PANAJI: Chartered accountants have said that administrative hassles coupled with the difficulties in interpreting the nuances of a "complicated income tax regulatory regime" continue to bog down the flow of direct foreign investment in the country.

Hitesh Gajaria, member of the Taxation and International Taxation Committees of the Bombay Chartered Accountants' Society, while addressing the ongoing regional convention of the Western India Regional Council of the Institute of Chartered Accountants of India here on Saturday said, "The FDI flowing into the country is minuscule when compared to countries such as China largely on account of the ground level administrative difficulties faced by the potential investors.

Moreover, India continues to be one of the highest taxed countries with headline rates of corporate taxes being 30 percent."

Speaking on the topic of "Opportunities under FEMA for inbound business", Mr. Gajaria said, "Added to this is the existence of provisions such as dividend tax, tax on bank withdrawals, fringe benefit tax and so on which the foreign investor sees as an additional cost of doing business here."

He said what the country was getting was FII investment in its stock markets.

"Once your tax law starts getting complicated, foreigners lose interest," he added.

Good points

However, he was quick to point out the good side too.

He said the country had a well-developed judicial system and a well-established tribunal system for tax matters unlike in countries such as China. He said it the regulations of the Reserve Bank of India was still complex and needed to be simplified.

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