Business EconomyPosted at: Sep 16 2026 1:29PM


Sitharaman urges industry to move beyond tax cuts, exemptions

Bengaluru, Sep 16 (UNI) union Finance Minister Nirmala Sitharaman on Wednesday called for a shift in the way industry and professional bodies make tax policy representations, urging them to move beyond demands for rate cuts, exemptions and concessions and back their proposals with data on compliance costs, revenue implications and unintended consequences.
Addressing an ITRA conference here, Sitharaman said tax consultations should be a genuine exercise involving "evidence, experience and ideas" rather than merely providing stakeholders an opportunity to place representations on record.
"Year after year, a very large part of the representation eventually comes down to three requests — reduce a rate, provide an exemption, or grant a concession," she said.
She said a mature tax policy debate must go beyond sectoral interests and examine whether existing provisions continued to serve their purpose, even when businesses currently benefited from them.
"If a provision is set to impose an excessive compliance burden, tell us how many taxpayers it affects, how much time or cost it imposes and what an alternative would mean for revenue," she said.
"If a change is proposed, show us not only who gains from it but also its consequences for the tax base itself, administration and other taxpayers," she added.
Sitharaman also urged stakeholders to identify possible unintended consequences of their recommendations and said the larger question should be what kind of tax system India should have over the next two decades as the country moves towards Viksit Bharat 2047.
"That requires better tax policy research — research that looks at a proposal from all sides, measures its effects, recognises the trade-offs and wherever possible offers a workable alternative," she said.
The Finance Minister also called for stronger independent tax policy research in India and urged the Institute of Research on Taxation (ITRA) to play a larger role in shaping policy.
"I would like to see ITRA emerge as India's leading independent institution for tax policy research and analysis," she said.
She said India had economists, tax lawyers and chartered accountants of the highest calibre but lacked an institution that brought their expertise together and gave their work greater standing in the policy process.
Drawing comparisons with institutions such as the Institute for Fiscal Studies in the UK and the International Bureau of Fiscal Documentation in Amsterdam, Sitharaman said India needed more visible and rigorous independent tax research.
She said the government followed a consultative process before union Budgets and major tax reforms by engaging industry, professional bodies, experts and other stakeholders.
"Tax policy therefore is not and it should not be a one-sided exercise for the government," she said, adding that those outside government often saw the practical consequences of a provision before policymakers did.
Sitharaman also highlighted recent tax reforms, including the reduction of corporate tax to 22 per cent in 2019, rationalisation of personal income tax, replacement of the Income Tax Act, 1961, with a new Income Tax Act, faceless assessment and appeals, pre-filled returns and updated returns.
She said TDS and TCS provisions had been progressively rationalised, while the government had sought to reduce tax litigation through measures such as Vivad Se Vishwas and higher monetary thresholds for departmental appeals.
On GST, she said reforms since its introduction in 2017 had simplified indirect taxation, while restructuring the rate structure had helped reduce classification disputes.
On international taxation, Sitharaman highlighted India's renegotiation of treaties with Mauritius, Singapore and Cyprus, adoption of the multilateral instrument, country-by-country reporting, automatic exchange of information and measures targeting undisclosed foreign income.
She also highlighted India's advance pricing agreement programme and measures relating to global funds, virtual digital assets and global capability centres.
Looking ahead, she said the tax system would have to respond to emerging issues including artificial intelligence, robotics, the gig economy, global mobility, virtual digital assets and global capability centres.
“Global capability centres are Bengaluru's question above all others,” she said, noting the growing presence of such centres in the city.
Sitharaman said the ITRA conference's focus on emerging tax issues, rather than rates, exemptions and deductions, was “a notable choice and a welcome one”.
She urged participants to submit concrete tax policy alternatives and quantify their proposals.
"Research that measures the compliance cost of a provision, identifies the number of taxpayers affected, or models the revenue implications of an alternative is far more useful for policymakers than criticism that remains only qualitative," she said.
The Finance Minister said tax policy must provide the revenues required for development while remaining fair, predictable, administrable and supportive of investment, enterprise and innovation.
UNI BDN
Tags: #Sitharaman urges industry to move beyond tax cuts# exemptions
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