Leaner, Swifter Taxing Machine

Context: Transitions in Indian tax administration during Covid-19, like online personal hearings, e-office solutions and machine-based automation have reduced physical interfaces and removed bulky paperwork.

Transformations in tax administration:

• Turant Customs initiatives: such as online query module, eSanchit, web-based goods registrations and electronic processing of directorate general of foreign trade (DGFT)-issued licences have been taken.
• Faceless assessment processing: has been rolled out nationally, aimed at reducing waiting time.
• GST has increased formalisation of the economy: There are now 1.28 crore registered taxpayers, reflecting the efforts to widen and deepen the tax base.

Impact of digitisation and datafication of tax administration and trade facilitation:

• Enhanced the effectiveness of tax compliance: improved taxpayer services, increased transparency and reduced tax compliance burdens
• Ease of doing business:
  • India is one of the 10 economies showing most notable improvement in Doing Business 2020 and jumped 12 places in the Trading across Borders.
  • The Authorized Economic Operator (AEO) programme, assures a comprehensive list of benefits while ushering in modern supply chain security standards.
  • Revamped customs warehousing scheme that supports ‘Make in India’.
  • The Production-Linked Incentive (PLI) scheme in the pharma and electronics sectors;
• Checks taxation on consumptions within the border:
  • In India, the OIDAR (Online Information Database Access and Retrieval) route in GST has moved to tax some of the services supplied across the border.
  • Concerns remain around base erosion and profit shifting (BEPS) and related issues.

Conclusion: The future of tax reforms will be based on trust, transparency and technology. Also implied is that the principles of a fair tax system — consistency, predictability, neutrality — will be the touchstones going into the future as well.