India Must Balance Tax-Base Protection With Certainty For Global Investors, Says Top I-T Official

New Delhi: India's international tax framework is at a crossroads, with the need to strike a balance between safeguarding its tax base and ensuring policy stability, predictability, and certainty for global investors, according to Monica Bhatia, Principal Chief Commissioner of Income Tax (International Tax) who spoke at the 23rd International Tax Conference organized by ASSOCHAM.

Bhatia highlighted the impact of the Supreme Court's Tiger Global judgment, the new Income Tax Act, evolving dispute-resolution mechanisms, and rapid technological advancements on the international tax landscape. She underscored that policy stability is crucial for investor confidence.

Following the Tiger Global judgment, the government has taken steps to provide greater certainty to genuine legacy investments. Bhatia also emphasized India's progress in advance pricing agreements (APAs), with the country exceeding the 1,000-agreement mark, including over 220 bilateral agreements. Looking forward, she noted that artificial intelligence is transforming business models and tax administration, creating new questions around permanent establishment, profit attribution, and the location of value creation.

International cooperation and consensus-based global rule-making will become increasingly vital as technology advances faster than existing tax rules, according to Bhatia. Rakesh Nangia, Chairman of ASSOCHAM's Task Force on International Taxes, stated that international taxation has shifted from rapid evolution to a fundamental transition stage, driven by the Tiger Global judgment, new tax legislation, global minimum tax developments, and AI.

Sandeep Chaufla, Chairman of ASSOCHAM's National Council on Direct Taxes, emphasized the need for a balance between protecting tax bases and providing taxpayers with certainty and predictability. The discussion at the event covered various topics, including the post-Tiger Global tax landscape, AI, international tax policy, BEPS 2.0, treaty evolution, the new Income Tax Act, APAs, safe harbours, and cross-border dispute resolution.