Tax Authorities Seek New Powers in India
October 10, 2011 Taxation in India
NEW DELHI – Indian tax authorities are looking at fresh means to fight tax evasion, and considering new rules to significantly extend their powers when conducting investigations into international tax evasion.
Over the weekend the Ministry of Finance of India revealed that it is currently considering new measures aimed at aiding the fight against international tax evasion. The study is being led by a recently appointed committee headed by the Chairman of the Central Board of Direct Taxes (CBDT) Sudhir Chandra.
The committee is proposing that Indian tax authorities should be granted extended powers for reopening investigations of tax assessments filed in previous periods by companies and individuals currently suspected of being involved in tax evasion. Tax authorities would be able to reexamine 16 years of tax assessments for companies that are found to have undisclosed foreign assets or hidden bank accounts overseas. Under current rules, tax authorities may only reopen tax assessments for the last six years.
The proposal has already drawn strong criticism from tax experts in India. Diljeet Titus, senior partner of law firm Titus & Co, commented on the idea, saying that it would cause great fear and “psychosis” amongst taxpayers. Rahul Garg, Executive Director at KPMG India, said that the extended power would not help raise greater revenues, but would cause problems as companies are not currently required to keep 16 years worth of data.
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