TIOL - COB( WEB) - 965
MARCH 27, 2025

By Shailendra Kumar, Founder Editor

DIGITALISATION is in the air across all geographies in the world. Its fragrance is a little more enticing and stronger for the Indian economy as it has rapidly emerged as one of the key drivers of its growth. As per the Central Government data, the digital economy accounts for about 12% of India's GDP and employs over 15 million workers. It is not only growing at twice the rate for the rest of the economy but is also five times more productive than the rest. It is projected to account for 20% of India's GDP by 2030. Within the fold of the digital economy, there are many sunrise segments such as fintech, e-Commerce and gaming. Keeping in mind the potential of their future growth, TIOL Congress 2025 had planned a dedicated session on "Ease of Doing Business in New Age Digital Economy". While delivering a special address, the Minister for IT & Digital Services, Government of Tamil Nadu, Dr P Thiaga Rajan, observed that ease of doing business is an essential factor for growth, employment generation, and accelerated development. He underpinned his observations by saying that while the ease of doing business is often a theoretical concept, its practical implications can be measured with fewer barriers, less rent-seeking behaviour, and more streamlined regulations.

Dr PTR stated that India has always been known for its inefficiencies in terms of ease of doing business. However, the advent of digital era has provided an opportunity to not only address existing challenges but also leapfrog into a new phase of business operations. He further remarked that though India is 12th among the G20 nations in individual user digitalisation, its current digital infrastructure, including initiatives like the India Stack and digital payment systems, places the country in an advantageous position globally. He shared his experiences from his time as Tamil Nadu's Finance Minister, where the use of technology helped enhance the efficiency of government operations. Initiatives such as blockchain-based wallets, AI in agriculture, and e-service centres, have significantly reduced friction costs in government services; minimised rent-seeking behaviours, and improved overall transparency. He concluded by saying that as India moves towards becoming the third largest economy, the shift towards digital solutions is essential for driving structural changes in business operations. The challenges of rising vacancies in government positions and increasing administrative burdens entail the use of technology to maintain efficiency and meet the demands of a growing population.

The panel discussion was initiated by the moderator, Shri Vijay Kumar from TIOL Knowledge Foundation, who asked the CEO of GSTN, Shri M K Sinha - Whether GSTN could extend its capabilities to processing of external data from other tax systems, and whether a single infrastructure could manage both? Mr Sinha said that the GSTN already exchanges data with the CBIC and the CBDT, ensuring that compliance returns in both taxes are congruent. He observed that while integrating all tax systems into a single infrastructure is an appealing idea but the operational reality would be complex. He further remarked that data integration is the future rather than full systemic integration. He underscored the unique nature of GSTN's IT infrastructure, which serves as the backbone of the federal GST system, a model that has arrested global attention for its effectiveness and scalability. What underpins the critical aspect of the GST reform are the four pillars of IGST, GST Council, common IT infrastructure and administrative collaboration, he added while observing that IGST is now construed as a global benchmark for a federal model of taxation. Mr Sinha further remarked that the GSTN is presented as a flexible framework that allows the rapid scaling of digital public infrastructure, something that would have otherwise taken significantly longer, if managed solely by government departments.

On the issue of technology and taxation, Shri Vijay Pandya, Global Tax Head of TCS, said that both are rapidly advancing closer and the world is grappling with issues like how to tax digital economy and how to tax new business streams driven by technologies. He observed that a few countries have gone for digital services tax and VAT. And all these levies are serious challenges for the businesses. He further remarked that the OECD has come up with pillar 1 and pillar 2 solutions but deep canyons exist across geographies especially in the US. Taxation of crypto currency is another major area of discord. He stated that what teases policy-makers is - Whether it is a currency or a commodity by itself? From business perspective, it is a new stream of income. He stated that alpha and omega of the new trend is - opportunities for the businesses and nerve-fraying challenges for policy-makers co-exist and they need to find innovative solutions to improve the ease of doing business.

Turning towards Shri Ramesh Bafna, CFO, Zepto, Mr Vijay Kumar asked about the GST challenges for the e-commerce sector. And he observed that while the quick service e-commerce is expanding in the country, what is expected from the government is to provide the ease of quick GST registration for dark stores. Quick registration service is the one which can help spur growth in this sector and it can be done by simplifying and standardising registration for new business locations, he added. His second suggestion in the context of giving a fillip to the start-ups in India is speedy GST refund, which is, at present, a cumbersome process. He observed on the basis of his experience that many start-ups, especially in the quick service sector, are often left in a cash crunch due to delayed GST refunds. He recommended that if the glitches of GST refunds are ironed out and streamlined like direct taxes, it would go long way in unlocking working capital problem of start-ups.

Reshaping the pitch of the conversation, Shri Ashish Chandra, Chief Legal Risk & Policy Officer of Junglee Games, observed that time has come to reinvent the regulatory approach to disruptive technologies such as AI, blockchain, and skilled gaming. He opined that the new age tech-based industries should not be seen as a 'sinner', rather as robust drivers of economic growth, employment, and technological advancement. He suggested that the government needs to adopt a more supportive role towards them, similar to how the proliferation of software and communication industries were cushioned in the past. He further observed that the younger generations, which will have pivotal role in the Indian economy of 2047, need to be empowered by these technologies. If India can adapt its tax policies to foster these emerging sectors, it would leg up a sustainable economic model on creativity, skill, and technology. On my part, I would like to stick to the historical wisdom that taxes should be the offspring of economic activities and certainly not an end in itself. Fiscal tool-kit should be designed to cushion the egg-laying goose rather than tending to the goose with a meat-cleaver. New age technologies have come as a proven productivity-booster for the Indian economy and, that too, at a time when the Indian economy is fully braced to switch gear to higher growth trajectory. Let's hope that the GST Council gazes beyond the revenue-centric blinkers and trudges away from the confrontationist turf to minimise snafus in the economy! Time to have some macha now!