Income tax 2.0
Why do businesses play dirty
Or is it that it is not possible to play clean.
It is my firm belief that good policy can solve most things. The new income tax act is a brilliant document, painstakingly put together. And addresses the very core of corruption. A lot of it is based on the govts learning’s from the Tata Trusts case, the subsequent CBI cases and the chargesheeting of the Tata Trusts leadership ending in resignation of the Tata Trusts CEO. It vindicates whatever Cyrus Mistry stood for. And is reason enough for every Indian to hang his head in shame.
Since biblical times, the taxman is a hated being. A little more than even the money lender. Closer home and in current times, the hatred has reduced. Not because the taxmen and chartered accountants have mended their ways.
But because technology has cleaned up things. Faceless scrutinies have made it relatively difficult to extract bribes. But at the same time, it is also leading to unfair tax claims.
The venture capital and startup industry bore the brunt of bad policy and even poorer implementation. It handcuffed the industry. What the Modi govt did was to remove this handcuff. And then everything started working.
But large business doesn’t like clarity. It creates a level playing field. And that is bad for cartels, it is bad for racketeering and it is bad for profitability. Unclear tax regulations and import policies have made indian manufacturing costs so high that mfg itself has become unviable. Steel is double the price vis a vis China, so is cement or power etc. what is most important and credit worthy is the govts resolve to stop inappropriate behaviour by large businesses.
The Tata trusts for example were doing inappropriate acts to influence their tax outcomes. Details are here:
This included the routine stuff like bribing tax officials etc. The very things that Cyrus Mistry did not want to do and actually became a whistleblower on.
It takes a very strong govt to act so decisively. And to show that no one is above the law. A message which has gone through loud and clear.
But what is more important is that they have taken the pain to rewrite the entire income tax act which is being tabled in parliament soon.
This will bring in a whole new level of transparency and hope for India’s future.
It could be Mr Modi’s greatest contribution to a free India.
India awaits the new income tax act with baited breath.