India's plan to get more people to pay taxes is working — and now its cracking down even harder on assets stashed abroad
- India’s effort to set up a more efficient tax system us working, with its direct tax-to-GDP ratio at a ten-year high of 5.98% in 2017-18, according to recent data released by the Central Board of Direct Taxes,
- While the average tax revenue from corporate entities has risen by 55% between 2013-14 and 2016-17, individual contributions have increased by 26%.
- The country’s
income taxdepartment is now cracking down further on tax evaders, monitoring the offshore deposits and overseas transactions of thousands of Indians under the 2015 anti-black money law.
With a vast informal economy and legacy of tax evasion, India is routinely cited as one of the more difficult places to enforce direct taxation measures. However, that seems to be changing, based on recent data released by India’s Central Board of Direct Taxes.
India’s direct tax-to-GDP ratio has reached a ten-year high of 5.98% in 2017-2018, versus 6.3% in 2007-2008, driven by a higher compliance rate among non-salaried individuals and a widening of the taxpayer base.While the average tax revenue from corporate entities has risen by 55% between 2013-14 and 2016-17, individual contributions have increased by 26%. Further, the number of individuals with an annual income over ₹10 million has surged 68% in the last three years to 81,344.
But the Income Tax Department is not resting on the laurels of its recent successes. In fact, it is instead making a renewed push to crack down on tax evasion, according to a report from the Press Trust of India.
Its first order of business? Targeting assets stashed by Indian residents abroad. The department is reportedly monitoring the offshore deposits and overseas transactions of thousands of Indians, and has even sent notices to a number of them including high-profile launderers like Nirav Modi.
Last week, around 7,500 Indians with homes in Dubai were sized up by domestic tax authorities, the Indian Express reported. In the last few months, India has also signed financial intelligence sharing agreements with the governments of Switzerland and Liechtenstein — two popular places where Indians have bank accounts.
The Income Tax Department is looking to enforce its recently-passed anti-black money law — The