‘India Less Competitive:' Tax Expert Dinesh Kanabar On Tax Advantage China Offers To Global Manufacturers

For The Core Report: Weekend Edition, financial journalist Govindraj Ethiraj spoke to Kanabar to understand tax implications related to shifting manufacturing supply chains into India.

26 Nov 2023 5:30 PM IST

The Covid-19 pandemic forced global manufacturers to adopt a China plus one policy, making policymakers and stakeholders enthusiastic about India becoming a manufacturing hub. However, despite policy intervention and incentives, there still remain hurdles in India replacing China as the primary choice. And the main reason seems to be that India is less competitive compared to China from a cost perspective for manufacturers.

?Here the government is doling out so many subsidies in China, which we are not doing in India, which may not be a right thing to do in India. But the fact of the matter is that that makes us less competitive with China,? Dinesh Kanabar, founder of tax and regulatory advisory body Dhruva Advisors, told The Core.

Kanabar said that the major impediment to manufacturing in India, more than tariff issues, is price competition. Manufacturing in China is heavily subsidised which makes it still the favoured site. If we take the case of iPhone, for instance, an iPhone manufactured in India costs higher than an imported iPhone because, according to Kanabar, the Chinese government is able to bypass international trade barriers at the World Trade Organization (WTO) and pass on those benefits to manufacturers. ?... and say that we'll provide to you electricity cheaper than what it costs us, we're going to provide finance to you at a very very cheap rate, all of that. So you could (manufacture here). ...

The Covid-19 pandemic forced global manufacturers to adopt a China plus one policy, making policymakers and stakeholders enthusiastic about India becoming a manufacturing hub. However, despite policy intervention and incentives, there still remain hurdles in India replacing China as the primary choice. And the main reason seems to be that India is less competitive compared to China from a cost perspective for manufacturers.

“Here the government is doling out so many subsidies in China, which we are not doing in India, which may not be a right thing to do in India. But the fact of the matter is that that makes us less competitive with China,” Dinesh Kanabar, founder of tax and regulatory advisory body Dhruva Advisors, told The Core.

Kanabar said that the major impediment to manufacturing in India, more than tariff issues, is price competition. Manufacturing in China is heavily subsidised which makes it still the favoured site. If we take the case of iPhone, for instance, an iPhone manufactured in India costs higher than an imported iPhone because, according to Kanabar, the Chinese government is able to bypass international trade barriers at the World Trade Organization (WTO) and pass on those benefits to manufacturers. “... and say that we'll provide to you electricity cheaper than what it costs us, we're going to provide finance to you at a very very cheap rate, all of that. So you could (manufacture here). It's a very peculiar system,” he said.

Apple made use of China’s vast manufacturing network to mass produce the iPhone, iPad and other popular products. However, the country’s Covid policy tested the company’s dependance on China. Apple is now accelerating its plans to shift production out of China. It has been reported that it would take Apple until at least 2025 or 2026 to move the majority of its iPhone production to markets like India and Vietnam.

“Let's say you have got a corporate tax in China of 30% that is shared between the centre and the state. So the state gets 15%. You can actually negotiate with the state that the share of income tax comes back to you. If you are relocating from one place to another, they will give you land free, they will give you power free, they will give you incentives to make your relocation cheaper,” he said.

For The Core Report: Weekend Edition, financial journalist Govindraj Ethiraj spoke to Kanabar to understand tax implications related to shifting manufacturing supply chains into India.

Here are edited excerpts from the interview: 

Let me start by asking you to lay out a general landscape. And in our conversations before this, I was giving you an example of an iPhone. We are obviously trying to bring in more and more of the iPhone manufacturing ecosystem into India. But it's also a fact that the final product may be assembled here. There are many things coming from all over the world. How does tax begin to play and how does it work at the various points of entry and exit and assembly in a product like that?

We did discuss this sometime earlier. In fact, about six years ago when Foxconn started the journey to come back, they (had) already (been) in Chennai. They had left, they had a strike, whatever else. They went back. And then they came back to say, we cannot afford to be only in China. Remember, they have 14 lakh workers in China, and they felt that they'd put all their eggs in one basket. Almost six years ago, they came down to India to say, how do we set up a manufacturing base in India? And lo and behold! 

The strange thing which happened is that it was more costly to manufacture in India than to simply assemble or even get the full item bought and imported into India. With what you call an inverted duty. And the inverted duty meant that if you imported components, you paid duty on those components, you assembled the components, and paid again GST (Goods and Services Tax) on all of that. If you are exporting, you did whatever IGST, etc. What you paid up was far more making the product costlier than simply importing the equipment. And we were called in by NITI Ayog, by MeiTY (ministry of information technology), and spent quite a bit of time explaining to them. And a large part of those issues have been addressed thus far. And what we found was that the overall duty payable if you manufactured in India, was far more than if you imported the final product. We explained all of this to NITI Aayog, we explained all of this to MeiTY. They understood the proposition and they made a number of changes as a result of which it has now become neutral. To say that, yes, if you're manufacturing in India, you are no worse off. 

And then to grab this entire initiative of Make in India, export from India, make in India for the world, for the region, whatever else we introduce PLI (production-linked incentive) schemes and all of it. Having said all of that, there are still a number of processes. There was this whole issue regarding Tesla, which came in and there was a standoff. And the point really, and the government seems to be relenting to come back and say that if there is somebody who's ultimately aiming to manufacture… a manufacture cannot happen on day one, you need to first allow SKD (semi knocked down), CKD (completely knocked down) products (to) assemble in India and then allow somebody to manufacture. So there are a number of issues out there where there are leakages, and those leakages do not make manufacturing in India attractive. 

Good part is that the government is aware of that, it has now accepted the position and has, as in the case of iPhones, sort of set it right. 

To go back to that example, and you mentioned Foxconn, so can you illustrate that, let's say, what would have been a component, or let's say chip that was being imported, let's say from Taiwan into India, and I'm sure some other part was coming from maybe Vietnam or somewhere else. And what were the duties that were being applied at various stages and how was it affecting the final cost? 

The way it was working originally is that, for example, the duty on iPhone– import duty was 10% but on chip was 15%, and you could not therefore subsume that 15% into 10%. That 5% was a loss. There were various components within the manufacture of a product whose duty was higher than the final product. Therefore, if you got all those products, put everything together and sent it out because of the fact that the duty on components was higher than the duty on the final product, even if you re-exported it, you lost that particular amount. That was what was actually the crux of the issue.

In the context of supply chains to stay with that for a moment, there must be similar other examples.

Car manufacturers are again one such example. For example, you are assembling a car in India and you are getting a number of components, whether it is batteries, whether it is whatever else, engines whatever, the (duty on the) components could be higher than the duty on the final product which is what made manufacturing in India not attractive. 

But today, to import a car, you're paying very high duty. You could be paying 100%, for example. 

Correct.

Whereas components, I'm assuming, in any case, are less. 

No. Take a situation where you are going to make a car and export it out. If you are manufacturing, you could subsume all of it. Now, when you are manufacturing and selling it out, are you able to get a set off of all the duties that you paid on the components when you send it out or not— that's what becomes the issue. 

So are you able to? 

Now things have been set right and you are now able to. Six years ago you were not. A process started….it was a process of learning for the government. Fortunately, the government was proactive, understood what it was all about and we were able to convince the government to make changes. And the changes were very wholesome and welcome.

At this point, there are no import…

There are no leaks. The government has this issue of inversion and has ensured that it does not matter whether you manufacture in India or you get components or import the product as a whole. 

As we look at our ambitions, let's say we want to bring in more investments into India. China plus one. The iPhone is one illustration. We want to bring in much more. Let's say it could be semiconductors at the highest end to more toy manufacture at the lowest end. What are the kinds of taxation and tariff issues that we are grappling with right now? 

I think more than tariff issues, what we are looking at is a price competition. When you are looking at China where manufacturing is heavily subsidised…I'll again go back to the iPhone. You spoke only about the duty. But let's compare India and China. And you are aware, for example, that an iPhone manufactured in India costs higher than an imported iPhone. And why is that so? The question is that when the Chinese government is able to bypass all the WTO barriers and come back and say that we'll provide to you electricity cheaper than what it costs us, we're going to provide finance to you at a very very cheap rate, all of that. So you could… It's a very peculiar system. Govind, I'll go into a bit of detail. 

Let's say you have got a corporate tax in China of 30% that is shared between the centre and the state. So the state gets 15%. You can actually negotiate with the state that the share of income tax comes back to you. 

If you are relocating from one place to another, they will give you land free, they will give you power free, they will give you incentives to make your relocation cheaper. What you are finding is that because of the intervention of the state, the ability to manufacture …it's not a level playing field. That's the point I'm trying to make.. that you make an iPhone in India and you make an iPhone in China. Ordinarily you would say that it is my manufacturing cost and one should compare like with the like and compete in an open market. That's not what is happening out here. Here the government is doling out so many subsidies in China, which we are not doing in India, which may not be a right thing to do in India. But the fact of the matter is that that makes us less competitive with China. 

The interesting thing you're saying is that corporate or income tax is not a pure federal collection in China. 

It is a federal collection, but then part of centre parts, just as in GST, we have collection by the centre and then disbursement to the state. Similarly, the income tax is collected by the centre. It's a single levy. But it is shared with the state..

Immediately at a fixed percentage. 

Correct. 

That's not the case in India. 

That's not the case in India, but that doesn't matter. I'm giving you just an example. We don't need to delve only on that example. In India, for example…

No, but you're saying the state could give up its share. So it's like saying Maharashtra gives up its share of income tax and fights with Gujarat. 

It does not give up. It happens in a way that you will pay the full thing and the state will reimburse you what it is getting. In China, if you were in a particular province, you would pay the same federal income tax because that's the rate of tax. However, the share with the state gets… it will reimburse you and it can reimburse you in ten different ways. 

But you're saying therefore it becomes that much more tough for…

Absolutely. We are not competing on a level playing field at all. 

In general now talking about supply chains? What are the other kinds of issues? I don't want to jump into transfer pricing right now, but it would be useful to understand the role of transfer pricing today. We've had it now for many years. Are things becoming easier? And again, once seen in the context of supply chains. How are we coping with it? 

Two parts to it. One is the pure tax part. And I'll come to that later. But again, I just go back to the point which I made earlier. It is the state intervention and the state's ability to say, I will give you power cheap. I will give you water cheap, even if the manpower cost in India and China is comparable to like, you just can't compete because the state intervention ensures that every…. And again I can give this to you as an example. 

When Foxconn came here and we went with Foxconn to meet several other state governments, and the state governments would go back and say, we can give you the land cheaper. The question is why cheaper? Why not free? I can't take the land with me. Ownership of land means nothing to me. You are giving me land, so that I can set up a factory and I can give employment to your people. Why should I pay for the land? Now to us in India, that may appear to be outrageous. How can somebody ask for it? Why would I give it to you for free? 

And when we went with the state governments to China to examine what they do, a Chinese state government would come back and say, we'll give you land free. In fact, if you are wanting to set up here, we will reimburse you the entire cost of relocating from another state to my state. And happy to reimburse all of it to you. Now, that's a very, very different approach. The approach which China is taking, which of course is a different system, which they can do and which you may not be able to do in a democracy because it's purely market run and the state has limited role to play. But the way China is approaching it is to say: if our goal is to create jobs, our goal is to grow our GDP. We'll do whatever it takes.

Let me come back to supply chains. As we end 2023, go into 2024. How are things moving when it comes to international tax? 

It's a difficult question to answer, Govind. I'll tell you why 

Is it becoming more complex? 

I'll give a practical example. I'm dealing with one of the largest American companies, which is into some aspects of auto manufacturing. I won't go into that specifically. And they bave a huge manufacturing plant In China. The largest manufacturing base is in China. And as they evaluated, they came back to say that they wanted to relocate to India. It was not China plus one, but actually physically relocating the existing plant into India and thereafter going into backward things… EVs, whatever else, etc, etc. they wanted to do. A very very welcome thing and we started working with them. 

And as we start working with them, we find that there is probably a level of bureaucracy which is frustrating them. At a policy level, I can tell you that our policies are absolutely top class. Nothing to complain about. The question is how are the policies getting implemented? Is there red tapeism? Is there a bureaucracy which sort of puts a barrier to the implementation of the policy in the way the government would like to have it implemented? And I think the answer seems to be yes. 

Because you got to negotiate with the state governments for land, you got to negotiate with somebody else for something else. And that process sometimes becomes very, very frustrating, sometimes full of red tapeism. And I am actually witnessing that there is a rethinking on the part of this American company to come back and say are we approaching this right? We are very gung ho about coming to India, moving out of China. Maybe we need to rethink, maybe India should be plus one rather than being the manufacturer. 

This is automotive, which is as physical as it gets. Do you see similar concerns on the services side as well or is that far more frictionless?

Services is far more frictionless because the touch point with the government is de minimis. And that has been the biggest thing. The reason why we have seen the Infosys of the world, the TCSs of the world, Wipros, HCLs, whoever else, grow has been that the government intervention has been de minimis. They of course got this advantage of being in SEZ (special economic zone), having a ten year tax holiday, etc etc. The only thing there was the point which you raised with me earlier, which was on transfer pricing. 

So one of the things which is far too prevalent (in India) is captives. Everybody is using India as a back office. And while the word ‘back office’ may not sound so sexy, what sort of work are you doing? What I have seen in my experience is that people come to India for cost and stay here because of our capabilities. People go on moving up the value chain such that at some stage you make the overseas operations almost redundant. And that's something to be extremely proud of. That's where we are. 

You may come back and say can I do basic accounting? From basic accounting you can say I can come and do an IFRS (International Financial Reporting Standards) reconciliation. From there you can come back and say can I maintain all my books of accounts here? And then finally you'd come back and say I can prepare financial statements, I don't need a CFO sitting out of the USA. And then now the Big Four, for example, have their audit divisions in India or other audits happening for global accounts from India. It's actually moving quite a bit.

That is because everything is so digital. It's not like they have to go and sit in the offices, look at books and ledgers and so on. 

Absolutely. The only challenge which has happened there is transfer pricing and two limbs to it. There was earlier a controversy, see, and thank god it died down as to say that if there is a core operation happening in India, then in that core operation, I will not accept transfer pricing. I will actually regard a profit split. So part of the profit should come to India. That is how the tax office started. Fortunately, that didn't go too far. 
But even today we have this issue as to what should be the margin. Fortunately, the global MNC is accepted. Everybody actually began with cost plus 5%, 7%, 10%. And now the general norm is around 17,18, 19%. There have been lots of bilateral advance pricing agreements, competent authority proceedings under which these have been accepted. 

But this is higher than the global norm. It also means that when you render services, you are getting full cost plus that markup, whether it is 17,18, 19% and that money gets trapped in India, then you declare a dividend. Then there is a dividend tax and whatever else on that. That does become cumbersome. But it is far, far less than anything else one would see in the manufacturing sector.

To go back to that example that you gave just now. In a global captive centre, as they call them. Let's say there's Walmart or Target in the US. Their software and as you said, tax audit and so on, arms are sitting here. So how does the book get built? The output of this company, how do they start measuring it? I'm assuming salaries come from overseas. Let's say 100 is the salary bill, salary plus overheads and everything for this unit in India. Take us through the journey after that. 

It's actually very simple. It's not complicated at all. Almost all captives are on total cost plus. There may be some differences. For example, the cost may not include interest cost because that's borrowing which is local, et cetera, et cetera. Every single cost that you have, whether it is rent, whether it is salary, whether it is power, whether it is water, whether it is travel, everything is borne by the global parent which is getting services in India. And the way it works is that in the beginning of the year you agree on a budget with the Indian captive which is a wholly owned subsidiary. By and large, you come back and say this is the margin we are going to give you. Month on month, invoices are raised to take into account the entire cost and a payout happens. 

Where is the problem with tax? I mean, why do questions then get asked? 

The question is what is the markup which India should charge? And without making it too technical, Govind, let me just explain to you that in a situation like this, India is not an entrepreneur. It is a captive. It doesn't have to go out and market. It does not bear the risk of foreign exchange. It does not bear the risk of capacity utilisation. Let's say you've got a 10,000 person back office and let's say in a particular month there is only work for 8,000. India does not bear that risk. 

Let's assume you constructed a ten story building and initially you used only six and four were vacant, India would still get reimbursed. The question is that if you are a captive and the entire cost is borne by your parent, what sort of a markup should be there? The global MNCs would like to believe that a markup in such a case should be de minimis. 5%, 7%, 10%. India comes back and says no. In fact, India has asserted margins as high as 35% to 81% and those got litigated. And now, as I said, some sanity has come about and we see averages of around 17% to 20%. 

But Global MNCs, while avoiding litigation, have accepted those 17% to 20%. There is a concern to say, is that a right markup? With a person who's taking zero risk, there is no inventory risk, there is no nothing you incur. The more expenditure you incur, the more wasteful you are, the more profit you will make because we are going to be reimbursed for everything. What should be the markup? That's the issue. 

This is of course captives. But are you seeing transfer pricing issues again as companies relocate or want to set up bases in India…

Transfer pricing is that when two associated enterprises deal with each other, are they dealing at an arm's length or not? And that is of course a very simple way of putting things globally. Whether arm's length is at all possible is a matter of challenge. And I won't go into those technicalities. But the question here is that in India generally the transfer pricing has been very, very aggressive. At one stage it would be surprising to know that 70% of global transfer pricing litigation was in India. 

We had 2% of the global trade and 70% of transfer pricing litigation. Because whether you paid royalties, whether you paid technical charges, whether you paid cost sharing for common infrastructure, common technology, whatever else, everything was a matter of challenge. And it continues to be. What has happened is, thanks to the captives accepting 17, 18%, lots of advanced pricing agreements happened. The quantum of litigation has gone out, but there still continues to be litigation. So again, what are the comparables to be used in coming to that comparison? What factors to ignore, what factors not to ignore becomes a big issue. 

Let’s come to the risk part now. And I mean the risk is borne by companies and in companies it's borne by people who sit on the board and the leadership and so on. Walk us through what it takes today. In all these cases that you spoke of, you spoke of manufacturing services, captives, non captives transfer pricing in all of these cases, there are people who are bearing the risk. And in a larger context, when you invest in India, this is something that you should think about if you've not invested already. And if you are invested in India, then you should be actively plugged into this space. 

I'll break up that answer. It will be a mouthful of an answer, but let me try and put it as briefly as I can. 

Two things happen. Tax risk is one of those risks which global MNCs, when they invest into India, look at. And therefore if the normal IRR (international rate of return) expectation is X after taking country risk and whatever else into account, tax risk will be an additional factor. If for example, a corporation says my IRR in India should be 15%, then it might go back and say I need 17% to make up for the tax risk and litigation that might happen. 

But is that a real figure? 

Yes and no. Each company has its own sort of set of numbers that one is looking at. But does my tax risk result in a higher expectation? The answer is very much yes. A private equity, for example, will come back and say I am making an investment. My normal expectation is a 15% IRR. But I'm looking at a tax litigation where things could be stuck up in appeals, et cetera. I might have to make on account payments and whatever else and they will put it as a higher return. Therefore, that is not theoretical. That is very practical. In evaluating India risk, one of the risks which you'll take into account is transfer price… or rather tax litigation risk, not just transfer pricing. So that's one part. 

Second is a much different issue and that may not necessarily relate to global corporations and transfer pricing, but which applies everywhere. Every board today has independent board members. And independent board members, when they look at ESR (environmental social responsibility) and when they look at what are the risks that are being assumed by an enterprise, tax risk becomes a very, very important and a critical factor. 

I'll give you a couple of quick examples. For example, we would have seen in the recent past that the government has changed its view on how to tax the gaming industry. The question is, am I supposed to go on a net basis or on a gross investment basis? The government came back to clarify the law that is on a gross basis and said that's what it always was. And therefore taxes for back years have been asserted. And I'm looking at numbers which at least in my career, I had never thought of. I have known enterprises getting demands of as high as Rs 60,000-70,000 crores. Now these organisations have to go bust. If at all they have to make that payment, they can't, they would go bankrupt. And of course these are being challenged in appeals, etc. 

A quick question: can you go bust? Because assuming there's say even a Rs 1000 crore tax demand and all you have in your bank and assets and everything is only Rs 500 crores, the balance, 500 crores becomes a liability on the directors, right? Or can you just fold up and go no.

It's a limited liability company. 

Okay, so the directors will not be chased down. 

Yes and no, 

Because as I understand it, directors get hauled in. 

No. The answer is again to everything in life, yes and no. The law is very clear. A limited liability company is liable only to the extent of funding. That's the definition. And there is a provision in Income Tax Act that in the case of an unlisted company, if the directors have acted wrong, they have done something which can be sort of held personally, that they have not been appropriate in their conduct, they did something to avoid taxes, then the taxes can be recovered. Which is a rare thing to happen because generally in  matters like this there will be council opinions, whatever else on a point of view that you have taken. 

Take for example, going back to this GST on gaming companies. It was a view which was never there. And in some cases where the tax office came back to say that that should be the view that you should be on a gross basis, there were several judgments which held no, it was not so. And now the government has sort of changed the law and is applying the law retroactively and people have filed writ petitions are being heard. There is no way a director can be hauled up personally for any of those things. 

But a director would be concerned about the tax risk that is the company now a going concern at all? Is this amount required to be provided? Not provided? That's what a director is concerned with, to come back and say…. Just imagine you are on the board of a company and the company has got assets of Rs 1000 crores and it receives a demand of Rs 50,000 crores. It's very likely that if that demand was real, then the company will cease to be a going concern, and will have to be wound up. 

Without getting into whether a director is liable, a director is concerned whether the accounts are right or not. An auditor is concerned about what to do about this liability. Because even though you may have a view that it is not right, you want to be very sure that it is not required to be provided. That becomes a tax risk. 
Today the way the values are coming up in terms of the numbers, the liability which is being asserted by the revenue which is so high that the board becomes… has to take tax into account as a very major risk factor and satisfy itself that the accounts are true and fair even if tax is shown merely as a contingent liability and not as an actual liability. 

You use gaming as an extreme example because you're saying the amounts are so large that there's no but you're also saying that on a continuing basis for a regular company, a board should be thinking about tax risk more actively than they were earlier. 

Oh, absolutely. And again, it is a subject in itself and there's little that I can do in the limited time that we need to look at. But let me give you an example. There has been this litigation on whether you are a telecom company and you do revenue share under the new telecom policy whether that expenditure is capital in nature or revenue in nature. To us as puritanical accountants, it might appear to be a non issue. The revenue share goes to the government. It's part of my normal operations and therefore is a revenue expenditure. 
The Supreme Court held and I'm sure a review petition will be filed. But that's the law as it stands today, that if you came into existence as a result of the licence and you paid apart from that continuing or getting into existence a maintenance and operations and running of that licence, the entire expenditure is capital in nature, which is not how most of us would have understood law. And therefore that expenditure will not be allowed to in this particular case, there is a process of amortisation and that has to be taken into account. 

Now, if that means that you will not get the amount as a revenue expenditure, then your tax outgo goes up and that board needs to consider all over. So there are so many changes which are happening. 

There's another big issue about brand licensing. So on GST, again, there is this whole issue that if there is a corporate brand, and that brand is being used by all the companies, is there a deemed charge for the use of the brand? And that royalty on which GST has not been collected, can it be collected? So we have so much litigation going on today. 

Brand is like a Tata mother brand or… 

Tata in fact, as is known in the public domain, charges every company, correct? But not all groups do that. And can the tax office deem that you are allowed to use something free, you should have charged and therefore the amount which you have foregone by way of a charge on that I am going to charge you GST. So we are looking at litigation almost out of thin air, if I may say so. And boards need to be very, very concerned about are they looking at the risk right? Are they taking steps to protect themselves and the organisation from the risk? And if a demand has arisen, are they really provisioning? Not provisioning. 

Are you able to think like the tax man does today? Like when you say the example that you gave. I mean, you're thinking that it's going to be revenue. And the Supreme Court in this case, it's a court that says it's capital expenditure, which obviously changes the way you account for it. Something else, you would not even think of anything. And then suddenly a tax demand lands. And it's also because people, let's say in a newer tax, like a goods and services tax, are trying to think on the tax man side, trying to be more and more innovative. 

The answer to your question as to whether advisors. organisations can think the way a tax department thinks.. The answer is yes and no. There could be issues on which capital versus revenue, you can foresee litigation. But take this again, going back to this GST case. Would you really be able to do it at all? Because it was never there. Suddenly, out of the thin air, the tax office comes back with an interpretation. Because remember one thing. Our tax laws, the way they have been designed, is to say that no central body can tell a tax officer to decide a particular matter in a particular manner. So in order to prevent any corruption, whatever else, a freedom has been given to the tax office. 
Unfortunately, what that freedom also means is that each tax officer interprets the same law or a tax treaty in a different manner, and there is nobody who can question him, so to say, for it. 

But in the case of gaming, it seems to me that there was anticipation something like this could come, maybe not as big as you've seen. 

But if it was there, then the values had to be what they are. So when the game in the case of gaming… so what happens is… exactly the point I was making. There's a tax officer in one part of the country, say Kerala, taking a particular point of view. You are sitting in Bombay. Your assessments have gone through after examination, six years, seven years and that Kerala thing goes into high court. You may not even be aware that somebody sitting in some part of India has taken that view. Now the tax office is going and saying, but this is the right view. And not only today, it was always the right view. 

If there's one thing that you would want to change, which is in the near term practical, which would make life a little easier from your point of view, what would it be? 

I think the Central Board of Direct Taxes, the CBDT, needs to really give direction and resolve disputes as they arise. Everything need not be litigated all the way up to the Supreme Court today. Once a dispute starts, it means that until a Supreme Court intervenes, which could be 1-15 years, you won't get a solution and you have a Damocles Sword on your head. India needs to come out of it to go back and say that people will take a view and will resolve issues sooner they arise rather than allow them to go. 

 

Updated On: 27 Nov 2023 12:40 AM IST
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