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India seeks tax reform to boost economic growth

Tax-Law-India

Tax codes can be one of the most confusing areas of financial study, which is a big reason why CPAs get paid so well. However, when governments simplify their tax policies, it allows people to start and grow small business more rapidly. This is exactly why India’s new finance minister is working to add much needed clarity to their tax codes. BBC News reports on the recent change in policy:

India’s new finance minister, Palaniappan Chidambaram, has pledged to clarify tax laws and take measures to boost investment in the Indian economy.

“Since investment is an act of faith, we must remove any apprehension or distrust in the minds of investors,” the finance minister said late on Monday.

“Clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution and an independent judiciary will provide great assurance to investors.”

Asia’s third-largest economy expanded at an annual rate of 5.3% in three months to March, the slowest pace of growth since 2003.

Last week, India’s central bank, the Reserve Bank of India (RBI), lowered India’s growth forecast for the current financial year to 6.5% from 7.5%.

The bank also resisted calls for cutting interest rates, leaving its key rate unchanged at 8%.

It cited rising consumer prices as the key reason behind its decision, saying that a cut in interest rates would “only aggravate inflationary impulses without necessarily stimulating growth”.

Consumer prices in India grew by 7.25% in June from a year earlier, a much higher rate than many other emerging economies in the region.

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