India did not promote “tax terrorism” but was not a “tax haven” either, with no escaping genuine dues, finance minister Arun Jaitley said on Monday — in an oblique reference to investors crying foul over a spurt of notices in the last few days.
Jaitley also assured a “reasonable compliance window” under the proposed black money law to allow those with unaccounted overseas funds to come clean.
“India is not so vulnerable that every legitimate tax demand is considered as tax terrorism ... we are not a tax haven and we don’t intend to be one,” Jaitley said while speaking at the annual general meeting of the Confederation of Indian Industry. “Our fairness has been fairly misunderstood... the converse of tax terrorism is not a tax haven.”
About 200 foreign funds are reported to have been served with notices to pay taxes over the past years. This has spooked investors although the government has maintained that the notices were for taxes not paid till March 2015.
The income tax department has imposed a 20% minimum alternate tax (MAT) on capital gains made by FIIs.
Jaitley in the budget for 2015-16 has proposed to scrap MAT on capital gains made by FIIs. Revenue secretary Shaktikanta Das said FIIs were asking for “retrospective exemption” of MAT.
“Taxes which are not payable must not be paid. They should be challenged...but taxes which are payable must be paid,” the finance minister said.
Last month, the government has introduced in Parliament a bill to combat the black money with stringent provisions to penalise and prosecute those who do not declare their stashed cash and assets.
The bill provides for a one-time compliance opportunity for a limited period for persons to disclose hidden foreign assets.
“A very reasonable compliance window would come for those who indulged in misadventure in the past,” Jaitley said.
On the provisions of the Prevention of Corruption Act, Jaitley said it was drafted in the pre-liberalisation era and needed a relook.
Jaitley also defended the Land Acquisition Bill, stressing that it was important to get Parliament approval for the same as it would boost the development of the rural segment. “I firmly believe that the 2013 land law is hugely detrimental to rural India... it is the most unfriendly piece of legislation as far as rural India is concerned,” he said.