To counterbalance the effect of demonetisation on GDP growth and to stimulate growth in economy, many expect the Government to focus on fiscal reforms in the upcoming Budget. On the direct tax front, we witnessed a number of reforms last year. These include the new dispute resolution mechanisms, treaty re-negotiations, Income Disclosure Scheme and rules and clarifications towards reforming tax provisions.

Though the intent to rationalise taxes is felt, there remains scope for streamlining many aspects. Here are some:

The ambit of residency of corporates for tax purpose was expanded by incorporating the concept of place of effective management (PoEM), and draft rules on PoEM were issued last year. The PoEM rules have a far reaching impact on tax compliance and governance including availability of treaty benefit, foreign tax credit and tax rate disparity.

In the absence of clear guidelines on determination of PoEM, taxpayers expect removal of PoEM or at least for it to be deferred to bring in more certainty on tax and transparency in governance, which could also supplement ease of doing business in India.

Income Computation and Disclosure Standards (ICDS), a set of tax standards introduced to marry the provisions of tax and accounting, remained unsettled for a long time, until the applicability was recently affirmed. Though the support of the department is felt from the amendments made in tax return forms, the taxpayer fraternity perceives it as an undue compliance requirement.

As Indian corporates are transitioning into an evolved Indian Accounting Standards landscape, another set of tax standards is not welcome. Perceived as a compliance burden, taxpayers hope to see ICDS scrapped.

The Government is set to implement the General Anti-Avoidance Rules (GAAR), the most debated tax code of the decade, from the upcoming financial year. The tax code is set to be implemented without encompassing proposals of the Shome Committee such as negative list of transactions and overriding effect on pre-existing anti-avoidance provisions, which are serious concerns.

Also, lack of capacity building and infrastructure in the department to handle such an advancement should be examined. To allay the fears of taxpayers and investors and to attract more FDI, it is hoped that GAAR will be deferred till the rules are made objective with proper checks and balances.

Last, but most important, the personal income-tax segment eagerly awaits multiple announcements in individual tax regime for reducing the tax outflow, such as increasing slab rates and permissible deductions. After a slew of tax reforms including the much publicised voluntary income disclosure and dispute resolution schemes, which yielded high returns to the exchequer, the common man is looking forward to some tax savings in his personal taxes.

As always, a stiff task for finance ministry awaits, that is to achieve a fine balance between providing stimulus for economic growth and keeping the fiscal deficit in check. Only the Budget day will reveal if the taxpayers will indeed witness achche din.

The writer is Partner-Direct Tax, PwC. The views are personal