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Indian govt to clear air on retro tax issue
Publication Date : 29-06-2012
Under criticism over taxation issues, cited as leading to investors’ loss of confidence in India as a destination, the finance ministry yesterday said it would clear the air on recent amendments within two to three weeks.
The issues to be clarified include the retrospective tax amendment which requires Vodafone to pay Rs 20,000 crore. The development comes a day after the Prime Minister Manmohan Singh raised concerns over tax matters.
“Prime Minister’s Office (PMO) sought clarifications on taxation issues and Section 9 of the Income Tax Act (related to tax on indirect transfer of assets). We asked them to give us two-three weeks time,” finance secretary R.S. Gujral told reporters.
He ruled out any plans to further defer implementation of General Anti-Avoidance Rules (Gaar), which had evoked sharp reactions from both domestic and foreign investors.
The government had already postponed the budget proposal of implementing Gaar by one year to April 2013.
The finance ministry would issue draft guidelines on GAAR for public comments shortly, Gujral said.
The decision of the former finance minister, Pranab Mukherjee to amend the Income Tax Act with retrospective effect to tax overseas deals involving domestic assets had generated a lot of controversy.
Ignoring the criticism, Mukherjee went ahead with the proposal which now had become a part of the statute. The changes will have direct implications on the British telecom major Vodafone though it won the tax case in the Supreme Court.
Meanwhile, amid a flurry of activities in the PMO and the finance ministry to clear air on contentious tax laws, Planning Commission Deputy Chairman, Montek Singh Ahluwalia yesterday indicated that the investors will “soon see action” at the policy front for reviving their confidence.