(Bloomberg) -- India plans to overhaul its tax assessment and investigation process for the nation’s top 500 companies as part of Prime Minister Narendra Modi’s endeavor to improve ease of doing business and curb corruption in Asia’s third-largest economy, people with knowledge of the matter said.
The measure, likely to be introduced in the federal budget in February, will eliminate the need for all human interactions in scrutiny of tax returns and replaced with an online system, the people said, asking not to be identified as the matter is private. In case more information is sought, the company’s response will not end with the same set of officials as it will be determined by an algorithm, eliminating discretion, they added.
India is ranked 119 out 190 countries when it comes to ease of paying taxes, according to the World Bank’s latest doing business survey. Modi, who won the 2014 elections on a pledge to improve the nation’s investment climate, wants India among the top 50 in the World Bank’s rankings from the current 100th position and has been spearheading efforts to boost foreign direct investment.
The e-assessment system will require the information technology wing of the direct tax office to undergo a major revamp. Once successful, this will be expanded to cover other tax payees, the people said. Finance Ministry spokesman D.S. Malik declined to comment on the proposed measure.
The new system will be location agnostic as assessing officials will be chosen electronically, making their location irrelevant, the people said. The measure will also help weed out corruption associated with posting of tax officials who often seek to be based in large cities especially Mumbai, home to the headquarters of most large Indian companies.
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