Unreasonable tax demands giving India bad name abroad: Jaitley

21 Nov 2014


Finance minister Arun Jaitley today made another reference to India's unfriendly tax policies, especially the retrospective tax rules, saying that an unsustainable tax demand would only earn the country a bad name as an investment destination.

"Unsustainable demand won't get you taxes. Unsustainable demands in the books can show you in good glory, but eventually those taxes will be blocked in some judicial court proceedings ... they would have only earned us a bad name as an investment destination," he said.

He, however, maintained that those who are supposed to pay taxes must pay.

Jaitley's comments come in the wake of a Mumbai High Court order earlier this week under which the Income Tax Department lost its Rs18,000-crore transfer pricing cases against oil major Shell India.

The government is further engaged in a long-running Rs20,000 crore tax dispute with British telecom major Vodafone.

Referring to retrospective amendments to the tax laws made by the previous UPA government, Jaitley said if India is not investor friendly, people would start looking elsewhere.

He, however, made no mention of repealing the retrospective tax laws passed by the previous government.

He said making India's taxation regime investor friendly and streamlining the procedure for land acquisition are the big challenges facing the government.

"Undoing a lot of taxation decisions is quite challenging, but that does not necessarily involve a legislative action. Only some areas require action," he told a media gathering in New Delhi.

When asked what three specific reforms he would like to get passed in the ensuing winter session of Parliament, Jaitley said he would like insurance, coal laws and the goods and services tax (GST) to be cleared.

He said there are political risks to reforms and those in government need to blend economic reforms with politics.

"Economic reforms have also to be blended with competent and clever politics. Reforms by themselves are not enough - if they have to survive politically, the blending has to be adequately done by those involved. And I am sure it is one area both my party and government is paying adequate attention," Jaitley said.

On the vexed black money issue, he said real estate, the jewellery market, the luxury goods market, and mining are the sectors in which illicit money is prevalent. The minister said he has asked the chief commissioner of direct taxes to look into these sectors.

As regards black money stashed abroad, he said his government would follow the legally right course.

"If you make an adventurist step and make every name available, without any supporting evidence, breach your international treaties, you are not going to be only disadvantaged by future non-cooperation, but also nobody will want to provide you with supporting evidence," he said.

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