Committed to the reforms process: Pranab
A day after presenting the federal budget for next fiscal, which mostly got negative reviews from analysts and commoners, finance minister Pranab Mukherjee said the government was committed to passage of key reforms.business Updated: Mar 17, 2012 16:58 IST
A day after presenting the federal budget for next fiscal, which mostly got negative reviews from analysts and commoners, finance minister Pranab Mukherjee said the government was committed to passage of key reforms.
"We give deadlines with certain expectations but that does not mean that if we are not reaching it by the targeted date, we are giving it up," said Mukherjee in an interaction with Headlines Today.
When asked about delay in implementation of reforms like the Goods and Services Tax (GST) and Direct Tax Code (DTC), the finance minister said: "It will depend on the legislative process. Why couldn't I stick to the deadline? Last year I sent the direct tax code to the standing committee, they gave their report on March 9. I cannot impose my decision on the parliamentary standing committee."
"Similarly, constitutional amendment (for GST) I have introduced last year, but unless the standing committee considers it, gives their recommendation and thereafter it is passed by both houses, ratified by states (it won't happen)," he added.
The finance minister also vehemently defended the increase in excise duty and service tax to 12% -- a proposal which has not gone down well with industry.
"Excise duty was 14% up to 2008. Because of the financial crisis I reduced it first to 8% then it was raised to 10% and this year it has been raised to 12%. I have partially restored it," said Mukherjee.
"I have brought service tax also up to 12% because our ultimate objective is to reach GST. And there the service tax, excise duty, they will have to be aligned."
Mukherjee also denied criticism that the proposal for amending the Income Tax Act with retrospective effect to bring under tax net all overseas transactions involving domestic firms, was done after Income Tax department lost a case in the Supreme Court liability against Vodafone for purchase of stake in the erstwhile Hutchinson Essar in 2007.
The department had demanded Rs 11,000 crore in tax claims.
"No question of that. This is a normal practice. After all law is made by legislation. Law is interpreted by judiciary. When there is divergence of opinion, the course left to the legislature is to correct interpretation, or reiterate intention of the legislature through retrospective amendments. This is normal practice in income tax act," he said.
"When we invite foreign investment we do not tell them that you will not have to pay tax. We say if you pay tax in one country, you need not pay tax to me".