London, March 15: Fince Minister Arun Jaitley concluded his two-day visit here with a message to the global investing community that India’s stated position now was not to impose any retrospective tax but that the one slapped on Cairn was a “legacy” issue. “When the new government had come in, I had stated the policy of the new government that it would not move in the direction of any retrospective legislation on tax issues,” Jaitley told a press conference here late Saturday.
“But when earlier notices and legacy issues are concerned, they’ll have to be sorted out. There is a due judicial process. We’ve stuck to it. Wherever in an earlier issue the judicial process has decided some issue, as in some recent cases, we’ve accepted them,” he said. The fince minister also added that such a recourse was available to any company.
“Also, any fresh notices or new action will ordirily not be done. If any assessing of our officer wants to take such action, the clearance of the Central Board of Direct Taxes (CBDT) will be required.”
During his meetings with the business community here over several engagements, the issue raised with concern pertained to tax authorities in India slapping a $3.2-billion capital gains tax on Cairn India, a part of the Vedanta Group now, for a transaction some 10 years ago.
The Indian arm of Cairn was sold by the British parent and the acquirer company now has been asked to pay capital gains for not withholding such a levy. Such a tax was not explicitly in existence at that time, was introduced in 2012 with retrospective effect.
Britain-based Vodafone faces a similar dilemma when it acquired its Indian mobile assets and so do some 30-odd companies. This issue been a major cause for concern among foreign investors — and more so now after the present government said there will be no such fresh demands.
The fince minister said even as India and its policies were being closely watched by the global investing community, what really mattered was whether it was moving in the right direction as promised or moving backward.
“I think we are moving in one consistent direction,” he said. “The is a huge amount of interest about India and people are looking at the areas to invest in India. We are back on the radar of investors.” During his visit, Jaitley had a host of engagements, including meetings with Prime Minister David Cameron, Foreign Secretary Philip Hammond, Leader of Opposition Edward Miliband and Indian-origin lawmaker Keith Vaz, and Chancellor of the Exchequer George Osborne.
He also gave a talk at an event co-hosted by the Federation of Indian Chambers of Commerce and Industry and UK-India Business Council, made a presentation to global investors on “India Insights” organised by JP Morgan and addressed members of the London Stock Exchange. Jaitley’s other engagements included unveiling of Gandhi statue in Parliament Square with Prime Minister David Cameron, talks with Prince Charles, and meeting with a delegation of the Confederation of British Industry, led by director general John Cridland.
During his several meetings, concern over India’s tax system figured prominently even as the fince minister sought to assure them that his government was overhauling the country’s tax system to make it fair and equitable. “We are trying to ratiolise taxes - that is, lower taxes and introduce an on-adversarial, fair system,” he said, adding: “We need a lot of investment in India. We need to ease the process of doing business. Therefore, slowly we are introducing changes in that direction.” (IANS)