Corporate environment is one of the guiding forces for increased foreign direct investments (FDI) in any country. After serious corporate governance lapses and increased corporate frauds in India during the year 2013, Indian government decided to rejuvenate the same.
Taxation issues were at the core of dispute between big companies and Indian government. For instance, companies having commercial presence in India were accused of violating the transfer pricing laws of India. Transfer pricing orders have already been issued against Vodafone and Shell India and Nokia has been accused of violating the income tax and transfer pricing laws of India.
It is not the case that there are no laws in this regard. There are provisions under the Income Tax Act for avoidance of tax by certain transactions in securities and avoidance of income-tax by transactions resulting in transfer of income to non residents. To further curb income tax avoidance and to check black money accumulation in foreign jurisdictions, Income Tax Overseas Units (ITOUs) of India in foreign countries would also be established.
However, a need to overhaul the corporate regulatory environment of India was also felt. The first thing that Indian government did to improve the corporate environment of India was the formulation of a new legal framework for Indian companies. The Parliament of India passed the Indian Companies Act, 2013 (PDF) to give effect to this requirement. Powers of Serious Fraud Investigation Office (SFIO) were also increased so that they can effectively deal with corporate frauds and crimes in India.
Now media reports have claimed that the Securities and Exchange Board of India (SEBI) will soon come out with new corporate governance rules for the listed entities in the country. SEBI chairman U.K. Sinha said on Saturday that the board will take up the proposals in its next board meeting and will announce them after board approval.
This is a good step taken by the SEBI and it would bring transparency and accountability in the corporate affairs. We hope that SEBI, Reserve Bank of India (RBI), Income Tax Department of India, etc would also consider providing some regulations for Bitcoin exchanges of India that are operating without complying with Indian laws as on date.