Regulation of Taxation System in India

Abstract

India currently focus to standardize its economy, as in history, it has background of black money, tax avoidance, and institutional corruption. Consequently, authorities are also willing to safeguard their businesses and traders alike are carried under federal and state tax and regulatory networks. Although worries over the grey economy has great impact on India’s tax program, foreign investors should step themselves: the country is intense to increase its affordability for foreign investors. Corporate tax rates are probable to fall down in the next five to eight years, as India’s formal economy and instant federal tax targets expands. India is still normalizing its economy years, while in 1991, when the first series of transformations were introduced– its aim was to lower corporate tax rates and it should be treated as reliable, but it can only be possible by the long-term efforts. In India, at present, large firms and multinational companies pay approximately 30-40% of corporate taxes depending on their cess duties and surcharges applied on them. Moreover, the Union Budget 2018-19 has also decided to lower the corporate income tax (CIT) rate up to 25 percent for micro, small, and medium enterprises (MSMEs) that are applicable from assessment year (AY) 2019-20. This lower tax rate for MSMEs targets the quantum of India’s business sector – at over 95 percent; large multinational firms represent the country’s minority of top taxpayers. The important tax announcements regarding the latest budgets involve the return of tax on long-term capital gains and tax relaxations for specific sectors.