Are tax administrations prepared for the future?

A Plan for the Future

Governments utilize tax policy as a significant instrument by taxing individuals with greater earnings at higher rates, while those with incomes below a certain level are exempt.

Even though India's population is projected to surpass China's in 2023, the World Bank still ranks it as the world's fastest-expanding major economy. Atma Nirbhar Bharat, or "Self-Reliant India," is a new set of policies and programmes designed to make India a more influential economic power. The Insolvency and Bankruptcy Code and the National Asset Reconstruction Company are two examples of recent financial reforms with a primary focus on distressed assets and the release of funds for lending by banks.

Infrastructure building is also a priority. It was stated in October 2021 that the PM Gati Shakti programme will promote integrated connectivity amongst different modes of transportation to benefit people, commodities, and services. The National Infrastructure Pipeline, which has a $1.4 trillion budgeted outlay through 2025 and focuses on developing infrastructure projects in areas such as aviation, telecommunications, transportation, logistics, energy, water, and sanitation, also contributes to the emphasis on infrastructure building. A focus on infrastructure and connectivity will enable businesses to be developed with an increase in the 'ease of doing business' and promote the Start-up Ecosystem in India even further.

To transform the Indian Tax Landscape and modernise its domestic and cross-border tax administration, the Indian Government is taking substantial steps. Identifying Digitization as an important concern, an adoption of Electronic invoicing and real-time transaction data submission is being implemented. Multiple tax and regulatory agencies are digitizing and coordinating as part of Project Insight, a programme designed to improve collaboration and harmonization among various departments (e.g., direct tax, indirect tax, and corporate affairs).

This shared data will be used to drive tax assessments and audits in India. The Income Tax Transaction Analysis Centre (INTRAC), for instance, focuses on data integration, processing, quality, warehousing, and management. INTRAC will deploy web-text mining and advanced data analytics, including artificial intelligence, for risk assessment of taxpayer profiles and audit execution.

The mentioned indications lead to favorable capital market prospects.

The annual Economic Survey of India published by the Ministry of Finance indicated "hectic" fundraising from April to November 2021. The numbers are "far higher" than the previous decade, with 75 companies raising almost $11.25 billion funding.

‘With 44 embryonic enterprises achieving unicorn status (value of more than $1 billion), India is now the world's third largest ecosystem for start-ups.’

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