Fiscal Policy in relation to Tax

SUBJECT: Taxation

SUBMITTED TO: Prof. Neha Pathakji SUBMIITED BY: Manognya Cheeti 2010-39 III YEAR, VI SEMESTER.

National Academy for Legal Studies and Research University of Law, Hyderabad.

INTRODUCTION Fiscal policy plays a vital role in the overall economic frame work of a country and is therefore closely associated with its general economic policy and strategy building. Fiscal policy includes tax policy, expenditure policy, investment or disinvestment strategies and debt or surplus management. This policy is framed and placed before the parliament for discussion each year by the finance commission, appointed by the Ministry of Finance and Human Resource Development.1 As this paper seeks to look at the articles in the news in relation to the taxation reforms sought or speculated, before the fiscal policy for the year 2013 is tabled in the parliament, it becomes pertinent to look at how the policy in India has evolved over time. The Indian Constitution provides the overarching framework for the countrys fiscal policy. India has a federal form of government with taxing powers and spending responsibilities being divided between the central and the state governments according to the Constitution. The Constitution provides that for every financial year, the government shall place before the legislature a statement of its proposed taxing and spending provisions for legislative debate and approval. This is referred to as the Budget.2 The central and the state governments each have their own budgets. Besides the annual budgetary process, since 1950, India has followed a system of five year plans for ensuring long-term economic objectives. This process is steered by the Planning Commission for which there is no specific provision in the Constitution.3 The initial years of Indias planned development strategy were characterized by a conservative fiscal policy whereby deficits were kept under control. The tax system was geared to transfer resources from the private sector to fund the large public sector driven industrialization process and also cover social welfare schemes. Indirect taxes were a larger source of revenue than direct taxes.4 However, growth was anemic and the system was prone to inefficiencies.

1 2

http://www.ris.org.in/images/RIS_images/pdf/dp171_pap.pdf. See, http://indiabudget.nic.in/. 3 Fiscal Policy Strategy Statement, Available online at -http://indiabudget.nic.in/ub2013-14/frbm/frbm3.pdf. 4 Fiscal Policy Rules for India?, George Kopits, Economic and Political Weekly , Vol. 36, No. 9 (Mar. 3-9, 2001), pp. 749-756, Published by: Economic and Political Weekly, Article Stable URL: http://www.jstor.org/stable/4410348

In the 1980s some attempts were made to reform particular sectors and make some changes in the tax system. But the public debt increased, as did the fiscal deficit. Triggered by higher oil prices and political uncertainties, the balance of payments crisis of 1991 led to economic liberalization. The reform of the tax system commenced with direct taxes increasing their share in comparison to indirect taxes. The fiscal deficit was brought under control. Indias economy has grown at an impressive pace over the last two decades as a result of wideranging structural reforms dismantling the old licensing system and introducing competition into a number of sectors that had previously been dominated by public monopolies resulting in the opening up the economy.5 This decision has helped the Indian economy come close to the living standards in advanced economies. When the deficit and debt situation again threatened to go out of control in the early 2000s, fiscal discipline legalizations were instituted at the central level and in most states. Further reforms have helped accelerate growth in the 2000s and it averaged over 8% a year, one of the strongest performances in the world. The deficit was brought under control and by 200708 a benign macro-fiscal situation with high growth and moderate inflation prevailed. The global financial crisis tested the fiscal policy framework and it responded with countercyclical measures including tax cuts and increases in expenditures. Four years have passed since the height of the financial crisis. In these four years, taxation has become front page news like never before; fiscal stimulus has been followed by fiscal austerity and tax now makes headlines the world over.6 More recently, activity has slowed reflecting not only the weak global environment but also the emergence of strains created by the pressure that rapid economic growth has put on energy, natural resources, infrastructure and skills.7 Following the slowdown induced by the global financial crisis in 2008-09, the Indian economy responded strongly to fiscal and monetary stimulus and achieved a growth rate of 8.6% and 9.3% respectively in 2009-10 and 2010-11.8 However, with the economy exhibiting inflationary tendencies, the RBI started raising interest rates in March 2010. High rates as well as policy constraints adversely impacted investment and in the subsequent two years, viz 2011-12 and 2012-13, the growth rate slowed to 6.2% and 5.0% respectively. As growth

FISCAL ADJUSTMENT IN TRANSITION: EVIDENCE FROM THE 1990S, Catriona Purfield, Emerging Markets Finance & Trade , Vol. 39, No. 1, The Role of Fiscal Reforms in the Transition (Jan. - Feb., 2003), pp. 43-62, Published by: M.E. Sharpe, Inc., Article Stable URL: http://www.jstor.org/stable/27750325. 6 http://www.ey.com/Publication/vwLUAssets/India_Budget_2013.pdf/$FILE/India_Budget_2013.pdf. 7 http://www.oecd.org/india/IndiaBrochure2012.pdf. 8 Ibid.

slowed and Government revenues did not keep pace with the spending, the fiscal deficit threatened to breach the target.

The role and objectives of fiscal policy have gained importance in the current crisis as governments have stepped in to support financial systems, jump-start growth, and mitigate the impact of the crisis on vulnerable sections of the society.9 The post-crisis recovery of the Indian economy is witnessing a correction of the fiscal policy path towards a regime of prudence with focus on bringing in new tax reforms and better targeting of social expenditures.10 After causing consternation in the international business community in the Budget 2012, the Government had demonstrated a far higher level of willingness to engage with business. The recommendations of the Shome committee on GAAR proposals and the retroactive measure on taxing the indirect transfer of assets were both warmly welcomed as steps in the right direction.11 For Indias stronger, cleaner and fairer economic growth and sustenance, there is a need for better policy frame work for Improving the business environment, transport infrastructure, regulation, public governance and transparency, quality and access in education and health care while improving efficiency, Reforming labor markets, Increasing productivity in agriculture, Reducing trade and FDI barriers, Promotion of greener growth with special focus on Lowering poverty and inequality.12 It requires a lot spending which the current fiscal situation however does not allow for. Fiscal policy in simpler terms can be understood as use of government spending and taxation to influence the economy.13 Taxes are the main source of government revenues. Therefore the Tax policy of the country which is in turn covered under fiscal policy frame work and is reassessed every year becomes extremely crucial as it is majorly responsible for how much money is available for spending.

http://www.imf.org/external/pubs/ft/fandd/2009/06/pdf/basics.pdf.s Fiscal Decentralization and Infant Mortality: Empirical Evidence from Rural India, Abay Asfaw, Klaus Frohberg, K. S. James and Johannes Jtting, The Journal of Developing Areas , Vol. 41, No. 1 (Fall, 2007), pp. 17-35, Published by: College of Business, Tennessee State University, Available online at: http://www.jstor.org/stable/40376156. 11 See, SHOME COMMITTEE RECOMMENDATIONS ON GAAR BEING EXAMINED: GOVT, NOV 22, 2012, The Economic Times, available online at http://articles.economictimes.indiatimes.com/2012-11 ; GOVT MAY AGREE TH WITH SHOME COMMITTEE ON RETRO TAX, The Business Standard, Jan 29 2013, Available online at: http://www.business standard.com/article/economy-policy/govt-may-agree-with-shome-committee-on-retro-tax113012900101_1.html. 12 Mark Horton and Asmaa El-Ganainy, FISCAL POLICY: TAKING AND GIVING AWAY, Available online at : http://www.imf.org/external/pubs/ft/fandd/basics/fiscpol.htm. 13 Ibid.
10

NEWS ON FISCAL POLICY PRE-BUDGET 2013 A lot of discussion in the last 1 month revolved around the meeting of the target fiscal deficit 5.3 by the end of this fiscal. Different opinions stated that the chances of meeting the target fiscal deficit of 5.3% were achievable. Against a budgeted fiscal deficit of 5.1% of GDP, most private estimates had pegged the deficit at near 6% of GDP. That fiscal deficit for the year 2011-12 was 1.8% points higher than budgeted 4.1% of the GDP, did further damage to the credibility of government's estimates. After taking over as finance minister in August last year, Chidambaram had set up a committee under Vijay Kelkar to suggest a fiscal consolidation plan, and based on that announced a revised fiscal deficit target of 5.3% of GDP for the current fiscal year and a roadmap to bring it down to 3% of GDP in 2016-17. He backed that promise with increase in price of diesel, a cap on the number of subsidied cooking gas cylinders and a massive cut in plan expenditure. "This (5.3% fiscal deficit) would have appeared unrealistic just a few months ago, but the recent fuel price decisions and expenditure data are encouraging," wrote Taimur Baig and Kaushik Das of Deutsche Bank, in a recent report. "If the government slashes plan expenditure by 28% in FY13, as reported in the media, and postpones subsidy payments, then the revised fiscal deficit target (5.3% of GDP) will be in the realms of possibility with a chance of even under-shooting it," said Nomura's Sonal Varma and Aman Mohunta in a note last week. 14 India is expected to grow at a higher rate of 6.7 per cent in 2013-14 on the back of a pick-up in the agriculture sector, lower interest rates and higher government spending, according to ratings agency Crisil.15 In a measure to curb the excessive tax evasion, which has always been one of the biggest problems, the forthcoming Budget is likely to allow changes in the provisions of the Income Tax Act to give power to the tax officials for compounding an offence, which it is hoped will have a bearing on scores of tax cases related to Indians with unauthorized overseas accounts. At present, the tax officers initiate prosecution even in cases where it is difficult to establish the charges in a court of law. Now, a tax officer typically does this to minimizing chances of

14

http://articles.economictimes.indiatimes.com/2013-02-07/news/36972280_1_fiscal-deficit-budget-estimatesplan-expenditure 15 http://www.thehindu.com/business/Economy/crisil-sees-67-growth-in-201314/article4290309.ece

anyone later pointing a finger at him for not exercising the power to prosecute an offender according to a tax official. 16 Coming to the investor attraction to our country, Finance minister P Chidambaram, who promised a non-adversarial tax regime and a friendly administration, has been torn between the need for fiscal consolidation to avert a sovereign credit rating downgrade and the need for restoring investor confidence.17 US India Business council in its pre-budget memorandum submitted to the Union Finance Minister, Chidambaram to ensure that any changes to India's income tax law "will not be retrospective", as well as "provide clarification" that recent changes to that effect will be legally binding and not subject to arbitrary application. Prominent among the wish list include updating India-US bilateral tax treaty, emanation of double taxation on software revenue, 15 year tax holiday for software technology parks and special economic zones. "An updated, harmonized direct tax framework would have tremendous multiplier effects to fiscal balance and macroeconomic stability, which clearly benefits consumers, domestic industry, and global investors in India," it said. It also calls for ensuring that transfer pricing principles are applied in fair and consistent manner for all tax payers and allow a reasonable method for determining transfer pricing comparables to support fees on services performed in India for non-Indian affiliated entities that match the nature of the company's services performed. USIBC said one of the primary frustrations of foreign multinational companies investing in India is an often inconsistent transfer pricing regime and a lack of a predictable, efficient dispute resolution mechanism. As international norms dictate, transfer pricing principles should never be viewed as a selective and arbitrary mechanism for raising revenues," it said. "In the interim, we believe the GOI and the US government should consider adopting alternative dispute resolution procedures to more efficiently and expeditiously resolve tax. Specifically, the two governments could consider an MOU for Binding Arbitration.

16

http://economictimes.indiatimes.com/news/economy/finance/budget-2013-taxman-may-get-more-power-tohandle-overseas-accounts/articleshow/18358143.cms 17 http://www.financialexpress.com/news/targethunting-indian-taxmen-spike-direct-tax-code-schemeabroad/1072575

India plans to cut its fertiliser subsidy bill by at least 15 percent for the fiscal year 2013-14, four sources told Reuters, a move that takes advantage of a fall in international prices to help narrow the country's fiscal deficit. Fertilisers, after oil and food, account for the third-biggest share of India 's total subsidy bill, which is expected to rise to 2.4 percent of gross domestic product (GDP) in fiscal 2012/13. "Since international prices have fallen, obviously, (the) subsidy will go down," Junior Fertiliser Minister Srikant Jena told Reuters separately, adding that a final decision on the extent of the cut was yet to be taken. The move is unlikely to trigger opposition from farmers as the government plans to leave unchanged the subsidy for urea, the most-used fertiliser, an official with a Mumbai-based state-run fertiliser company said.18

The economists wanted higher investment in health and education sectors, higher capital expenditure on agriculture. They also said storage capacity for foodgrains should be increased. Besides, they wanted the government to take more steps to promote renewable energy. They also suggested that fees for higher studies in universities and professional institutions should be increased and the extra funds should be diverted for primary and secondary education for poor and weaker sections of the society.19

There are speculations that the Finance Minister P Chidambaram may consider to introduce super-rich tax in the upcoming Union Budget. While some economists suggested it to the finance minister, some tax experts believe that this may turn out to be a futile exercise as it will lead to higher tax evasion. "Tax for super-rich" can be introduced in either of two ways a higher rate of income tax for the super rich category of taxpayers or by reintroducing and revamping once abolished inheritance tax or estate duty.20 The issue of taxing the rich more needs immediate attention in the coming Budget. The issues that need to be sorted out are:
18 19

http://www.financialexpress.com/news/battling-fiscal-deficit-india-to-cut-fertiliser-subsidy-for-fy14/1071548 http://www.financialexpress.com/news/tax-super-rich-economists-tell-chidambaram/1056015 20 http://www.moneycontrol.com/news/economy/super-rich-tax-to-be-futile-exercise-tax-experts_829155.html

To determine the cut-off income beyond which an individual could be classified as super-rich. The rate of tax over the cut-off limit. Whether inheritance tax (estate duty) should be re-introduced. How Wealth Tax Act can be revamped to prevent concentration of wealth in fewer hands. How super-rich agriculturists can be brought under the income-tax and wealth-tax net.21

Chidambaram has approached the issue of tax hikes for the rich in a tactical fashion. In the first week of January, C. Rangarajan, a trusted economic advisor to both the prime minister and finance minister, floated the balloon of more taxes. "We need to raise more revenues and the people with larger incomes must be willing to contribute more," he said at a seminar in Delhi. Rangarajan's suggestion was to introduce a surcharge on the top rate of 30 per cent, instead of raising the rate to 40 per cent. In the last week of January, Planning Commission Deputy Chairman Montek Singh Ahluwalia, also a trusted aide of both the prime minister and finance minister, endorsed Rangarajan. "The rich should indeed pay more tax," he said. Says an official, "Rangarajan and Montek would not have said this in public if it did not have Chidambaram's blessings." Chidambaram has only said he is willing to consider all options. He has been careful to deny that raising taxes is his idea.

There are obvious risks in hiking the top tax rate. It is being suggested that the additional tax will apply to individuals with an annual income of Rs.12 lakh and above. That will target the upper end of the middle class, rather than the super rich. "A lot of salaried professionals, including senior government officials, will be agitated by this," says an official. This segment of the population is already angry at the UPA. A tax hike would cause UPA to lose their votes with certainty. The official also points out that the super rich (entrepreneurs and those with substantial capital assets) don't earn most of their money from income, but from other sources such as capital gains, which are taxed less.22

21

http://www.thehindubusinessline.com/todays-paper/tp-opinion/superrich-should-not-oppose-highertaxes/article4358407.ece
22

http://indiatoday.intoday.in/story/budget-2013-p-chidambaram-tax-on-rich/1/249443.html

BMR Advisors and CNBC-TV18 asked a cross-section of tax and financial experts from India Inc, multi-national companies and even individual tax payers for their expectations and here's how the chips fell: On the tax front, 40 percent of the respondents expect a marginal increase in tax rate given the looming fiscal deficit, but the majority, 47 percent say no and 60 percent do not expect an increase in the surcharge and/or education cess. But nearly half the respondents expect a separate slab rate to be introduced for high net worth individuals or the super rich though over half of them do not expect the minister to introduce an inheritance tax. Over 40 percent hope the government will follow the Shome Committee's recommendation on the prospective application of indirect transfer provisions and nearly 50 percent see the minister laying down safe harbor rules for curbing transfer pricing litigations. GAAR Nearly 50 percent of the respondents say they do not foresee any new specific-antiavoidance-rules in view of the deferment of GAAR. Commending the proposal of important clarifications by the Prime Minister's Expert Committee on GAAR and the recent decision to defer implementation until

2016, USIBC said in order to plan long-term capital allocation and employment- generating investment into India, global investors look forward to final confirmation of these guidelines at the earliest point possible. "While the proposed guidelines have granted substantial assurances, global companies require predictability and remain concerned about how such assurances will translate into law," USIBC said in its memorandum. GST, DTC Over 40 percent believe the Budget will lay down a clear road map for the introduction of the direct taxes code (DTC) and nearly 50 percent foresee a major announcement on goods and services tax (GST). On indirect taxes, 60 percent say the finance minister will hike the

median rates for excise duty and service tax. A hike in indirect taxes could hit the government's efforts to kick-start the economy once again.23 Of the believe that Goods and Services Tax ( GST) would dramatically increase government revenue while streamlining operational and cost planning for business, while potentially decreasing some tax rates, USIBC said it remains prepared to support the development and expeditious implementation of a revised DTC (Direct Taxes Code). Indirect Taxes should be levied on final consumption alone.24 The Goods and Services Tax (GST) a comprehensive national-level tax on manufacture, sale and consumption of goods and services and touted as one of the biggest taxation reforms has remained a mirage, though conceived way back in 2005. There was palpable earnestness when April 1, 2010, was set as the kick-off date in Budget 2006-07. There is a genuine expectation that the Finance Minister at whose behest the GST took roots will unfold a clear roadmap for the revamped version of GST. Even if the GST at the start is not the most ideal version, which can be achieved through course correction, it shall suffice if the GST takes off. This will facilitate investments and consequently growth at a time when sentiments are depressed and growth projections lowered by day and by night.25 States have agreed to the compensation formula suggested by the Centre for their CST (Central Sales Tax) revenue loss for implementing the Goods and Services Tax (GST), said Sushil Kumar Modi, Chairman of the Empowered Committee of State Finance Ministers, and Deputy Chief Minister of Bihar, here on Monday.26 Mr. Modi said: Petroleum products have been kept outside the GST regime in the Bill. The committee favours that the item should be kept within the Bill. And the GST Council should decide how to levy taxes on petroleum products. States had also bargained hard for their autonomy in the proposed GST regime, Mr. Modi said States were also opposed to dual control provisions. One agency should deal with the GST instead of two different agencies

23

http://www.moneycontrol.com/news/cnbc-tv18-comments/budget-2013-14-india-inc-taxpayers-expect-taxregime-claritystability_822158.html 24 http://www.caclubindia.com/articles/challenges-that-india-face-in-key-areas-of-fiscal-policy16526.asp#.UWjQ_6LLr0o 25 http://www.thehindu.com/business/Economy/gst-still-a-mirage/article4435843.ece 26 http://www.thehindu.com/business/Economy/consensus-over-key-issues-of-gst/article4354656.ece

from the Centre and the States. Small traders suffer under the dual control system. There were also some disagreements regarding exempted items and the threshold rate. 27 CONCLUSION The major developments in Indias fiscal policy can be traced from the early stages of planned development in the 1950s, through the countrys balance of payments crisis of 199128, the subsequent economic liberalisation and rapid growth phase, the response to the global financial crisis of 2008 and the recent post-crisis moves to return to a path of fiscal consolidation. Indias fiscal policy in the phase of planned development commencing from the 1950s to economic liberalisation in 1991 was largely characterised by a strategy of using the tax system to transfer private resources to the massive investments in the public sector industries and also achieve greater income equality. The result was high maximum marginal income tax rates and the consequent tendency of tax evasion.29 The public sector investments and social expenditures were also not efficient. Given these apparent inadequacies, there were limited attempts to reform the system in the 1980s. However, the path of debt-induced growth that was pursued partly contributed to the balance of payments crisis of 1991.30 Following the crisis of 1991, the government charted out a path of economic liberalisation. Tax reforms focussed on lowering of rates and broadening of the tax base. There were attempts to curb subsidies and disinvest the government holdings in the public sector industries. While initially the fiscal deficit and public debt were brought under control, the situation again started to deteriorate in the early 2000s. This induced the adoption of fiscal responsibility legislations at the central and state levels. There were also reforms in the state level tax system with the introduction of VAT. Consequently there were major improvements in the public finances. This probably contributed to the benign macro-fiscal environment of high growth, low deficits and moderate inflation that prevailed around 2008. After reaching a high of 11.9 per cent in 2007-08, there has been a decline in the Tax-to-GDP ratio, to 10.1 per
27 28

http://www.thehindu.com/business/Economy/let-gst-council-decide-tax-on-petroproducts/article4357903.ece Valerie Cerra and Sweta Chaman Saxena, WHAT CAUSED THE 1991 CURRENCY CRISIS IN INDIA?, IMF STAFF PAPERS VOL. 49, NO. 3, Available online at: http://www.uoit.ca/sas/Macroeconomic%20Issues/What1991CrisisIndia.pdf.
29

Subhash Lakhotia, SHOULD INCOME-TAX RATES BE HIKED IN BUDGET 2013-14, Available online at:

http://www.moneycontrol.com/smementor/mentorade/indian-markets/should-income-taxrates-be-hikedbudget-2013-14-813187.html.
30

C Rangarajan, BOP CRISIS OF 1990-91: OVERCOMING THE FOREX CONSTRAINT, Available online at: http://www.financialexpress.com/old/fe20010702/an1.html.

cent in 2011-12. This decline was caused in part due to the fiscal stimulus extended by Government through concessionary tax measures, and subsequently by the economic downturn. To achieve a sustainable fiscal consolidation it is essential to return to the highs of Tax-to-GDP ratio achieved in 2007-08.31 There is therefore need to initiate interventions for greater buoyancy in revenue mobilization. The Tax-to-GDP ratio for 2012-13 is estimated at 10.6 per cent.32 The Finance Ministrys medium-term consolidation roadmap demonstrates that the government attaches the highest priority to lowering deficits to bring the economy back on a high growth trajectory. The authorities believe that stronger growth will buoy tax revenues, allowing fiscal consolidation to be accompanied by a pro-growth and pro-poor reorientation of spending. On subsidy reform, various pilot schemes are under way to move toward direct cash transfers and the use of the UID to replace current delivery mechanisms. They expect that by 2016/17 cash transfers are expected to be in place for key subsidies, which will reduce.33 Tax reforms can play a decisive role in supporting growth, by removing distortions and enhancing transparency and predictability of tax systems while increasing the efficiency of tax administration and boosting revenues. The central government, in co-operation with state governments, seeks to implement important tax reforms, including the introduction of a Goods and Services Tax (GST).34 The current indirect taxation system is complex and involves cascading taxes that bias production decisions and hinder inter-state trade. A national GST, coupled with a state GST, would rationalise indirect taxes while preserving states financial autonomy. To keep the overall rate low, the base should remain as broad as possible. Ideally, a single tax rate should apply in each state and where differential rates apply they should be kept as low as possible and confined to a limited range of products. A major effort is now required to finalise implementation details. The central government is also seeking to reform direct taxes and negotiations are continuing on a revised Direct Tax Code. The proposed changes would increase the tax-free threshold, releasing many lowincome taxpayers from the tax net, thereby reducing administration costs. They would also reduce the corporate tax rate and broaden the corporate tax base. A further proposal is to reduce the tax on savings, including by making contributions to pension schemes free of
31

EFFORTS TO RECOUP TAX TO GDP RATIO BY NEXT FISCAL: PARTHASARATHI SHOME, The Business Standard, March 12 2013. 32 THE KELKAR COMMITTEE REPORT 2012. 33 CASH TRANSFERS AND UID , Economic and Political Weekly, Available online at: www.epw.in/letters/cashtransfers-and-uid.html. 34 See, http://gstindia.com/.

taxation. While this measure would help promote savings it is important that the government adopts a balanced approach and avoids excessively generous tax treatment. Reforms are also underway to streamline a number of tax expenditures. The government also needs to ensure a certain level of stability in the area of international taxation. Recent efforts by the government seeking to create an atmosphere of certainty and predictability in this area are very welcome and this will definitely boost investor sentiment and attract foreign direct investment. India needs to address the issues concerning taxation of foreign companies too in a manner that balances its needs for expansion of the revenue base and with the confidence of the investors. The volume of overseas investment into India has grown over the last few years. While this has boosted employment, and helped develop infrastructure, it has also led to a growing number of tax disputes. In this context, the recent remarks of the government on the need to perceive the tax administration in a non-adversarial manner are welcome. India has tried ways and means to develop an effective dispute resolution mechanism and these steps need to be consolidated and developed. As per the news, as the challenges are daunting35 the following are some of the reforms that are being sought by various stake holders and investors from the Budget 2013: Strengthen fiscal frameworks through legislative and institutional reforms. Improve spending efficiency, especially on subsidies, by improving targeting and delivery mechanisms. Proceed with the implementation of the GST, minimizing exemptions to keep the base as broad as possible while also aiming for a single rate within each state. Implement a revised Direct Tax Code which streamlines collection and reduces the overall burden of direct taxes. Push reforms in the area of international taxation in order to boost investor sentiment and provide a stable and certain tax environment for businesses.

35

http://www.worldpolicy.org/blog/2013/01/08/five-challenges-india-2013