Vodafone has not paid a single paisa of tax: Rajan

Wading into the Vodafone tax dispute, Reserve Bank of India Governor Raghuram Rajan said on Friday the British telecom giant has not paid "a single naya paisa" as yet on the demands made on it, but this case always comes up when India talks about creating a predictable tax regime.

In an interaction at Chicago Booth School, Rajan said India is making serious efforts to become "a more friendly place to do business" and putting in place a predictable tax regime is part of those efforts.

"One of the things that we have been working hard on is creating a predictable tax structure. But every time we talk about taxes, we get Vodafone sort of flung back at us.

"Remember Vodafone has yet to pay a single naya paisa on the demands that were levied on it. That's going on. We have a structure of how this is decided and the government has said repeatedly we can't subvert that structure for a specific case.

"But going forward, we will try and make the tax regime as transparent and as clear to you as possible and I think that effort is under way. So, there are now advance tax rulings that you can get from the tax authorities. Across the board, the attempt is to make India a better way to do business."

Vodafone has been lodged in a long-running dispute with the Indian tax authorities.

Rajan said the 'Make in India' programme is about a lot of things that are taking place in India. "It involves things like improving infrastructure, making it easier to do business, bringing down the cost of doing business. It is about making India a more friendly place to do business.

"Among the things that we need to is to improve R&D. Of course there are foreign institutions that have come and set up R&D offices in places like Bangalore and Hyderabad and we need to encourage that. We also need to encourage domestic R&D, as also joint ventures. There are attempts to increase that," he said.