NRIs in UAE: Tax officers can now access digital evidence of evasive manoeuvres

Khaleej Times

3 days ago

Question: I am told that tax officers in India are using digital evidence to detect evasion of taxes both in India and abroad. Does this not violate a citizen's right to privacy?
ANSWER: The internal handbook for tax officers has recently been revised whereby investigators are permitted to use data access tools from the Centre for Development of Advanced Computing permitting them to enter the web where tax evaders often trade and chat. User credentials have been created for IT officials to access the web through special software. Currently, taxmen have to deal with an array of digital evidence, especially when it comes to dealing with transactions in virtual digital assets (VDAs). Therefore, steps and procedures have been outlined in the manual for identification and seizure of hardware and locating recovery phrases and QR codes to access private keys.
Further, tax officers have been empowered to determine the ownership and location of unaccounted VDAs. If this involves violation of the black money law, Foreign Exchange Management Act or the Money Laundering Act, investigations would be commenced by other enforcement agencies as well under such laws. However, officers have been advised to follow the procedures and directions contained in the digital evidence investigation manual and to ensure that data security is not compromised and the personal data of citizens is protected.
Question: With artificial intelligence techniques being applied widely in every sphere of industry, will India's advantage of offering labour at a competitive cost disappear?
ANSWER: The advantage is emerging in a different landscape. There is a clear shift in India during the past three years towards high value added work like research and development in global sciences, technology and engineering. This shift is apparent from the fact that more than half of Fortune 500 companies have set up their Global Capability Centres in India. Atleast one GCC was set up in India every week in 2024. The country has about 1,800 GCCs employing close to 2.16 million professionals, recording a compounded annual growth rate of 11 per cent over the past five years. These business units are likely to employ 2.8 million professionals by 2030. Further, these outfits are now shifting to Tier 2 and Tier 3 cities where skilled manpower is available and the cost of real estate is 30 per cent to 40 per cent lower than in the metros.
The Government of India is going out of its way to provide legislative support and a hassle free administration to ensure that the GCC ecosystem can attain its full potential. Other areas in which GCCs are now concentrating are in the fields of data science and product development. It is therefore expected that the GCCs contribution to the Indian economy will be around $200 billion by 2030 as against $68 billion at present. The primary reason for multinationals setting up these business outfits in India is that the country has 28 per cent of the global technology, science and engineering workforce and 23 per cent of the global software engineering talent.
Question: Have government authorities provided any guidelines for appointment of senior managers in financial institutions with a view to ensure that persons of independent stature control the affairs of such institutions?
ANSWER: The Securities and Exchange Board of India has laid down regulations and prescribed the process for appointment of key management personnel by market infrastructure institutions (MIIs). To strengthen the governance framework for stock exchanges, clearing corporations and security depositories, the guidelines require that the key management personnel (KMP) of MIIs should be persons of independent stature in crucial areas of operations, such as compliance, risk management, technology and information security.
SEBI has mandated that MIIs should appoint an independent external agency which would identify and recommend suitable candidates for appointment as compliance officers, chief regulatory officers and other senior managers. This agency is required to submit its recommendations to the Nomination and Remuneration Committee which in turn would evaluate the recommendations and submit its report for appointment of KMP to the Board of Directors of the MII. The final decision would thereafter be taken by the Board and the same procedure would be followed for reappointment, termination or acceptance of resignation of KMP.
The writer is a practising lawyer, specialising in corporate and fiscal laws of India.