In remarks that are likely to soothe frayed nerves of anxious investors, the NDA government on Monday pledged a “non-adversarial” tax regime for the industry, obliquely hinting that it was open to re-examine the controversial retrospective tax on corporate deals.
“The government will embark on rationalisation and simplification of the tax regime to make it non-adversarial and conducive to investment, enterprise and growth,” President Pranab Mukherjee said in his speech.
In 2012, the government had changed laws to impose a retrospective provision for taxing some international mergers that included British telecom giant Vodafone’s 2007 acquisition of Hutchinson’s mobile assets in India for $11.1 billion (about Rs 66,000 crore at current rates).
Vodafone contested it on the basis that no tax was due in any event as the deal was concluded in Cayman Islands.
The President, whose speech is drawn up by the Cabinet, said the government will introduce a common goods and services tax (GST). “My government will make every effort to introduce GST while addressing concerns of states,” he said.
GST, which will subsume local levies such as excise, value added tax and octroi and stitch together a common national market, has faced political hurdles because some states feel it will rob them of their fiscal independence.
Finance minister Jaitely, who met state finance ministers on Monday, said GST “is one pending issue, on which consensus needs to be built and implementation done at an early date.”