As the finance ministry reviews the Income Tax Act, a Deloitte India survey shows that 94% of industry leaders prioritise simplifying tax laws, while 43% call for improved tax dispute resolution mechanisms.
The goal is to enhance tax certainty, reduce ambiguities, minimise litigation, boost investor confidence and improve taxpayer services, the survey says.
Tax reporting complexities hinder the ease of doing business, especially for small firms struggling with burdensome compliance. “Over 70% of these businesses emphasized the need for simpler processes. Additionally, businesses are concerned about the high time and cost of tax litigation, highlighting the need for streamlined and efficient dispute resolution,” it says.
Despite these challenges, 61% of respondents appreciated recent reforms, particularly the integration of advanced technology through the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) tools. These pre-filled tax returns have simplified access to financial data, reducing the time spent on data collation and encouraging higher voluntary compliance, as reflected in the rise in tax returns filed over the past two years, according to the survey.
Opportunity to revamp the tax framework
Gokul Chaudhri, President – Tax, Deloitte India, said, “To enable its full economic potential and establish itself as a growth leader, India has an opportunity to revamp the tax framework that is simplified and digitally advanced. The government has made commendable strides with initiatives such as GST simplification, e-invoicing and faceless tax assessments.”
“There is an opportunity for fair value computations and ease in preparing and filing income tax return forms for individuals. A modernised tax system, aligned with recent government initiatives, would enhance compliance, drive growth and bolster India’s competitiveness on a global scale.”
Additionally, 74% of respondents highlighted the need to simplify and streamline the return filing process. Executives stressed the importance of clear guidelines and stronger reporting standards within the TDS system to improve compliance and business efficiency.
Businesses also called for faster dispute resolution, timely appeal processing and an end to repetitive assessments. Key reform suggestions include a streamlined patent regime, simplified hiring exemptions and a “one rate, one section” model for TDS to reduce compliance burdens.
Amrish Shah, Partner, Deloitte India, said, “In a welcome move, the Honourable Finance Minister, in her Budget Speech for the fiscal year 2024–25, announced the historic initiative of reviewing the existing income tax law, an exercise aimed at simplifying the law, making it easy to read and comprehensible, thereby reducing disputes and litigation and providing tax certainty.”