Amendments to GAAR, the controversial law against tax avoidance through foreign investments, have been finalised, finance minister P Chidambaram disclosed on Sunday.
“I have finalised the amendments to the Chapter 10A of the Income Tax Act. Now it will go to the PMO and then we should be ready with the amendments and then the GAAR rules will reflect the amended Chapter 10A. That is under preparation and I think the work is almost complete. The drafting work is complete. So, GAAR is under control. I have taken the decisions, subject to Prime Minister's approval and then Cabinet," he said in an interview.
Chapter 10A of the Income Tax Act deals with taxation of investments. GAAR (General Anti-Avoidance Rules), which was proposed in 2012-13 budget with a view to preventing tax evasion, evoked sharp reactions from foreign as well as domestic investors who feared that unbridled powers to taxmen would result in harassment of investors.
The government later appointed a committee headed by tax expert Parthasarthi Shome to look into their concerns.
Chidambaram, during the interview, spoke on a variety of subjects including his optimism on meeting disinvestment and spectrum sales target, confidence on pushing through with reforms measures and the relationship with RBI which he said was not antagonistic.
On the issue relating to retrospective tax amendment on which the Shome Committee had submitted its report, he said: "The CBDT has given its views. I have taken decisions at my level. The drafting is going on. Again it will go to the PMO and then to the Cabinet."
Referring to the Direct Taxes Code (DTC), a bigger matter, he said, "We have now started work. This morning I spent two hours on that. Earlier I had spent several hours. We are looking at it. We have tabulated it...will take final decision."
Cabinet to take up NIB proposal soon
Chidambaram indicated that the proposal to set up the National Investment Board (NIB) for expediting clearance to large projects will soon come up for approval before the Cabinet. "The Cabinet Note is with the Cabinet Secretariat and the Prime Minister's Office. It will be listed before the Cabinet at a time when the PM decides it should be listed. But I saw in some newspapers ... that it is likely to be listed," he said.
Concerned over delays in implementation of several mega projects, Chidambaram had recently proposed setting up of NIB under the Prime Minister to clear large projects. However, environment minister Jayanthi Natarajan had raised objections to the NIB proposal.
When asked about the environment ministry views,Chidambaram said, "They have some reservation which I think the officers have explained at a meeting...with the PMO."
He said that "please remember NIB, or whatever name you call it", is intended to address only the projects where the investment is over R1,000 crore and all other projects are not being brought under its purview.”
‘Reserve Bank, govt not antagonistic to each other' Chidambaram rejected the perception that his ministry and RBI were at loggerheads over interest rates and other issues, and said that they were not "antagonistic" to each other.
"The equation between the government and the central bank in India is the same as the equation between the government and the central bank of any country. It is always arguing for growth on the part of government and arguing for stability and taming inflation on the part of the central bank," he told PTI in an interview.
Even as the government makes out a case for the central bank to support growth, it doesn't mean “they (the finance ministry and the RBI) are antagonistic to each other", he said. "What we are trying to do is to argue our case, argue the case for growth, argue the case for taming inflation and then of course whatever the judgement is arrived at...," the minister added.
Invest or lose surplus cash, PSUs told
Chidambaram said the central PSUs have been put on notice to either invest their surplus cash or lose it. “We have already put (PSUs) on notice, no one will be allowed to fall short of (the) announced intention to invest... If they have not invested and they still have surplus cash, they have been told to invest...the principle is use it or lose it," he said.
At the beginning of the financial year, each central PSUs had committed to invest certain amount.
Chidambaram said the performance of CMDs will be measured, among other things, on how much their company has invested in terms of the declared intention.
Chidambaram said the performance of PSUs on investment front will be reviewed in January. Stressing that investment is key to growth, he said thereis reluctance among industry to invest because they perceive a number of hurdles to investment and also do not see the economic situation very "propitious or conducive".
Govt may be open to aviation FDI tweak
Government may be open to tweaking FDI norms in the aviation sector to attract investment, for which there has to be "willing buyer and a willing seller", Chidambaram said.
"What is there to tweak, we have allowed 49%. Let us see whether there are potential investors. These are executive decisions, they can always be tweaked," he said.
"See, merely because you raise it (the 49% limit) to 51% does not mean somebody is going to come. There may be a willing buyer, there has to be a willing seller also. The Indian company must be willing to yield control. And (there is) no evidence of that. There are only half a dozen players in the sector," Chidambaram said.
He was asked whether there was a possibility of tweaking the FDI norms for the aviation sector due to the lack of response so far.
‘Coal scam loss figure will turn out to be mythical’
After terming CAG's estimate of R1.76 lakh crore loss in 2G spectrum allocation as a "myth", Chidambaram said the projected R1.86 lakh crore loss in coal blocks allocation would also turn out to be a "mythical" and "fancy" number.
Fresh from the just-concluded auction of 2G mobile phone airwaves that tested if the government could actually get what the official auditor had projected as loss from allocating the spectrum on first-come-first-serve basis, Chidambaram said the loss estimated in coal block allocation was "another fancy number".
"One (well respected) business house told me that they were allotted a coal block some seven-eight years ago. (But) he has not been able to enter that area yet for a variety of reasons. His officers (have) not entered the area yet. Now what's the point in saying that some loss is there. What isthe loss?," he asked.
"Yes, if there is any irregularity in allocating the block then that's a different matter. But where is the loss," he asked.
‘It is for oilmin to consider raising LPG cylinder cap’
Amidst demands from within theCongress party to increase the limit on supply of subsidised LPG cylinders, Chidambaram said it was for the petroleum ministry to bring a proposal for raisingthe cap if it feels so.
"(Supply of) six (subsidised) cylinders (per household in a year) was decided by the Cabinet based on the proposal that came from the Ministry of Petroleum and Natural Gas. (Now it is) for them to rework it, if they feel it needs to be reworked," he said.