Corporate tax in emerging countries: Some aspects of India

Abstract

The purpose of this paper is to find out the corporate tax gaps in India and the possible reasons behind it. The objectives were achieved by looking at the existing tax system in the country, problems in the area of corporate taxation and the reasons for these problems. The authors also look at how we can address a few of these problems in comparison with other emerging countries. Emerging countries play an important role in the world economy. India is undeniably rising as an important and vital country, not only among emerging countries but also in the global economy. Tax environment in India is often seen as a complex system with the multiplicity of indirect taxes, overburdening litigations and lack of certainty. Tax policies can be an effective mechanism to promote investments, both international and domestic, which India needs in abundance. The existing high fiscal deficit in the country necessitates the need to make revenue increase a primary concern of tax policy in India. Although indirect taxes have become an important source of development funds in developing countries due to their wide coverage, we feel that corporate tax can become a potential source of revenue in the future. This paper should help in changing the way policy decisions relating to tax should be looked at. Studies in the Indian context are limited. This paper should be of some use to those intending to understand the tax system, especially with reference to corporate taxes in India.