Taxes to pave way for Viksit Bharat @ 2047

Blitz Bureau

Taxes play a seminal role in the development of a country and the ability of the Government to fulfill its major macroeconomic objectives depends largely on the amount of resources generated by it through taxation. Emphasising this, Pratap Singh (IRS), Principal Commissioner of Income Tax (PCIT) Gurugram, told Blitz India Editor-in-Chief Deepak Dwivedi that taxes are set to drive India’s journey towards Viksit Bharat @ 2047. Besides talking about the transformation of the I-T Department, automation of various processes and new initiatives taken by the Government to reduce tax burden and ease-of-compliance, Singh dwelt with steps needed to attract increased FDI, in this exclusive interview with Blitz India

To begin with, we would like to know how has the Income Tax Department evolved and transformed over a period of time? When we joined the Income Tax Department, way back in nineties, the entire work was in physical mode. There used to be long queue in I-T offices, close to the due date of filing the tax. To avoid crowding, we used to go to a nearby park, or some open area, and set up special counters there so that people don’t have to wait for long. The return and refund processing also used to take a long time – of over one year. Since then there has been a total transformation and now almost all the functions of the department are computerised and automated, be it tax payment, tax filing, refunds or assessments, or even grievances. Now a person can meet his tax obligations 24×7, sitting at home or in his office, at any time of the day, without visiting the Income Tax office. This is the real empowerment of people. Today, the department is able to process tax refund the day it is filed. In fact, now the I-T is one of the most modern departments and many foreign delegations visit our facilities, especially the CPC Bengaluru, every year. We are also an important voice in global tax forums, like the OECD, UN and G20, and are shaping the global tax regime. Besides, our tax collections have grown to over Rs 22 lakh crore and the tax base increased to over 9.15 crore. The tax-GDP ratio of direct taxes has grown to about 7 per cent of the GDP, which is quite decent at our level of development.

What are the new initiatives taken by the Government to reduce tax burden, ease-of-compliance and smoothness of tax processes? The Income Tax Department, under the CBDT, has taken several steps to streamline the system, promote growth and reduce the compliance burden. These include faceless assessment and appeal system, facility of pre-filled tax returns, creation of 100 posts of Joint Commissioner (Appeals) to reduce litigation, facility of filing updated returns and e-verification, as also demand facilitation and management to reduce infructuous tax arrears. These are path-breaking initiatives to simplify the tax system and to promote voluntary compliance. Besides, various reliefs have been granted in the recent Budget, like reduction in tax rates for startups and new corporate entities, new savings scheme for women and elderly, relief to cooperatives, reduction of compliance burden and decriminalisation of various violations. A huge impetus has been given on capex, infrastructure development and clean energy to spur growth.

Recently, the Government came up with a new Income Tax Bill. What are the important features of this Bill and how is it going to help taxpayers? The I-T Bill 2025 was introduced in the Lok Sabha on February 13 and is presently being examined by the Standing Committee on Finance. It is likely to be passed in the Monsoon Session of the Parliament. The Bill, primarily, aims to simplify language and remove redundant provisions, as also to fill in certain gaps. Tax rates and regimes for individuals and corporations remain unchanged. There are no changes in offences and penalties. The proposed Bill is about 60 per cent of the existing IT Act and is written in a very simplified language, after a lot of consultation with all stakeholders. The Bill proposes April 1, 2026 as the date of its commencement. It also seeks to empower the Central Government to frame new schemes for greater efficiency, transparency, and accountability. This can be done by: (i) eliminating the interface with the assessee through technology and (ii) optimising resource utilisation through economies of scale and functional specialisation. An important feature of the Bill is that it defines virtual digital space as an environment, area, or realm that is constructed and experienced through computer technology. It includes email servers, social media accounts, online investment and trading accounts, and websites for storing details of asset ownership.

What initiatives have been taken to help the taxpayers and promote voluntary compliance? The Government has taken a lot of innovative steps to streamline the tax system. These include pre-filled tax returns, frontloading of information in possession of the department and sharing it with the taxpayers in the form of 26-AS and AIS, which is accessible to a taxpayer before the due date of filing return. Then comes the e-verification portal, which provides another opportunity to a person to revise his/her tax details. This reduces litigation and creates trust and, thus, promotes the ease-of-doing business. Then there are mechanisms like CPGram and E-Nivaran to take care of grievances and mechanism like BAR-Board for Advance Resolution and DRC-Dispute Resolution Committees and APAs for providing tax certainty.

Going beyond taxation, tell us how can India attract more foreign direct investment?

To attract more FDI, the Government should focus on the ease-of-doing business, incentivising innovation, and creating a more stable and predictable economic environment. Additionally, strengthening infrastructure, promoting trade, and ensuring strong legal frameworks are crucial. A stable and predictable tax regime is also desirable. This includes clear guidelines for investment approvals, ensuring transparency, and addressing concerns about land disputes and property rights. Encouraging R&D and innovation can attract forward-looking investors. Further, promoting collaboration between academia and industry can lead to new technologies and products. Building stronger relationships with countries that are geopolitically aligned can attract FDI through ‘friend shoring’. Schemes like PLI and ‘Make in India’ and ‘Startup India’ initiatives help in mobilising FDI.

What role can taxes play in making India a fully developed country – ‘Viksit Bharat’ by 2047? For a developing country like India, economic growth and development remains a major macroeconomic objective. The ability of the Government to live up to these responsibilities largely depends on the amount of resources generated by it through taxation. Taxes also play a crucial role in stimulating savings, making investments and activities which promote development. They also impact consumption and spending patterns of individuals. Hence, taxes play a seminal role in the development of a country. Tax incentives and tax holidays, among others, can attract foreign investors. Taxes legitimately belong to the citizen of a country and if somebody is not paying his due share, he is letting down the people, as also the country. Building modern infrastructure – roads, railways, ports and airports – is essential for a developed country. We were able to make an expenditure of over Rs 10 lakh crore on this in FY 2024- 25; resources for which came from the taxes. Besides, targeting tax deductions/exemptions to areas which promote infrastructural development, manufacturing, industrial development and employment generation will increase per capita income, which, in turn, will stimulate higher income tax payment by the people. The tax administration, therefore, has to craft its own strategy – keeping a sharp eye on transactions which result in tax evasion, while adopting a more facilitative and service-oriented approach. The taxes, therefore, are going to play a major role in moblising resources to make India fully developed by 2047.

Any message you would like to give to people, the taxpayers at large? Taxpayers are the most important stakeholders in the entire tax system. The country is run because of their contributions, which has been appreciated from the highest level. The top leadership of the I-T Department has conveyed that we will ‘trust first and scrutinise later’. So there has been a huge attitudinal change. Nobody should fear the tax department, except the tax-evaders. Further, the tax payment now has become very easy and simple. There are a lot of web-based resources on departmental website and other guidance available, which can be used to clarify all doubts. Then there is an Income Tax call centre, or CPC call centre. Apart from that, there are Aayakar Sewa Kendras all over the country, which one can visit to seek help. Still, if there are problems, a person can visit the tax office, where officials will always be ready to help.

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