India pressed for greater international cooperation and global alignment of taxation systems to deal with the menace of tax evasion and black money. Finance Minister Pranab Mukherjee said this while addressing a global conference on tax and equality on wednesday. Making a strong case for effectively dealing with global tax evasion, Mr. Mukherjee, quoting the global financial integrity report, said that the annual illicit outflows from emerging economies and developing countries, average between 725 billion and 810 billion US Dollars.
On the domestic front, Mr. Mukherjee expressed the hope that the Direct Taxes Code, DTC, which seeks to modernise tax laws in the country, will come into force from April 1, 2012. He said, in a bid to modernise the tax system, the government has proposed to replace the Income Tax Act, 1961, with a new legislation. With regard to indirect tax reforms, the Minister said, the government is moving towards an economy-wide, generalised value-added tax system of Goods and Service Taxes, GST, at all levels in the country. Mr Mukherjee said, Centre has adopted a five-pronged strategy to deal with the issues of tax evasion and black money. The strategy includes joining the global crusade against black money and creation of a legislative and institutional framework to deal with illicit money. Although the strategy has started showing results, the Finance Minister said, the complexity of cross-border transactions is on the rise and presents a serious challenge to tax administrators in practicing and bringing equality.
As regards tax reforms, Mr. Mukherjee said, India has been pursuing them in a gradual manner. He said they are aimed at rationalisation of tax rates, broadening of the tax base, focusing on sunrise areas like transfer pricing and international taxation, and strengthening of the tax information exchange network. The government, he added, was also focusing on providing better taxpayer services. Mr. Mukherjee said that the progressive personal income tax policy has resulted in 10-fold increase in revenue collections. It went up from 8.62 billion US Dollars in 1996-97 to 87 billion US dollars in 2010-11.
