direct taxes and another 1.36 lakh are pending in indirect taxes.
In order to attract foreign investors Adhia said, "We have to rationalise our taxation laws, we have to simplify them, we have to have a predictability in tax regime, a kind of certainty. These are things which are required when it comes to taxation, then the investors would be interested in coming to our country.