‘India sending right messages on non-adversarial tax policy’

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New Delhi | Published: March 14, 2015 8:07:19 PM

Asserting that India is sending the right messages on its non-adversarial tax policy, a senior government official...

Asserting that India is sending the right messages on its non-adversarial tax policy, a senior government official today said there are some “legacies of the past” that are posing challenges.

“I think the government has sent all right messages as far as consistency, predictability and clarity of tax policy is concerned.

“It (government) has not appealed against Vodafone (tax) case, which very few government would have done. And I see the tax department far more friendlier than it was in the past,” said the Secretary, Department of Industrial Policy and Promotion (DIPP) Amitabh Kant during a session at India Today Conclave here.

However, he said that there are some challenges which are legacies of the past. There are issues related with taxation and India needs consistency and predictability of policy.

In January, the government had said that it would not appeal against a Bombay High Court ruling that Vodafone was not liable to pay tax demand of Rs 3,200 crore in a transfer pricing case.

The decision of not filing an appeal in the Vodafone case was taken at the highest level following advice by Attorney General Mukul Rohatgi.

The tax authority had issued a show cause notice to Vodafone India on January 17, 2014 and later passed an order asking it to pay additional Rs 3,200-crore tax for allegedly undervaluing the shares of its Pune BPO.

Later on Vodafone moved the High Court challenging the I-T order and contended that its transaction on transfer of shares was not taxable under the Indian tax laws.

In its ruling, the Bombay High Court had said “in our opinion there is no taxable income on share premium received on the issue of shares.”
Kant said it is important that India grows at a rapid rate and it is very important that government makes this country a very easy place to do business.

“In last 7-8 months we have scrapped a number of process, licencing rules, paperwork and other rules. We have integrated and converged several departments.

“We opened up the FDI (Foreign Direct Investment) regime across sectors– defense, construction, railways, insurance, medical devices one after another,” he added.

India today is one of the most open economies of the world as far as the FDI is concerned. In last 8-9 months FDI has grown about 36-37 per cent, he said further.

“India needs a very stable policy of land acquisition. You can blame this government for everything, but you can’t blame it at all for being intimidating. We have taken some very bold measures, we have even taken ordinances route. I think it has taken all the right moves, you just need to sustain it over a long time,” Kant said.

Speaking during the same session, Kalyani Group Chairman Baba N Kalyani said India has a lot of capability on the defense sector front.

“As the defense sector is opening up, India and the Indian industry has a lot of capability to make it happen. There are lot of issues, a lot of issues have been solved. The 49 per cent FDI in defense has helped us tremendously.

“There are a lot of people who want to form joint ventures to take the opportunity of supplying and producing products for the Indian defense sector,” Kalyani said.

On Make in India Campaign, ITC Chairman Y C Deveshwar said it embodies a very far reaching ambition.

“Any strategy, if it has to get fulfilled, it must be comprehended by all participants. India ]is a diverse country. The biggest problem with India is that its a very young country.

“There are 12 million people coming to the job market every year and by 2025 30 million more people will come to the job market. If we don’t provide that quality job that has dignity, then we are moving towards a demographic disaster,” Deveshwar said.

To increase market competitiveness on exports, he said India needs a 360-degree action for making ‘Make In India’ competitive.

“We need not only to be internationally competitive but responsibly competitive with new dimension of environmental friendliness. We need to first get our own land fertile for competitiveness,” he added.

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