Hello and welcome to exampundit. Here is the first Essay for UIIC AO 2016 about Indian Government's role in Tax
Arya Stark - Indian Government's role in Tax
Tax havens refers to a country or state or territory which maintains a system of financial secrecy which enables the foreign individuals to hide their assets or income to avoid or reduce taxes in the home jurisdiction. This creates a situation of tax competition among the jurisdictions. It may be specific government's policy to encourage inflows from tax havens.
Even Indian government is encouraging foreign entities to invest their money in India. This is benefiting India's stock markets & helping the country to meet it's current account deficit. Today, India have double taxation treaties with many countries. This enables many companies to legitimately pay lower tax in one country & to avoid high tax in another country. Mauritius is famous because it has zero tax on certain types of income & India have double taxation avoidance treaty with that country.
Here, India is creating tax haven, not Mauritius. Tax havens exist in India as well. When a politician demands a special status for his state, it means that he is demanding that his state should become a tax haven for domestic and global investors in order to develop faster. Recently, the expose of panama papers created a storm across the world. The supreme court of India ordered to form a special investigation team includes officers of CBDT, foreign investment unit, RBI and others to investigate into this matter. Indian government announced to punish those who are involved illegally in this.
Tax havens have been criticized because they often result in the accumulation of idle cash which is expensive & inefficient for companies to repatriate. Many tax havens are thought to have connections to fraud, money laundering & terrorism. Therefore, on one side India is creating tax havens for faster development and on another side, India is facing a challenge to avoid the flow of tax evaded money.
Ghost – Indian Government's role in Tax
Tax haven is a country where foreign investors or businessman are offered little or no tax under economically and politically stable environment. These institutions share negligible personal information to foreign tax authorities. The facilities are such that they assure guaranteed opaqueness and no disclosure of personal information. The threats those are posed by tax havens include uneven development which refers black money if invested will go to few sectors and mainly government revenue is affected due to illegal evasion of tax. Finance Minister of India Mr. Arun Jaitley has joined G20 meeting to curb tax evasion, terror financing and money laundering and thus warned those tax havens to be transparent in this regard and show information. The G20 meeting, Finance minister of India Arun Jaitley and The RBI governor Mr. Raghuram Rajan from India, is about to take "defensive" steps against tax evaders. India does not have official estimation regarding the amount stashed away by its nationals abroad but unofficial estimates assume the amount between $466 billion and $1.4 trillion. India and Mauritius have signed their three-decade old treaty to restrain tax haven. In upcoming future days, investments from Mauritius to India will have to weigh to pay zero to twenty per cent interest as CAPITAL GAINS tax depending upon the setting of new industry or business as per the treaty. In near future India is going to tighten the rules and regulations to curb tax evasion and is going to apply such rule that offshore dealings can claim capital gains tax. It can be envisaged by our nationals to make void the future of tax havens and tax evaders as well.