US trade associations have urged treasury secretary Timothy Geithner to take up with finance minister Pranab Mukherjee some contentious tax proposals that could adversely affect American investments in India. Mukherjee will meet Geithner in Washington on Thursday during his US visit to attend annual spring meetings of the World Bank and IMF.
Some of Mukherjee?s Budget proposals, including retroactive tax collection, general anti-aviodance rule (GAAR), and a tax on indirect stock transfers, have irked the foreign investors. Foreign institutional investors have criticised these tax proposal, even as the government maintained that honest FIIs will not be targeted
In a letter to Geithner, the associations said these tax will have a significant negative effect on member companies operating in India, their customers and shareholders, and investment in India. Such amendments are inconsistent with the India-US economic and financial partnership, they said.
?The provisions are far wider in scope than existing or proposed GAARs in other countries and place the burden of proof on individual companies, rather than on Indian tax authorities, to prove they are in compliance with GAAR,? according to the letter.
The letter has been submitted by the US associations: The Financial Executives International, Financial Services Forum, Information Technology Industry Council, Investment Company Institute, Managed Funds Association, National Foreign Trade Council, Securities Industry and Financial Markets Association, Software Finance & Tax Executives Council, TechAmerica, US Chamber of Commerce, United States Council for International Business, and the US-India Business Council
They pointed out other concerns including expansion of the definition of royalties for computer software and for transmission by satellite, cable, optic fiber or similar technology; and lack of clarity on the status of participatory notes.