India File

More compliance does not mean tax terrorism: Gopal Krishna Agarwal

Poornima Joshi | Updated on February 11, 2020 Published on February 11, 2020

Neither the Union Budget nor Prime Minister Narendra Modi’s subsequent assertion about there being no cause for “despondence” has yet lifted the depressed market spirits nor revived investor confidence. The ruling BJP, however, remains intriguingly sanguine in the face of what it dubs a “transitional phase” in India’s economic growth.

BJP’s spokesperson for economic affairs, Gopal Krishna Agarwal, tells BusinessLine that especially with regard to taxes, be it the GST roll-out, bringing down the corporate tax or even a minor initiative such as introduction this week of the Vivad Se Vishwas scheme in Parliament, the aim is to create efficient business practices and instil the ‘ease of doing business’ while also eradicating institutional corruption. Excerpts from an interview:

Business sentiment continues to remain depressed because the tax authorities and bureaucracy have decidedly been emboldened in the name of fighting corruption. Don’t you think you need to address this urgently?

Tax compliance and corruption are two very different things. We definitely need to instil an ease of doing business but not by contending with institutional corruption. At the heart of the Prime Minister’s vision for economy are administrative and structural reforms that create a tax regime that facilitates business but combats monumental profiteering. The vehicle for this transformation would be technology that creates transparency.

Anti-profiteering laws ensure that profit is passed on to the consumers and innovative and exhaustive use of technological platforms that bring all stakeholders together eradicates intermediary corruption. GST was the biggest indirect tax reforms since Independence. We were also true to our word about bringing down corporate tax rates. The Government wants to create wealth. At the same time, the philosophy also is to redistribute wealth and stop the concentration of wealth only in some pockets.

Would anyone disagree with us when we say that the previous system created vast inequality in wealth and there was no level playing field? The Government has to be there as the voice of the people and it has to ensure that there is equidistribution of wealth.

You still haven’t answered my question about bureaucratic corruption and hounding of genuine business in the name of tackling corruption.

I admit that besides addressing the demand side corruption that happens on the side of the business, we have to be equally vigilant about supply side corruption in the bureaucracy. A number of steps are being taken and there is acute awareness of such corrupt practices among the bureaucracy.

We are amending the Company Law, we are taking steps to decriminalise the use of Income Tax Act. Civil liabilities will be resolved through mechanisms such as plea bargaining. We will drastically reduce penal provisions that we understand accelerate bureaucratic corruption. But we are very clear that we will not compromise with corruption.

The Government’s attitude towards business has adversely affected the overall sentiment, MSMEs have been drastically hit, the GST continues to be problematic…

The problem with GST are the roadblocks with regard to things like restrictions of Input Tax Credit system-related issues, processing of refund for exporters et al as also the technical glitches in the online portal system evolved for the Goods and Services Tax Network (GSTN).

But, as the Prime Minister said, this is a dynamic process and we evolve as we grow. This is a step in the direction of eliminating intermediaries, bureaucratic corruption as well as tackling the endemic problem of tax evasion, which concentrated wealth in India. This is the direction in which we are moving; more compliance does not amount to tax terrorism. We will make the tax system more efficient and there will be more and more technological intervention. We are aware of the concerns of business and we know that honest mistakes, business failures, have to be distinguished from fraud. There will be more reliance on decriminalising the existing penal provisions, payment of penalties through dispute resolution in civil way. But we will not make allowances for ‘Suvidha Shulk’ (convenience tax, a term for easing business through bribes), both on the side of business as well as bureaucracy.

Published on February 11, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.