Rollout of several tax-related policies during the nearly three-year tenure of the Narendra Modi led government should be seen as measures to ensure greater transparency in financial transactions, says a senior official at Paris-based think tank Organisation for Economic Co-operation and Development (OECD). India now plays an active role at international bodies in initiating such steps.
“There has been a peculiar focus on raising the revenues that are due to governments, and one limb of that is ensuring transparency and to make sure that tax authorities have the information they need to be able to enforce their own tax laws and India's tax related measures should be seen in that light,” Monica Bhatia, head-secretariat, OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, told BloombergQuint.
The central government has announced a slew of measures in its fight against black money and ensuring transparency in financial transactions in its tenure, including the Income Declaration Scheme, the Undisclosed Foreign Income and Assets and Imposition of Tax Act, the new Benami law and demonetisation.
Bhatia added that of late, India has played a very active role at the international bodies like the OECD, G20, and India's tax-related moves are consistent with what the country is doing domestically when it comes to tax transparency.
Two major global events: the Brexit referendum and the election of Donald Trump as the U.S. president, have led to a lot of uncertainty in several countries around the world.
Bhatia, who was previously a commissioner in the Indian Income Tax Department and a director of tax policy and legislation and a director of foreign tax and research, believes that these developments show that countries want to protect their sovereignty.
“With a lot of push towards more nationalistic sentiment so to speak, which appears to be a move away from international bodies and collaboration, to me it seems that countries do want to protect their sovereignty and their decision making in tax matters. But, while doing that, I think the need to collaborate and cooperate will be even greater.”
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