22nd May 2017
Historically, the Indian government hasn’t been particularly effective at bringing in revenue through taxation, in fact, a blog we published earlier this year outlined how a staggering 1.8m individuals had been accused of having fraudulent activity related to their accounts, and that was after the government had launched a major tax amnesty. Bloomberg even suggested that tax evasion was the national sport of India.
However, it appears as if that may be about to change
Changing market
The problem has been a longstanding issue for the Indian government and in 2011 it was estimated that the country was losing a remarkable $314bn per year in unpaid tax. Since then, the deficit has decreased, largely because of a move taken by the Prime Minister to remove all 500 and 1,000 rupee notes from circulation in the latter part of 2016, which gave the government an easier task identifying those who were cheating the tax system.
New governing bodies
And more recently, the authorities have taken further moves to tackle tax evasion. The government announced it was rolling out a goods and service tax (GST) which subsumes central levies like excise duty, service tax and state VAT. This has forced the Central Board of Excise and Customs (CBEC) to reorganise its existing central excise and service tax field formation to suit the requirements of the new regime. Following this reshuffle, the board will be renamed as the snappily titled Central Board of Indirect Taxes and Customs (CBIC) and will supervise GST and Customs activities and provide government policy inputs.
To add to the acronyms, the human resource arm of the CBEC/CBIC said the former Directorate General of Central Excise Intelligence (DGCEI) will be renamed the Directorate General of GST Intelligence (DGGSTI) and will have more powers. And in even further sweeping changes:
- The Directorate of International Customs will be created to deal with WTO related matters, the Kyoto Convention and multilateral and bi-lateral agreements with other countries. It will also be the body in charge of cross-border trade through Land Customs Stations.
- The National Academy of Customs, Excise and Narcotics (NACEN) will become The National Academy of Customs, Indirect Taxes and Narcotics (NACIN) and will be the only academy of its kind to provide regular training to officers across India, potentially boosting the fight against tax fraud even further
As you can see, the Indian tax market has changed an enormous amount and is set for further changes in the coming months. Placing contractors in India is now a totally different proposition to what it once was and if you’re at all unsure about your status in what is essentially a new market then ensure you speak to the specialists.