India needs a better tax regime by bringing in “very drastic reforms” as the share of income tax is much less compared to its Gross Domestic Product (GDP), Supreme Court Judge Justice A K Sikri has said.
Speaking at the unveiling of a book on tax issues, Justice Sikri noted that various aspects need to be considered including suggestions to abolish income tax altogether as in other tax havens.
“In the entire income generated in GDP and taxation forms, how much is the share from income tax and in comparison with direct tax, it is much much less,” he said at the release of the book ‘Tax Dispute Resolution, Challenges and opportunities for India’, which has been penned by advocate Mukesh Butani.
“Why can’t we have a better income tax regime? There is a talk that why don’t we also abolish income tax altogether and like other tax havens, we also create such atmosphere, maybe the FDI we generate and the benefit which we reap out of that would outweigh the income which we are gaining through the collection of income tax and save the money spend on tax disputes,” he added.
Senior advocate Harish Salve, who released the book which provides ‘out of the box’ ideas to address the situation and make our tax system modern and responsive to change, said that there was a need for changing the mindset.
“We have to recognise we are a land of million hopes, we are a land of million ambitions. We also have to recognise that increasingly in the world, democracy is a fragile virtue. We are now islands of democracy in the growing anarchy of the world. We need a change of mindset, we need a change in the mindset in governance, administrators and corporates,” he said.
“If it takes ten years for a case to be disposed of, you might as well not have that case. A business man waiting ten years to get his money back, he might as well not get it back. The government which recovers ten years down the line in absolute terms what it had to recover ten years back is meaningless,” the senior counsel added at the event last evening.
The book aims to provide a holistic view of how tax policies have shaped in India, the importance of dealing with tax disputes and suggestions to improve, to tax payers, tax practitioners, tax administrators and tax administrative and judicial forums.
It is supposed to serve as a guide to tax policy makers to choose the practices adopted by nations.
With regard to the book, Justice Sikri said, “The book has come out in a relevant time. Now the debate on globalisation is going on, and media is discussing it a lot. Tax reforms are needed, very very drastic reforms are needed. This book is going to help the policy makers as well.”