Bringing transparency through increased compliance norms – 'A new India'

Over the last few years, there has been a concerted effort to bring greatergovernance and transparency measures in the Indian Corporate ecosystem. Certain bottlenecksimpeding GDP growth, which were being overlooked for many years, have now been revisited and given a new impetus.Three such landmark initiatives that have come out of this movement are the Goods and Services Tax (GST), Startup India Plan and Real Estate Regulation and Development Act (RERDA).

GST (Goods & Services Tax):

This is arguably the biggest Indirect Tax reformsince Independence that will consolidate 17 indirect taxes and bring outone simplified tax policy.The unified tax regime will lead to more transparency and encourage astreamlinedapproach to raise revenue with lesserbureaucracy and reduced economic distortions.

A NCAER study suggests that GST could boost India's GDP growth by 0.9-1.7 per cent. The transportation sector is agood case in point on how GST can have a direct impact on reducing administrative hurdles. A UBS Securities study found that truck drivers in India spend 60 per cent of their time off roads negotiating check posts and toll plazas. The report noted that 11 different categories of taxes are levied on the road transport sector. Implementation of GST could make a big impact by bringing down logistical costs in this sector.

Startup compliance norms:

The key objective of the Startup India Plan was to reduce the regulatory burden on start-ups, thereby allowing them to focus on their core businesses. The complianceswould now be affordable, friendly andflexible. The process of conducting inspections and exemptions shall be made more meaningful and simple. Start-ups shall be allowed to self-certify compliance (through the Start-up mobile app) with 9 labour and environment laws.

In case of the labour laws, no inspections will be conducted for a period of 3 years and with respect toenvironment lawsstartups will fall under the ‘white category’ (don’t require environmental clearance and consent).

RERDA (Real Estate Regulation & Development Act):

RERDA is an attempt to bring greater transparency and accountabilityin the real estate sector. It may initially cause some uneasiness among the builders but will eventually lead to a more consumer centric approach in real estate transactions. It provides for creation of a single window system to ensure that time bound project approvals and clearances are given for timely completion of projects.The RERDA billalso requires the builders to deposit 70 percent of buyers’ payments into a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.

These reforms are positive steps in the right direction and will undoubtedly change the public’s perception towards taxation and compliance. However, a lot still needs to done especially in terms of execution to ensure that the envisioned benefits are actually realized on the ground.