Deloitte India Survey: 94% of India Inc. calls for simplified tax reforms to boost compliance, reduce litigation

As the Finance Ministry undertakes a comprehensive review of the Income Tax Act, a a new survey has revealed that 94% of industry leaders surveyed unanimously agree on the need for simplification of the current income tax law in India.

“Interpretation of tax law and computing taxable income and tax payable are highlighted as the key areas in need of reform,” said the survey by Deloitte Touché Tohmatsu India (Deloitte India).

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The Income Tax Policy Survey in an online mode engaged over 320 industry professionals across a spectrum of industries, including technology, media and telecommunications; financial services; life sciences and healthcare; consumer; energy, resources and industrials; and government and public services.

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.”

It found that 64% rated transfer pricing law as complex or extremely complex, with the law for penalties and prosecution (63%) and assessment/reassessments (61%), following closely.

Anti-avoidance (GAAR and SAAR) rules received the highest votes in the category of being extremely complex, it said, adding that simplification in the ease of preparing and filing individual Income Tax Return (ITR), Corporate ITR and tax audit report form is a key ask from more than 70% of respondents. Time and cost commitments to pursue tax litigation emerged as a top concern for conduct of business, it further noted.

“Tax reporting complexities hinder the ease of doing business, especially for small firms struggling with burdensome compliance,” said the survey released on Wednesday. Over 70% of these businesses emphasised the need for simpler processes. Additionally, businesses were concerned about the high time and cost of tax litigation, highlighting the need for streamlined and efficient dispute resolution. 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.