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Retro tax knot tough to untie: FM

business Updated: Jul 25, 2014 00:15 IST
HT Correspondent
HT Correspondent
Hindustan Times
Finance minister

Finance minister Arun Jaitley on Thursday said blamed the UPA government’s adversarial tax policies for hurting India’s image as an investment destination.

The controversial retrospective tax — introduced in 2012 that imposed taxes on older corporate deals including Vodafone’s acquisition of Hutch in India in 2007 — decelerating an already slowing economy. This has left the new NDA government with the responsibility of turning around the economy along with changing tax laws.

“The retrospective tax sent a very negative signal and investments dried up... I hoped that the UPA untied the knot before they went but the UPA left it and it is a difficult knot to untie,” he said, while replying to the discussion on the budget in the Rajya Sabha.

There were signs of revival but it was too early to draw a trend, he added. Factory output grew 4.7% in May after two successive months of contraction, rekindling hopes of a rebound.

He reiterated the government’s pro-business stand, which he said would boost revenue collection necessary for the social sector. “I want to make a candid confession, if you say we are pro business, I have no hesitation in saying that we are pro business... but does it help the middle-income group...the answer is that it does...does it help the poor class, it does,” he said. “Profit is no more a bad word. Unless there is profit, there will not be taxes and the government needs revenue for strengthening social infrastructure and poverty alleviation.”

“The last two financial years have seen a sub 5% growth rate ...when you have a sub 5% growth rate, the spiral consequences are serious,” he added.

Jaitley said the discussion on the finance bill will be taken up in the Lok Sabha on Friday.