Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/176352
Authors: 
Singh, R. R.
Year of Publication: 
2016
Series/Report no.: 
Working Paper 325
Abstract: 
With opening of the economy in 1991 and subsequent removal of regulatory and trade barriers, India became an attractive investment (Foreign Direct Investment-FDI) destination. A large number of multinationals have established operations in India to utilise the services of available skilled manpower. Indian tax administration was always perceived to be difficult. The economic liberalisation had created challenges in integrating Indian tax system with the world economy during the adjustment phase. World financial environment had remained depressed since 2008. The actions of the government in the area of taxation laws during 2012 and 2013 with sudden introduction of General Anti-Avoidance Rules (GAAR) including retrospective amendment to law further aggravated the taxation environment specially in the area of international taxation. This badly affected the sentiments of the international investor community. In other words it can be said that the economic liberalization did not match with the tax aggressiveness and that probably led to some major concerns, and impacted ease of doing business. Though the government did take some steps during 2012 and 2013 and further more steps during 2014 and 2015 to soothe the investor sentiment, there are still areas of persisting concern which need to be addressed. Section one, introduction, broadly deals with the concerns of the multinationals in the area of taxation environment. Section two deals with the genesis of the recent crisis in this area and issues involved such as introduction of GAAR, international taxation, retrospective amendment dispute resolution etc. Section three deals with GAAR. Section four deals with various issues involved in the area of international taxation including Permanent Establishment, attribution of profits, transfer pricing, taxation of Information Technology (IT) and Information Technology enabled Services (ITeS) sectors, Advance Pricing Agreements (APAs) and Safe Harbour Rules. While Section five deals with retrospective amendments to the Income Tax Act and Section six deals with various aspects of dispute resolution, section seven deals with attitude of the tax administration. Section eight deals with the recent steps taken to address the taxation issues and section nine contains the conclusions and the areas that still needs to be addressed.
Subjects: 
GAAR
International Taxation
Transfer Pricing
APAs
Safe Harbour Rules
Retrospective Amendments and Dispute Resolution
JEL: 
F21
G11
H25
H26
K34
K41
O15
P45
Document Type: 
Working Paper

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