India needs to protect its legitimate tax base while providing policy stability and predictability to global investors. The observation was made by Monica Bhatia, Principal Chief Commissioner of Income Tax (International Taxation), while addressing the 23rd International Tax Conference organised by ASSOCHAM.
Bhatia noted that tax professionals, businesses, tax administration, and policymakers are currently navigating rapid changes in the global business economy and technology. She added that the government has taken several steps in recent months to strengthen tax certainty and create a stable fiscal regime despite geopolitical changes and global trade uncertainties.
Highlighting the role of international forums, Bhatia said India must engage more actively with organisations such as the Organisation for Economic Co-operation and Development (OECD), the European Union (EU), and the United Nations (UN). This engagement is seen as necessary to ensure that global tax rules reflect the interests of developing and market-oriented economies as cross-border transactions become more complex.
Addressing domestic measures, Bhatia pointed to the new Income-tax Act, changes in Safe Harbour Rules, and the Advance Pricing Agreement (APA) mechanism as key steps toward reducing disputes. She noted that the expansion of Safe Harbour provisions—including higher thresholds and automated, group-based mechanisms—signals the government's intent to prevent disputes. Furthermore, India has entered into over 20 new bilateral APAs with countries like France, Indonesia, Ireland, and Sweden, bringing the cumulative total to 1,035 agreements that provide certainty across thousands of assessment years.
On the administrative front, Bhatia mentioned that tax authorities will increasingly utilize technology and artificial intelligence (AI) to identify complex ownership structures and potential non-compliance, while ensuring compliant taxpayers are not unduly burdened. She also emphasized the importance of uniform interpretation of tax provisions by officers, capacity building, and continued engagement between tax administration, professionals, and businesses.
"Maintaining a balance between revenue protection and investor predictability is vital for long-term economic growth, particularly for startups and businesses expanding across borders. Mechanisms like Advance Pricing Agreements and Safe Harbour Rules provide much-needed clarity, reducing compliance friction and fostering a stable fiscal environment for domestic and international stakeholders alike." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
